PRUDENTIAL BANK, petitioner, vs. HONORABLE DOMINGO D.

PANIS, Presiding Judge of Branch III, Court of First Instance of

Zambales and Olongapo City; FERNANDO MAGCALE & TEODULA BALUYUT-MAGCALE, respondents.
G.R. No. L-50008 August 31, 1987 PARAS, J.:

This is a petition for review on certiorari of the November 13, 1978 Decision * of the then Court of First Instance of Zambales and Olongapo
City in Civil Case No. 2443-0 entitled "Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon. Ramon Y. Pardo and
Prudential Bank" declaring that the deeds of real estate mortgage executed by respondent spouses in favor of petitioner bank are null and
void.

The undisputed facts of this case by stipulation of the parties are as follows:

... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and Teodula Baluyut Magcale secured a loan in the sum of P70,000.00
from the defendant Prudential Bank. To secure payment of this loan, plaintiffs executed in favor of defendant on the aforesaid date a deed of
Real Estate Mortgage over the following described properties:

l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse spaces containing a total floor area of 263 sq. meters, more
or less, generally constructed of mixed hard wood and concrete materials, under a roofing of cor. g. i. sheets; declared and assessed in the
name of FERNANDO MAGCALE under Tax Declaration No. 21109, issued by the Assessor of Olongapo City with an assessed value of
P35,290.00. This building is the only improvement of the lot.

2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the right of occupancy on the lot where the above property is
erected, and more particularly described and bounded, as follows:

A first class residential land Identffied as Lot No. 720, (Ts-308, Olongapo Townsite Subdivision) Ardoin Street, East Bajac-Bajac, Olongapo
City, containing an area of 465 sq. m. more or less, declared and assessed in the name of FERNANDO MAGCALE under Tax Duration No.
19595 issued by the Assessor of Olongapo City with an assessed value of P1,860.00; bounded on the

NORTH: By No. 6, Ardoin Street

SOUTH: By No. 2, Ardoin Street

EAST: By 37 Canda Street, and

WEST: By Ardoin Street.

All corners of the lot marked by conc. cylindrical monuments of the Bureau of Lands as visible limits. (Exhibit "A, " also Exhibit "1" for
defendant).

Apart from the stipulations in the printed portion of the aforestated deed of mortgage, there appears a rider typed at the bottom of the reverse
side of the document under the lists of the properties mortgaged which reads, as follows:

AND IT IS FURTHER AGREED that in the event the Sales Patent on the lot applied for by the Mortgagors as herein stated is released or
issued by the Bureau of Lands, the Mortgagors hereby authorize the Register of Deeds to hold the Registration of same until this Mortgage is
cancelled, or to annotate this encumbrance on the Title upon authority from the Secretary of Agriculture and Natural Resources, which title
with annotation, shall be released in favor of the herein Mortgage.

From the aforequoted stipulation, it is obvious that the mortgagee (defendant Prudential Bank) was at the outset aware of the fact that the
mortgagors (plaintiffs) have already filed a Miscellaneous Sales Application over the lot, possessory rights over which, were mortgaged to it.

Exhibit "A" (Real Estate Mortgage) was registered under the Provisions of Act 3344 with the Registry of Deeds of Zambales on November 23,
1971.

On May 2, 1973, plaintiffs secured an additional loan from defendant Prudential Bank in the sum of P20,000.00. To secure payment of this
additional loan, plaintiffs executed in favor of the said defendant another deed of Real Estate Mortgage over the same properties previously
mortgaged in Exhibit "A." (Exhibit "B;" also Exhibit "2" for defendant). This second deed of Real Estate Mortgage was likewise registered with
the Registry of Deeds, this time in Olongapo City, on May 2,1973.

On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales Patent No. 4776 over the parcel of land, possessory rights over
which were mortgaged to defendant Prudential Bank, in favor of plaintiffs. On the basis of the aforesaid Patent, and upon its transcription in
the Registration Book of the Province of Zambales, Original Certificate of Title No. P-2554 was issued in the name of Plaintiff Fernando
Magcale, by the Ex-Oficio Register of Deeds of Zambales, on May 15, 1972.

For failure of plaintiffs to pay their obligation to defendant Bank after it became due, and upon application of said defendant, the deeds of
Real Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed. Consequent to the foreclosure was the sale of the properties
therein mortgaged to defendant as the highest bidder in a public auction sale conducted by the defendant City Sheriff on April 12, 1978
Property 1
(Exhibit "E"). The auction sale aforesaid was held despite written request from plaintiffs through counsel dated March 29, 1978, for the
defendant City Sheriff to desist from going with the scheduled public auction sale (Exhibit "D")." (Decision, Civil Case No. 2443-0, Rollo, pp.
29-31).

Respondent Court, in a Decision dated November 3, 1978 declared the deeds of Real Estate Mortgage as null and void (Ibid., p. 35).

On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-53), opposed by private respondents on January 5, 1979
(Ibid., pp. 54-62), and in an Order dated January 10, 1979 (Ibid., p. 63), the Motion for Reconsideration was denied for lack of merit. Hence,
the instant petition (Ibid., pp. 5-28).

The first Division of this Court, in a Resolution dated March 9, 1979, resolved to require the respondents to comment (Ibid., p. 65), which
order was complied with the Resolution dated May 18,1979, (Ibid., p. 100), petitioner filed its Reply on June 2,1979 (Ibid., pp. 101-112).

Thereafter, in the Resolution dated June 13, 1979, the petition was given due course and the parties were required to submit simultaneously
their respective memoranda. (Ibid., p. 114).

On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private respondents filed their Memorandum on August 1, 1979
(Ibid., pp. 146-155).

In a Resolution dated August 10, 1979, this case was considered submitted for decision (Ibid., P. 158).

In its Memorandum, petitioner raised the following issues:

1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID; AND

2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS OF MISCELLANEOUS SALES
PATENT NO. 4776 ON APRIL 24, 1972 UNDER ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-2554 ON
MAY 15,1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE. (Memorandum for Petitioner, Rollo, p.
122).

This petition is impressed with merit.

The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted on the building erected on the land belonging
to another.

The answer is in the affirmative.

In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this Court ruled that, "it is obvious that the inclusion of
"building" separate and distinct from the land, in said provision of law can only mean that a building is by itself an immovable property."
(Lopez vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958).

Thus, while it is true that a mortgage of land necessarily includes, in the absence of stipulation of the improvements thereon, buildings, still a
building by itself may be mortgaged apart from the land on which it has been built. Such a mortgage would be still a real estate mortgage for
the building would still be considered immovable property even if dealt with separately and apart from the land (Leung Yee vs. Strong
Machinery Co., 37 Phil. 644). In the same manner, this Court has also established that possessory rights over said properties before title is
vested on the grantee, may be validly transferred or conveyed as in a deed of mortgage (Vda. de Bautista vs. Marcos, 3 SCRA 438 [1961]).

Coming back to the case at bar, the records show, as aforestated that the original mortgage deed on the 2-storey semi-concrete residential
building with warehouse and on the right of occupancy on the lot where the building was erected, was executed on November 19, 1971 and
registered under the provisions of Act 3344 with the Register of Deeds of Zambales on November 23, 1971. Miscellaneous Sales Patent No.
4776 on the land was issued on April 24, 1972, on the basis of which OCT No. 2554 was issued in the name of private respondent Fernando
Magcale on May 15, 1972. It is therefore without question that the original mortgage was executed before the issuance of the final patent and
before the government was divested of its title to the land, an event which takes effect only on the issuance of the sales patent and its
subsequent registration in the Office of the Register of Deeds (Visayan Realty Inc. vs. Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110
Phil. 28; Director of Lands vs. Jurado, L-14702, May 23, 1961; Pena "Law on Natural Resources", p. 49). Under the foregoing considerations,
it is evident that the mortgage executed by private respondent on his own building which was erected on the land belonging to the
government is to all intents and purposes a valid mortgage.

As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554, it will be noted that Sections 121, 122 and 124 of the
Public Land Act, refer to land already acquired under the Public Land Act, or any improvement thereon and therefore have no application to
the assailed mortgage in the case at bar which was executed before such eventuality. Likewise, Section 2 of Republic Act No. 730, also a
restriction appearing on the face of private respondent's title has likewise no application in the instant case, despite its reference to
encumbrance or alienation before the patent is issued because it refers specifically to encumbrance or alienation on the land itself and does
not mention anything regarding the improvements existing thereon.

Property 2
But it is a different matter, as regards the second mortgage executed over the same properties on May 2, 1973 for an additional loan of
P20,000.00 which was registered with the Registry of Deeds of Olongapo City on the same date. Relative thereto, it is evident that such
mortgage executed after the issuance of the sales patent and of the Original Certificate of Title, falls squarely under the prohibitions stated in
Sections 121, 122 and 124 of the Public Land Act and Section 2 of Republic Act 730, and is therefore null and void.

Petitioner points out that private respondents, after physically possessing the title for five years, voluntarily surrendered the same to the bank
in 1977 in order that the mortgaged may be annotated, without requiring the bank to get the prior approval of the Ministry of Natural
Resources beforehand, thereby implicitly authorizing Prudential Bank to cause the annotation of said mortgage on their title.

However, the Court, in recently ruling on violations of Section 124 which refers to Sections 118, 120, 122 and 123 of Commonwealth Act 141,
has held:

... Nonetheless, we apply our earlier rulings because we believe that as in pari delicto may not be invoked to defeat the policy of the State
neither may the doctrine of estoppel give a validating effect to a void contract. Indeed, it is generally considered that as between parties to a
contract, validity cannot be given to it by estoppel if it is prohibited by law or is against public policy (19 Am. Jur. 802). It is not within the
competence of any citizen to barter away what public policy by law was to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino
supra). ... (Arsenal vs. IAC, 143 SCRA 54 [1986]).

This pronouncement covers only the previous transaction already alluded to and does not pass upon any new contract between the parties
(Ibid), as in the case at bar. It should not preclude new contracts that may be entered into between petitioner bank and private respondents
that are in accordance with the requirements of the law. After all, private respondents themselves declare that they are not denying the
legitimacy of their debts and appear to be open to new negotiations under the law (Comment; Rollo, pp. 95-96). Any new transaction,
however, would be subject to whatever steps the Government may take for the reversion of the land in its favor.

PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales & Olongapo City is hereby MODIFIED, declaring that the
Deed of Real Estate Mortgage for P70,000.00 is valid but ruling that the Deed of Real Estate Mortgage for an additional loan of P20,000.00 is
null and void, without prejudice to any appropriate action the Government may take against private respondents.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

Property 3
LEUNG YEE, plaintiff-appellant, vs.FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-appellees.
Booram and Mahoney for appellant. Williams, Ferrier and SyCip for appellees. CARSON, J.:

The "Compañia Agricola Filipina" bought a considerable quantity of rice-cleaning machinery company from the defendant machinery
company, and executed a chattel mortgage thereon to secure payment of the purchase price. It included in the mortgage deed the building of
strong materials in which the machinery was installed, without any reference to the land on which it stood. The indebtedness secured by this
instrument not having been paid when it fell due, the mortgaged property was sold by the sheriff, in pursuance of the terms of the mortgage
instrument, and was bought in by the machinery company. The mortgage was registered in the chattel mortgage registry, and the sale of the
property to the machinery company in satisfaction of the mortgage was annotated in the same registry on December 29, 1913.

A few weeks thereafter, on or about the 14th of January, 1914, the "Compañia Agricola Filipina" executed a deed of sale of the land upon
which the building stood to the machinery company, but this deed of sale, although executed in a public document, was not registered. This
deed makes no reference to the building erected on the land and would appear to have been executed for the purpose of curing any defects
which might be found to exist in the machinery company's title to the building under the sheriff's certificate of sale. The machinery company
went into possession of the building at or about the time when this sale took place, that is to say, the month of December, 1913, and it has
continued in possession ever since.

At or about the time when the chattel mortgage was executed in favor of the machinery company, the mortgagor, the "Compañia Agricola
Filipina" executed another mortgage to the plaintiff upon the building, separate and apart from the land on which it stood, to secure payment
of the balance of its indebtedness to the plaintiff under a contract for the construction of the building. Upon the failure of the mortgagor to pay
the amount of the indebtedness secured by the mortgage, the plaintiff secured judgment for that amount, levied execution upon the building,
bought it in at the sheriff's sale on or about the 18th of December, 1914, and had the sheriff's certificate of the sale duly registered in the land
registry of the Province of Cavite.

At the time when the execution was levied upon the building, the defendant machinery company, which was in possession, filed with the
sheriff a sworn statement setting up its claim of title and demanding the release of the property from the levy. Thereafter, upon demand of the

Property 4
sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in the sum of P12,000, in reliance upon which the sheriff sold the
property at public auction to the plaintiff, who was the highest bidder at the sheriff's sale.

This action was instituted by the plaintiff to recover possession of the building from the machinery company.

The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the machinery company, on the ground that
the company had its title to the building registered prior to the date of registry of the plaintiff's certificate.

Article 1473 of the Civil Code is as follows:

If the same thing should have been sold to different vendees, the ownership shall be transfer to the person who may have the first taken
possession thereof in good faith, if it should be personal property.

Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry.

Should there be no entry, the property shall belong to the person who first took possession of it in good faith, and, in the absence thereof, to
the person who presents the oldest title, provided there is good faith.

The registry her referred to is of course the registry of real property, and it must be apparent that the annotation or inscription of a deed of
sale of real property in a chattel mortgage registry cannot be given the legal effect of an inscription in the registry of real property. By its
express terms, the Chattel Mortgage Law contemplates and makes provision for mortgages of personal property; and the sole purpose and
object of the chattel mortgage registry is to provide for the registry of "Chattel mortgages," that is to say, mortgages of personal property
executed in the manner and form prescribed in the statute. The building of strong materials in which the rice-cleaning machinery was
installed by the "Compañia Agricola Filipina" was real property, and the mere fact that the parties seem to have dealt with it separate and
apart from the land on which it stood in no wise changed its character as real property. It follows that neither the original registry in the chattel
mortgage of the building and the machinery installed therein, not the annotation in that registry of the sale of the mortgaged property, had any
effect whatever so far as the building was concerned.

We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by the trial judge. We are of
opinion, however, that the judgment must be sustained on the ground that the agreed statement of facts in the court below discloses that
neither the purchase of the building by the plaintiff nor his inscription of the sheriff's certificate of sale in his favor was made in good faith, and
that the machinery company must be held to be the owner of the property under the third paragraph of the above cited article of the code, it
appearing that the company first took possession of the property; and further, that the building and the land were sold to the machinery
company long prior to the date of the sheriff's sale to the plaintiff.

It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express terms, in relation to
"possession" and "title," but contain no express requirement as to "good faith" in relation to the "inscription" of the property on the registry, it
must be presumed that good faith is not an essential requisite of registration in order that it may have the effect contemplated in this article.
We cannot agree with this contention. It could not have been the intention of the legislator to base the preferential right secured under this
article of the code upon an inscription of title in bad faith. Such an interpretation placed upon the language of this section would open wide
the door to fraud and collusion. The public records cannot be converted into instruments of fraud and oppression by one who secures an
inscription therein in bad faith. The force and effect given by law to an inscription in a public record presupposes the good faith of him who
enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue
under an inscription "in bad faith," to the benefit of the person who thus makes the inscription.

Construing the second paragraph of this article of the code, the supreme court of Spain held in its sentencia of the 13th of May, 1908, that:

This rule is always to be understood on the basis of the good faith mentioned in the first paragraph; therefore, it having been found that the
second purchasers who record their purchase had knowledge of the previous sale, the question is to be decided in accordance with the
following paragraph. (Note 2, art. 1473, Civ. Code, Medina and Maranon [1911] edition.)

Although article 1473, in its second paragraph, provides that the title of conveyance of ownership of the real property that is first recorded in
the registry shall have preference, this provision must always be understood on the basis of the good faith mentioned in the first paragraph;
the legislator could not have wished to strike it out and to sanction bad faith, just to comply with a mere formality which, in given cases, does
not obtain even in real disputes between third persons. (Note 2, art. 1473, Civ. Code, issued by the publishers of the La Revista de los
Tribunales, 13th edition.)

The agreed statement of facts clearly discloses that the plaintiff, when he bought the building at the sheriff's sale and inscribed his title in the
land registry, was duly notified that the machinery company had bought the building from plaintiff's judgment debtor; that it had gone into
possession long prior to the sheriff's sale; and that it was in possession at the time when the sheriff executed his levy. The execution of an
indemnity bond by the plaintiff in favor of the sheriff, after the machinery company had filed its sworn claim of ownership, leaves no room for
doubt in this regard. Having bought in the building at the sheriff's sale with full knowledge that at the time of the levy and sale the building had
already been sold to the machinery company by the judgment debtor, the plaintiff cannot be said to have been a purchaser in good faith; and
of course, the subsequent inscription of the sheriff's certificate of title must be held to have been tainted with the same defect.

Property 5
Perhaps we should make it clear that in holding that the inscription of the sheriff's certificate of sale to the plaintiff was not made in good faith,
we should not be understood as questioning, in any way, the good faith and genuineness of the plaintiff's claim against the "Compañia
Agricola Filipina." The truth is that both the plaintiff and the defendant company appear to have had just and righteous claims against their
common debtor. No criticism can properly be made of the exercise of the utmost diligence by the plaintiff in asserting and exercising his right
to recover the amount of his claim from the estate of the common debtor. We are strongly inclined to believe that in procuring the levy of
execution upon the factory building and in buying it at the sheriff's sale, he considered that he was doing no more than he had a right to do
under all the circumstances, and it is highly possible and even probable that he thought at that time that he would be able to maintain his
position in a contest with the machinery company. There was no collusion on his part with the common debtor, and no thought of the
perpetration of a fraud upon the rights of another, in the ordinary sense of the word. He may have hoped, and doubtless he did hope, that the
title of the machinery company would not stand the test of an action in a court of law; and if later developments had confirmed his unfounded
hopes, no one could question the legality of the propriety of the course he adopted.

But it appearing that he had full knowledge of the machinery company's claim of ownership when he executed the indemnity bond and
bought in the property at the sheriff's sale, and it appearing further that the machinery company's claim of ownership was well founded, he
cannot be said to have been an innocent purchaser for value. He took the risk and must stand by the consequences; and it is in this sense
that we find that he was not a purchaser in good faith.

One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good
faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts
which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his
vendor. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good
faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing
of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if afterwards
develops that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery had he
acted with that measure of precaution which may reasonably be acquired of a prudent man in a like situation. Good faith, or lack of it, is in its
analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled
by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined. So it is that "the
honesty of intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances which
ought to put a person on inquiry," and so it is that proof of such knowledge overcomes the presumption of good faith in which the courts
always indulge in the absence of proof to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched,
but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt., 504, 505;
Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)

We conclude that upon the grounds herein set forth the disposing part of the decision and judgment entered in the court below should be
affirmed with costs of this instance against the appellant. So ordered.

Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.

Torres, Avanceña and Fisher, JJ., took no part

JULIAN S. YAP, petitioner, vs. HON. SANTIAGO O. TAÑADA, etc., and GOULDS PUMPS INTERNATIONAL (PHIL.), INC.,
respondents. Paterno P. Natinga for private respondent. NARVASA, J.:
Property 6
The petition for review on certiorari at bar involves two (2) Orders of respondent Judge Tañada 1 in Civil Case No. 10984. The first, dated
September 16, 1970, denied petitioner Yap's motion to set aside execution sale and to quash alias writ of execution. The second, dated
November 21, 1970, denied Yap's motion for reconsideration. The issues concerned the propriety of execution of a judgment claimed to be
"incomplete, vague and non-final," and the denial of petitioner's application to prove and recover damages resulting from alleged irregularities
in the process of execution.

The antecedents will take some time in the telling. The case began in the City Court of Cebu with the filing by Goulds Pumps International
(Phil.), Inc. of a complaint 2 against Yap and his wife 3 seeking recovery of P1,459.30 representing the balance of the price and installation
cost of a water pump in the latter's premises. 4 The case resulted in a judgment by the City Court on November 25, 1968, reading as follows:

When this case was called for trial today, Atty. Paterno Natinga appeared for the plaintiff Goulds and informed the court that he is ready for
trial. However, none of the defendants appeared despite notices having been served upon them.

Upon petition Atty. Natinga, the plaintiff is hereby allowed to present its evidence ex-parte.

After considering the evidence of the plaintiff, the court hereby renders judgment in favor of the plaintiff and against the defendant (Yap),
ordering the latter to pay to the former the sum of Pl,459.30 with interest at the rate of 12% per annum until fully paid, computed from August
12, 1968, date of the filing of the complaint; to pay the sum of P364.80 as reasonable attorney's fees, which is equivalent " to 25% of the
unpaid principal obligation; and to pay the costs, if any.

Yap appealed to the Court of First Instance. The appeal was assigned to the sala of respondent Judge Tañada. For failure to appear for pre-
trial on August 28, 1968, this setting being intransferable since the pre-trial had already been once postponed at his instance, 5 Yap was
declared in default by Order of Judge Tañada dated August 28, 1969, 6 reading as follows:

When this case was called for pre-trial this morning, the plaintiff and counsel appeared, but neither the defendants nor his counsel appeared
despite the fact that they were duly notified of the pre-trial set this morning. Instead he filed an Ex-Parte Motion for Postponement which this
Court received only this morning, and on petition of counsel for the plaintiff that the Ex-Parte Motion for Postponement was not filed in
accordance with the Rules of Court he asked that the same be denied and the defendants be declared in default; .. the motion for the plaintiff
being well- grounded, the defendants are hereby declared in default and the Branch Clerk of Court ..is hereby authorized to receive evidence
for the plaintiff and .. submit his report within ten (10) days after reception of evidence.

Goulds presented evidence ex parte and judgment by default was rendered the following day by Judge Tañada requiring Yap to pay to
Goulds (1) Pl,459.30 representing the unpaid balance of the pump purchased by him; (2) interest of 12% per annum thereon until fully paid;
and (3) a sum equivalent to 25% of the amount due as attorney's fees and costs and other expenses in prosecuting the action. Notice of the
judgment was served on Yap on September 1, 1969. 7

On September 16, 1969 Yap filed a motion for reconsideration. 8 In it he insisted that his motion for postponement should have been granted
since it expressed his desire to explore the possibility of an amicable settlement; that the court should give the parties time to arrive at an
amicable settlement failing which, he should be allowed to present evidence in support of his defenses (discrepancy as to the price and
breach of warranty). The motion was not verified or accompanied by any separate affidavit. Goulds opposed the motion. Its opposition 9 drew
attention to the eleventh-hour motion for postponement of Yap which had resulted in the cancellation of the prior hearing of June 30, 1969
despite Goulds' vehement objection, and the re-setting thereof on August 28, 1969 with intransferable character; it averred that Yap had
again sought postponement of this last hearing by another eleventh-hour motion on the plea that an amicable settlement would be explored,
yet he had never up to that time ever broached the matter, 10 and that this pattern of seeking to obtain last-minute postponements was
discernible also in the proceedings before the City Court. In its opposition, Goulds also adverted to the examination made by it of the pump,
on instructions of the City Court, with a view to remedying the defects claimed to exist by Yap; but the examination had disclosed the pump's
perfect condition. Yap's motion for reconsideration was denied by Order dated October 10, 1969, notice of which was received by Yap on
October 4, 1969. 11

On October 15, 1969 Judge Tañada issued an Order granting Goulds' Motion for Issuance of Writ of Execution dated October 14, 1969,
declaring the reasons therein alleged to be meritorious. 12 Yap forthwith filed an "Urgent Motion for Reconsideration of Order" dated October
17, 1969, 13 contending that the judgment had not yet become final, since contrary to Goulds' view, his motion for reconsideration was not
pro forma for lack of an affidavit of merit, this not being required under Section 1 (a) of Rule 37 of the Rules of Court upon which his motion
was grounded. Goulds presented an opposition dated October 22, 1969. 14 It pointed out that in his motion for reconsideration Yap had
claimed to have a valid defense to the action, i.e., ".. discrepancy as to price and breach of seller's warranty," in effect, that there was fraud
on Goulds' paint; Yap's motion for reconsideration should therefore have been supported by an affidavit of merit respecting said defenses;
the absence thereof rendered the motion for reconsideration fatally defective with the result that its filing did not interrupt the running of the
period of appeal. The opposition also drew attention to the failure of the motion for reconsideration to specify the findings or conclusions in
the judgment claimed to be contrary to law or not supported by the evidence, making it a pro forma motion also incapable of stopping the
running of the appeal period. On October 23, 1969, Judge Tañada denied Yap's motion for reconsideration and authorized execution of the
judgment.15 Yap sought reconsideration of this order, by another motion dated October 29, 1969. 16 This motion was denied by Order dated
January 26, 1970. 17 Again Yap moved for reconsideration, and again was rebuffed, by Order dated April 28, 1970. 18

Property 7
In the meantime the Sheriff levied on the water pump in question, 19 and by notice dated November 4, 1969, scheduled the execution sale
thereof on November 14, 1969. 20 But in view of the pendency of Yap's motion for reconsideration of October 29, 1969, suspension of the
sale was directed by Judge Tañada in an order dated November 6, 1969.21

Counsel for the plaintiff is hereby given 10 days time to answer the Motion, dated October 29, 1969, from receipt of this Order and in the
meantime, the Order of October 23, 1969, insofar as it orders the sheriff to enforce the writ of execution is hereby suspended.

It appears however that a copy of this Order was not transmitted to the Sheriff "through oversight, inadvertence and pressure of work" of the
Branch Clerk of Court. 22 So the Deputy Provincial Sheriff went ahead with the scheduled auction sale and sold the property levied on to
Goulds as the highest bidder. 23 He later submitted the requisite report to the Court dated November 17, 1969, 24 as well as the "Sheriffs
Return of Service" dated February 13, 1970, 25 in both of which it was stated that execution had been "partially satisfied." It should be
observed that up to this time, February, 1970, Yap had not bestirred himself to take an appeal from the judgment of August 29, 1969.

On May 9, 1970 Judge Tañada ordered the issuance of an alias writ of execution on Gould's ex parte motion therefor. 26 Yap received notice
of the Order on June 11. Twelve (1 2) days later, he filed a "Motion to Set Aside Execution Sale and to Quash Alias Writ of Execution." 27 As
regards the original, partial execution of the judgment, he argued that —

1) "the issuance of the writ of execution on October 16, 1969 was contrary to law, the judgment sought to be executed not being final
and executory;" and

2) "the sale was made without the notice required by Sec. 18, Rule 39, of the New Rules of Court," i.e., notice by publication in case of
execution sale of real property, the pump and its accessories being immovable because attached to the ground with character of permanency
(Art. 415, Civil Code).

And with respect to the alias writ, he argued that it should not have issued because —

1) "the judgment sought to be executed is null and void" as "it deprived the defendant of his day in court" and "of due process;"

2) "said judgment is incomplete and vague" because there is no starting point for computation of the interest imposed, or a
specification of the "other expenses incurred in prosecuting this case" which Yap had also been ordered to pay;

3) "said judgment is defective because it contains no statement of facts but a mere recital of the evidence; and

4) "there has been a change in the situation of the parties which makes execution unjust and inequitable" because Yap suffered
damages by reason of the illegal execution.

Goulds filed an opposition on July 6, 1970. Yap's motion was thereafter denied by Order dated September 16, 1970. Judge Tañada pointed
out that the motion had "become moot and academic" since the decision of August 29, 1969, "received by the defendant on September 1,
1969 had long become final when the Order for the Issuance of a Writ of Execution was promulgated on October 15, 1969." His Honor also
stressed that —

The defendant's Motion for Reconsideration of the Courts decision was in reality one for new trial. Regarded as motion for new trial it should
allege the grounds for new trial, provided for in the Rules of Court, to be supported by affidavit of merits; and this the defendant failed to do. If
the defendant sincerely desired for an opportunity to submit to an amicable settlement, which he failed to do extra judicially despite the ample
time before him, he should have appeared in the pre- trial to achieve the same purpose.

Judge Tañada thereafter promulgated another Order dated September 21, 1970 granting a motion of Goulds for completion of execution of
the judgment of August 29, 1969 to be undertaken by the City Sheriff of Cebu. Once more, Yap sought reconsideration. He submitted a
"Motion for Reconsideration of Two Orders" dated October 13, 1970, 28 seeking the setting aside not only of this Order of September 21,
1970 but also that dated September 16, 1970, denying his motion to set aside execution dated June 23, 1970. He contended that the Order
of September 21, 1970 (authorizing execution by the City Sheriff) was premature, since the 30-day period to appeal from the earlier order of
September 16, 1970 (denying his motion to set aside) had not yet expired. He also reiterated his view that his motion for reconsideration
dated September 15, 1969 did not require that it be accompanied by an affidavit of merits. This last motion was also denied for "lack of
merits," by Order dated November 21, 1970. 29

On December 3, 1970, Yap filed a "Notice of Appeal" manifesting his intention to appeal to the Supreme Court on certiorari only on questions
of law, "from the Order ... of September 16, 1970 ... and from the Order ... of November 21, 1970, ... pursuant to sections 2 and 3 of Republic
Act No. 5440." He filed his petition for review with this Court on January 5, 1971, after obtaining an extension therefor. 30

The errors of law he attributes to the Court a quo are the following: 31

1) refusing to invalidate the execution pursuant to its Order of October 16, 1969 although the judgment had not then become final and
executory and despite its being incomplete and vague;

Property 8
2) ignoring the fact that the execution sale was carried out although it (the Court) had itself ordered suspension of execution on
November 6, 1969;

3) declining to annul the execution sale of the pump and accessories subject of the action although made without the requisite notice
prescribed for the sale of immovables; and

4) refusing to allow the petitioner to prove irregularities in the process of execution which had resulted in damages to him.

Notice of the Trial Court's judgment was served on Yap on September 1, 1969. His motion for reconsideration thereof was filed 15 days
thereafter, on September 16, 1969. Notice of the Order denying the motion was received by him on October 14, 1969. The question is
whether or not the motion for reconsideration — which was not verified, or accompanied by an affidavit of merits (setting forth facts
constituting his meritorious defenses to the suit) or other sworn statement (stating facts excusing his failure to appear at the pre-trial was pro
forma and consequently had not interrupted the running of the period of appeal. It is Yap's contention that his motion was not pro forma for
lack of an affidavit of merits, such a document not being required by Section 1 (a) of Rule 37 of the Rules of Court upon which his motion was
based. This is incorrect.

Section 2, Rule 37 precisely requires that when the motion for new trial is founded on Section 1 (a), it should be accompanied by an affidavit
of merit.

xxx xxx xxx

When the motion is made for the causes mentioned in subdivisions (a) and (b) of the preceding section, it shall be proved in the manner
provided for proof of motions. Affidavit or affidavits of merits shall also be attached to a motion for the cause mentioned in subdivision (a)
which may be rebutted by counter-affidavits.

xxx xxx xxx 32

Since Yap himself asserts that his motion for reconsideration is grounded on Section 1 (a) of Rule 37, 33 i.e., fraud, accident, mistake or
excusable negligence which ordinary prudence could not have guarded against and by reason of which ... (the) aggrieved party has probably
been impaired in his rights" — this being in any event clear from a perusal of the motion which theorizes that he had "been impaired in his
rights" because he was denied the right to present evidence of his defenses (discrepancy as to price and breach of warranty) — it was a fatal
omission to fail to attach to his motion an affidavit of merits, i.e., an affidavit "showing the facts (not conclusions) constituting the valid x x
defense which the movant may prove in case a new trial is granted." 34 The requirement of such an affidavit is essential because obviously
"a new trial would be a waste of the court's time if the complaint turns out to be groundless or the defense ineffective." 35

In his motion for reconsideration, Yap also contended that since he had expressed a desire to explore the possibility of an amicable
settlement, the Court should have given him time to do so, instead of declaring him in default and thereafter rendering judgment by default on
Gould's ex parte evidence.

The bona fides of this desire to compromise is however put in doubt by the attendant circumstances. It was manifested in an eleventh-hour
motion for postponement of the pre-trial which had been scheduled with intransferable character since it had already been earlier postponed
at Yap's instance; it had never been mentioned at any prior time since commencement of the litigation; such a possible compromise (at least
in general or preliminary terms) was certainly most appropriate for consideration at the pre-trial; in fact Yap was aware that the matter was
indeed a proper subject of a pre-trial agenda, yet he sought to avoid appearance at said pre-trial which he knew to be intransferable in
character. These considerations and the dilatory tactics thus far attributable to him-seeking postponements of hearings, or failing to appear
therefor despite notice, not only in the Court of First Instance but also in the City Court — proscribe belief in the sincerity of his avowed desire
to negotiate a compromise. Moreover, the disregard by Yap of the general requirement that "(n)otice of a motion shall be served by the
applicant to all parties concerned at least three (3) days before the hearing thereof, together with a copy of the motion, and of any affidavits
and other papers accompanying it," 36 for which no justification whatever has been offered, also militates against the bona fides of Yap's
expressed wish for an amicable settlement. The relevant circumstances do not therefore justify condemnation, as a grave abuse of
discretion, or a serious mistake, of the refusal of the Trial Judge to grant postponement upon this proferred ground.

The motion for reconsideration did not therefore interrupt the running of the period of appeal. The time during which it was pending before the
court — from September 16, 1969 when it was filed with the respondent Court until October 14, 1969 when notice of the order denying the
motion was received by the movant — could not be deducted from the 30-day period of appeal. 37 This is the inescapable conclusion from a
consideration of Section 3 of Rule 41 which in part declares that, "The "time during which a motion to set aside the judgment or order or for a
new trial has been pending shall be deducted, unless such motion fails to satisfy the requirements of Rule 37. 38

Notice of the judgment having been received by Yap on September 1, 1969, and the period of appeal therefrom not having been interrupted
by his motion for reconsideration filed on September 16, 1969, the reglementary period of appeal expired thirty (30) days after September 1,
1969, or on October 1, 1969, without an appeal being taken by Yap. The judgment then became final and executory; Yap could no longer
take an appeal therefrom or from any other subsequent orders; and execution of judgment correctly issued on October 15, 1969, "as a matter
of right." 39

Property 9
The next point discussed by Yap, that the judgment is incomplete and vague, is not well taken. It is true that the decision does not fix the
starting time of the computation of interest on the judgment debt, but this is inconsequential since that time is easily determinable from the
opinion, i.e., from the day the buyer (Yap) defaulted in the payment of his obligation, 40 on May 31, 1968. 41 The absence of any disposition
regarding his counterclaim is also immaterial and does not render the judgment incomplete. Yap's failure to appear at the pre-trial without
justification and despite notice, which caused the declaration of his default, was a waiver of his right to controvert the plaintiff s proofs and of
his right to prove the averments of his answer, inclusive of the counterclaim therein pleaded. Moreover, the conclusion in the judgment of the
merit of the plaintiff s cause of action was necessarily and at the same time a determination of the absence of merit of the defendant's claim
of untenability of the complaint and of malicious prosecution.

Yap's next argument that the water pump had become immovable property by its being installed in his residence is also untenable. The Civil
Code considers as immovable property, among others, anything "attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object." 42 The pump does not fit this description. It could be, and
was in fact separated from Yap's premises without being broken or suffering deterioration. Obviously the separation or removal of the pump
involved nothing more complicated than the loosening of bolts or dismantling of other fasteners.

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

WHEREFORE, the petition is DENIED and the appeal DISMISSED, and the Orders of September 16, 1970 and November 21, 1970 subject
thereof, AFFIRMED in toto. Costs against petitioner.

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

CONRADO P. NAVARRO, plaintiff-appellee, vs. RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants.
Deogracias Tañedo, Jr. for plaintiff-appellee. Renato A. Santos for defendants-appellants. PAREDES, J.:

On December 14, 1959, defendants Rufino G. Pineda and his mother Juana Gonzales (married to Gregorio Pineda), borrowed from plaintiff
Conrado P. Navarro, the sum of P2,500.00, payable 6 months after said date or on June 14, 1959. To secure the indebtedness, Rufino
executed a document captioned "DEED OF REAL ESTATE and CHATTEL MORTGAGES", whereby Juana Gonzales, by way of Real Estate
Mortgage hypothecated a parcel of land, belonging to her, registered with the Register of Deeds of Tarlac, under Transfer Certificate of Title
No. 25776, and Rufino G. Pineda, by way of Chattel Mortgage, mortgaged his two-story residential house, having a floor area of 912 square
meters, erected on a lot belonging to Atty. Vicente Castro, located at Bo. San Roque, Tarlac, Tarlac; and one motor truck, registered in his
name, under Motor Vehicle Registration Certificate No. A-171806. Both mortgages were contained in one instrument, which was registered in
both the Office of the Register of Deeds and the Motor Vehicles Office of Tarlac.

When the mortgage debt became due and payable, the defendants, after demands made on them, failed to pay. They, however, asked and
were granted extension up to June 30, 1960, within which to pay. Came June 30, defendants again failed to pay and, for the second time,
asked for another extension, which was given, up to July 30, 1960. In the second extension, defendant Pineda in a document entitled
"Promise", categorically stated that in the remote event he should fail to make good the obligation on such date (July 30, 1960), the
defendant would no longer ask for further extension and there would be no need for any formal demand, and plaintiff could proceed to take
whatever action he might desire to enforce his rights, under the said mortgage contract. In spite of said promise, defendants, failed and
refused to pay the obligation.

On August 10, 1960, plaintiff filed a complaint for foreclosure of the mortgage and for damages, which consisted of liquidated damages in the
sum of P500.00 and 12% per annum interest on the principal, effective on the date of maturity, until fully paid.

Defendants, answering the complaint, among others, stated —

Defendants admit that the loan is overdue but deny that portion of paragraph 4 of the First Cause of Action which states that the defendants
unreasonably failed and refuse to pay their obligation to the plaintiff the truth being the defendants are hard up these days and pleaded to the
plaintiff to grant them more time within which to pay their obligation and the plaintiff refused;
Property 10
WHEREFORE, in view of the foregoing it is most respectfully prayed that this Honorable Court render judgment granting the defendants until
January 31, 1961, within which to pay their obligation to the plaintiff.

On September 30, 1960, plaintiff presented a Motion for summary Judgment, claiming that the Answer failed to tender any genuine and
material issue. The motion was set for hearing, but the record is not clear what ruling the lower court made on the said motion. On November
11, 1960, however, the parties submitted a Stipulation of Facts, wherein the defendants admitted the indebtedness, the authenticity and due
execution of the Real Estate and Chattel Mortgages; that the indebtedness has been due and unpaid since June 14, 1960; that a liability of
12% per annum as interest was agreed, upon failure to pay the principal when due and P500.00 as liquidated damages; that the instrument
had been registered in the Registry of Property and Motor Vehicles Office, both of the province of Tarlac; that the only issue in the case is
whether or not the residential house, subject of the mortgage therein, can be considered a Chattel and the propriety of the attorney's fees.

On February 24, 1961, the lower court held —

... WHEREFORE, this Court renders decision in this Case:

(a) Dismissing the complaint with regard to defendant Gregorio Pineda;

(b) Ordering defendants Juana Gonzales and the spouses Rufino Pineda and Ramon Reyes, to pay jointly and severally and within
ninety (90) days from the receipt of the copy of this decision to the plaintiff Conrado P. Navarro the principal sum of P2,550.00 with 12%
compounded interest per annum from June 14, 1960, until said principal sum and interests are fully paid, plus P500.00 as liquidated
damages and the costs of this suit, with the warning that in default of said payment of the properties mentioned in the deed of real estate
mortgage and chattel mortgage (Annex "A" to the complaint) be sold to realize said mortgage debt, interests, liquidated damages and costs,
in accordance with the pertinent provisions of Act 3135, as amended by Act 4118, and Art. 14 of the Chattel Mortgage Law, Act 1508; and

(c) Ordering the defendants Rufino Pineda and Ramona Reyes, to deliver immediately to the Provincial Sheriff of Tarlac the personal
properties mentioned in said Annex "A", immediately after the lapse of the ninety (90) days above-mentioned, in default of such payment.

The above judgment was directly appealed to this Court, the defendants therein assigning only a single error, allegedly committed by the
lower court, to wit —

In holding that the deed of real estate and chattel mortgages appended to the complaint is valid, notwithstanding the fact that the house of
the defendant Rufino G. Pineda was made the subject of the chattel mortgage, for the reason that it is erected on a land that belongs to a
third person.

Appellants contend that article 415 of the New Civil Code, in classifying a house as immovable property, makes no distinction whether the
owner of the land is or not the owner of the building; the fact that the land belongs to another is immaterial, it is enough that the house
adheres to the land; that in case of immovables by incorporation, such as houses, trees, plants, etc; the Code does not require that the
attachment or incorporation be made by the owner of the land, the only criterion being the union or incorporation with the soil. In other words,
it is claimed that "a building is an immovable property, irrespective of whether or not said structure and the land on which it is adhered to,
belong to the same owner" (Lopez v. Orosa, G.R. Nos. L-10817-8, Feb. 28, 1958). (See also the case of Leung Yee v. Strong Machinery Co.,
37 Phil. 644). Appellants argue that since only movables can be the subject of a chattel mortgage (sec. 1, Act No. 3952) then the mortgage in
question which is the basis of the present action, cannot give rise to an action for foreclosure, because it is nullity. (Citing Associated Ins. Co.,
et al. v. Isabel Iya v. Adriano Valino, et al., L-10838, May 30, 1958.)

The trial court did not predicate its decision declaring the deed of chattel mortgage valid solely on the ground that the house mortgaged was
erected on the land which belonged to a third person, but also and principally on the doctrine of estoppel, in that "the parties have so
expressly agreed" in the mortgage to consider the house as chattel "for its smallness and mixed materials of sawali and wood". In construing
arts. 334 and 335 of the Spanish Civil Code (corresponding to arts. 415 and 416, N.C.C.), for purposes of the application of the Chattel
Mortgage Law, it was held that under certain conditions, "a property may have a character different from that imputed to it in said articles. It is
undeniable that the parties to a contract may by agreement, treat as personal property that which by nature would be real property"
(Standard Oil Co. of N.Y. v. Jaranillo, 44 Phil. 632-633)."There can not be any question that a building of mixed materials may be the subject
of a chattel mortgage, in which case, it is considered as between the parties as personal property. ... The matter depends on the
circumstances and the intention of the parties". "Personal property may retain its character as such where it is so agreed by the parties
interested even though annexed to the realty ...". (42 Am. Jur. 209-210, cited in Manarang, et al. v. Ofilada, et al., G.R. No. L-8133, May 18,
1956; 52 O.G. No. 8, p. 3954.) The view that parties to a deed of chattel mortgagee may agree to consider a house as personal property for
the purposes of said contract, "is good only insofar as the contracting parties are concerned. It is based partly, upon the principles of estoppel
..." (Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958). In a case, a mortgage house built on a rented land, was held to be a personal
property, not only because the deed of mortgage considered it as such, but also because it did not form part of the land (Evangelista v. Abad
[CA];36 O.G. 2913), for it is now well settled that an object placed on land by one who has only a temporary right to the same, such as a
lessee or usufructuary, does not become immobilized by attachment (Valdez v. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co.,
Inc. v. Castillo, et al., 61 Phil. 709). Hence, if a house belonging to a person stands on a rented land belonging to another person, it may be
mortgaged as a personal property is so stipulated in the document of mortgage. (Evangelista v. Abad, supra.) It should be noted, however,
that the principle is predicated on statements by the owner declaring his house to be a chattel, a conduct that may conceivably estop him
from subsequently claiming otherwise (Ladera, et al.. v. C. N. Hodges, et al., [CA]; 48 O.G. 5374). The doctrine, therefore, gathered from
Property 11
these cases is that although in some instances, a house of mixed materials has been considered as a chattel between them, has been
recognized, it has been a constant criterion nevertheless that, with respect to third persons, who are not parties to the contract, and specially
in execution proceedings, the house is considered as an immovable property (Art. 1431, New Civil Code).

In the case at bar, the house in question was treated as personal or movable property, by the parties to the contract themselves. In the deed
of chattel mortgage, appellant Rufino G. Pineda conveyed by way of "Chattel Mortgage" "my personal properties", a residential house and a
truck. The mortgagor himself grouped the house with the truck, which is, inherently a movable property. The house which was not even
declared for taxation purposes was small and made of light construction materials: G.I. sheets roofing, sawali and wooden walls and wooden
posts; built on land belonging to another.

The cases cited by appellants are not applicable to the present case. The Iya cases (L-10837-38, supra), refer to a building or a house of
strong materials, permanently adhered to the land, belonging to the owner of the house himself. In the case of Lopez v. Orosa, (L-10817-18),
the subject building was a theatre, built of materials worth more than P62,000, attached permanently to the soil. In these cases and in the
Leung Yee case, supra, third persons assailed the validity of the deed of chattel mortgages; in the present case, it was one of the parties to
the contract of mortgages who assailed its validity.

CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from, should be, as it is hereby affirmed, with costs against
appellants.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Barrera, Dizon, Regala, and Makalintal, JJ., concur.

JOSE A. LUNA, petitioner, vs. DEMETRIO B. ENCARNACION, Judge of First Instance of Rizal, TRINIDAD REYES and THE
PROVINCIAL SHERIFF OF RIZAL, respondents. Jose S. Fineza for petitioner. BAUTISTA ANGELO, J.:

Property 12
On September 25, 1948, a deed designated as chattel mortgage was executed by Jose A. Luna in favor of Trinidad Reyes whereby the
former conveyed by way of first mortgage to the latter a certain house of mixed materials stated in barrio San Nicolas, municipality of Pasig,
Province of Rizal, to secure the payment of a promissory note in the amount of P1,500, with interest at 12 per cent per annum. The document
was registered in the office of the register of deeds for the Province of Rizal. The mortgagor having filed to pay the promissory note when it
fell due, the mortgage requested the sheriff of said province to sell the house at public auction so that with its proceeds the amount indebted
may be paid notifying the mortgagor in writing of the time and place of the sale as required by law. The sheriff acceded to the request and
sold the property to the mortgagee for the amount covering the whole indebtedness with interest and costs. The certificate of sale was issued
by the sheriff on May 28, 1949. After the period for the redemption of the property had expired without the mortgagor having exercised his
right to repurchase, the mortgagee demanded from the mortgagor the surrender of the possession of the property, but the later refused and
so on October 13, 1950, she filed a petition in the Court of First Instance of Rizal praying that the provincial sheriff be authorized to place her
in possession of the property invoking in her favor the provisions of Act No. 3135, as amended by Act No. 4118.

When the petition came up for hearing before the court on October 25, 1950, Jose A. Luna, the mortgagor, opposed the petition on the
following grounds: (1) that Act No. 3135 as amended by Act No. 4118 is applicable only to a real estate mortgage; (2) that the mortgage
involved herein is a chattel mortgage; and (3) that even if the mortgage executed by the parties herein be considered as real estate
mortgage, the extra-judicial sale made by the sheriff of the property in question was valid because the mortgage does not contain an express
stipulation authorizing the extra-judicial sale of the property. After hearing, at which both parties have expressed their views in support of their
respective contentions, respondent judge, then presiding the court, overruled the opposition and granted the petition ordering the provincial
sheriff of Rizal, or any of this disputives, to immediately place petitioner in possession of the property in question while at the same time
directing the mortgagor Jose A. Luna to vacate it and relinquish it in favor of petitioner. It is from this order that Jose A. Luna desires now to
obtain relief by filing this petition for certiorari contending that the respondent judge has acted in excess of his jurisdiction.

The first question which petitioner poses in his petition for certiorari is that which relates to the validity of the extra-judicial sale made by the
provincial sheriff of Rizal of the property in question in line with the request of the mortgagee Trinidad Reyes. It is contended that said extra-
judicial sale having been conducted under the provisions of Act No. 3135, as amended by Act No. 4118, is invalid because the mortgage in
question is not a real estate mortgage and, besides, it does not contain an express stipulation authorizing the mortgagee to foreclose the
mortgage extra-judicially.

There is merit in this claim. As may be gleaned from a perusal of the deed signed by the parties (Annex "C"), the understanding executed by
them is a chattel mortgage, as the parties have so expressly designated, and not a real estate mortgage, specially when it is considered that
the property given as security is a house of mixed materials which by its very nature is considered as personal property. Such being the case,
it is indeed a mistake for the mortgagee to consider this transaction in the light of Act No. 3135, as amended by Act No. 4118, as was so
considered by her when she requested to provincial sheriff to sell it extra-judicially in order to secure full satisfaction of the indebtedness still
owed her by the mortgagor. It is clear that Act No. 3135, as amended, only covers real estate mortgages and is intended merely to regulate
the extra-judicial sale of the property mortgaged if and when the mortgagee is given a special power or express authority to do so in the deed
itself, or in a document annexed thereto. These conditions do not here obtain. The mortgage before us is not a real estate mortgage nor does
it contain an express authority or power to sell the property extra-judicially.

But regardless of what we have heretofore stated, we find that the validity of the sale in question may be maintained, it appearing that the
mortgage in question is a chattel mortgage and as such it is covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of
this Act allows the mortgagee through a public officer in almost the same manner as that allowed by Act No. 3135, as amended by Act No.
4118, provided that the requirements of the law relative to notice and registration are complied with. We are not prepared to state if these
requirements of the law had been complied with in the case for the record before us is not complete and there is no showing to that effect. At
any rate, this issue is not how important because the same can be treshed out when the opportunity comes for its determination, nor is it
necessary for us to consider it in reaching a decision in the present case. Suffice it to state that for the present we are not expressing any
opinion on this matter which concerns the validity of the sale in question for the reason that this opinion will only be limited to a matter of
procedure relative to the step taken by the mortgagee in securing the possession of the property involved.

In the supposition that the sale of the property made by the sheriff has been made in accordance with law, and the question he is confronted
is how to deliver the possession of the property to the purchaser in case of refusal to surrender its possession on the part of the debtor or
mortgagor, the remedy of the purchaser according to the authorities, is to bring an ordinary action for recovery of possession (Continental Gin
Co. vs. Pannell, 160 P., 598; 61 Okl., 102; 14 C.J.S., pp. 1027, 1028). The purchaser cannot take possession of the property by force either
directly or through the sheriff. And the reason for this is "that the creditor's right of possession is conditioned upon the fact of default, and the
existence of this fact may naturally be the subject of controversy" (Bachrah Motor Co. vs. Summers, 42 Phil., 3, 6). The creditor cannot
merely file a petition for a writ of possession as was done by Trinidad Reyes in this case. Her remedy is to file an ordinary action for recovery
of possession in ordered that the debtor may be given an opportunity to be heard not only in regarding possession but also regarding the
obligation covered by the mortgage. The petition she has filed in the lower court, which was not even docketed, is therefore improper and
should be regarded.

Wherefore, the order subject of the present petition for certiorari is hereby set aside, with costs against respondent Trinidad Reyes.

Bengzon, Tuason, Padilla and Pablo, JJ., concur in the result.

Property 13
MANILA ELECTRIC COMPANY, petitioner, vs. CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS, respondents. AQUINO, J.:

This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila Electric Company on a lot in San
Pascual, Batangas which it leased in 1968 from Caltex (Phil.), Inc. The tanks are within the Caltex refinery compound. They have a total
capacity of 566,000 barrels. They are used for storing fuel oil for Meralco's power plants.

According to Meralco, the storage tanks are made of steel plates welded and assembled on the spot. Their bottoms rest on a foundation
consisting of compacted earth as the outermost layer, a sand pad as the intermediate layer and a two-inch thick bituminous asphalt stratum
as the top layer. The bottom of each tank is in contact with the asphalt layer,

The steel sides of the tank are directly supported underneath by a circular wall made of concrete, eighteen inches thick, to prevent the tank
from sliding. Hence, according to Meralco, the tank is not attached to its foundation. It is not anchored or welded to the concrete circular wall.
Its bottom plate is not attached to any part of the foundation by bolts, screws or similar devices. The tank merely sits on its foundation. Each
empty tank can be floated by flooding its dike-inclosed location with water four feet deep. (pp. 29-30, Rollo.)

On the other hand, according to the hearing commissioners of the Central Board of Assessment Appeals, the area where the two tanks are
located is enclosed with earthen dikes with electric steel poles on top thereof and is divided into two parts as the site of each tank. The
foundation of the tanks is elevated from the remaining area. On both sides of the earthen dikes are two separate concrete steps leading to
the foundation of each tank.

Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick. Pipelines were installed on the sides of each tank
and are connected to the pipelines of the Manila Enterprises Industrial Corporation whose buildings and pumping station are near Tank No.
2.

The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and the walls, dikes and steps, which are integral
parts of the tanks, are affixed to the land while the pipelines are attached to the tanks. (pp. 60-61, Rollo.) In 1970, the municipal treasurer of
Bauan, Batangas, on the basis of an assessment made by the provincial assessor, required Meralco to pay realty taxes on the two tanks. For
the five-year period from 1970 to 1974, the tax and penalties amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the
tax and penalties as a condition for entertaining its appeal from the adverse decision of the Batangas board of assessment appeals.

The Central Board of Assessment Appeals (composed of Acting Secretary of Finance Pedro M. Almanzor as chairman and Secretary of
Justice Vicente Abad Santos and Secretary of Local Government and Community Development Jose Roño as members) in its decision dated
November 5, 1976 ruled that the tanks together with the foundation, walls, dikes, steps, pipelines and other appurtenances constitute taxable
improvements.

Meralco received a copy of that decision on February 28, 1977. On the fifteenth day, it filed a motion for reconsideration which the Board
denied in its resolution of November 25, 1977, a copy of which was received by Meralco on February 28, 1978.

On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Board's decision and resolution. It contends that the Board
acted without jurisdiction and committed a grave error of law in holding that its storage tanks are taxable real property.

Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property enumerated in article 415 of the Civil Code
and, therefore, they cannot be categorized as realty by nature, by incorporation, by destination nor by analogy. Stress is laid on the fact that
the tanks are not attached to the land and that they were placed on leased land, not on the land owned by Meralco.

This is one of those highly controversial, borderline or penumbral cases on the classification of property where strong divergent opinions are
inevitable. The issue raised by Meralco has to be resolved in the light of the provisions of the Assessment Law, Commonwealth Act No. 470,
and the Real Property Tax Code, Presidential Decree No. 464 which took effect on June 1, 1974.

Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land, buildings, machinery, and other
improvements" not specifically exempted in section 3 thereof. This provision is reproduced with some modification in the Real Property Tax
Code which provides:

Sec. 38. Incidence of Real Property Tax. — They shall be levied, assessed and collected in all provinces, cities and municipalities an annual
ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not
hereinafter specifically exempted.
Property 14
The Code contains the following definition in its section 3:

k) Improvements — is a valuable addition made to property or an amelioration in its condition, amounting to more than mere repairs or
replacement of waste, costing labor or capital and intended to enhance its value, beauty or utility or to adapt it for new or further purposes.

We hold that while the two storage tanks are not embedded in the land, they may, nevertheless, be considered as improvements on the land,
enhancing its utility and rendering it useful to the oil industry. It is undeniable that the two tanks have been installed with some degree of
permanence as receptacles for the considerable quantities of oil needed by Meralco for its operations.

Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City, 15 Atl. 2nd 271.

For purposes of taxation, the term "real property" may include things which should generally be regarded as personal property(84 C.J.S. 171,
Note 8). It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be
considered personal property (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).

The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein Meralco's steel towers were held not to be
subject to realty tax, is not in point because in that case the steel towers were regarded as poles and under its franchise Meralco's poles are
exempt from taxation. Moreover, the steel towers were not attached to any land or building. They were removable from their metal frames.

Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116 Phil. 501, where the tools and equipment in the
repair, carpentry and blacksmith shops of a transportation company were held not subject to realty tax because they were personal property.

WHEREFORE, the petition is dismissed. The Board's questioned decision and resolution are affirmed. No costs.

SO ORDERED.

Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.

Concepcion, Jr., J., is on leave.

Justice Abad Santos, J., took no part.

Property 15
DAVAO SAW MILL CO., INC., plaintiff-appellant, vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-
appellees. Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees. MALCOLM, J.:

The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by counsel for the parties on
appeal, involves the determination of the nature of the properties described in the complaint. The trial judge found that those properties were
personal in nature, and as a consequence absolved the defendants from the complaint, with costs against the plaintiff.

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 the contract of lease between the sawmill company and the owner of the land there appeared the following provision:

That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected by the party of the second part
shall pass to the exclusive ownership of the party of the first part without any obligation on its part to pay any amount for said improvements
and buildings; also, in the event the party of the second part should leave or abandon the land leased before the time herein stipulated, the
improvements and buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon had expired:
Provided, however, That the machineries and accessories are not included in the improvements which will pass to the party of the first part
on the expiration or abandonment of the land leased.

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 mortgages.

Property 16
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of —

1. Land, buildings, roads and constructions of all kinds adhering to the soil;

xxx xxx xxx

5. Machinery, liquid containers, instruments or implements intended by the owner of any building or land for use in connection with any
industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade of industry.

Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt that the trial judge and
appellees are right in their appreciation of the legal doctrines flowing from the facts.

In the first place, it must again be pointed out that the appellant should have registered its protest before or at the time of the sale of this
property. It must further be pointed out that while not conclusive, the characterization of the property as chattels by the appellant is indicative
of intention and impresses upon the property the character determined by the parties. In this connection the decision of this court in the case
of Standard Oil Co. of New York vs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or not, furnishes the key to such a situation.

It is, however not necessary to spend overly must 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. In the opinion
written by Chief Justice White, whose knowledge of the Civil Law is well known, it was in part said:

To determine this question involves fixing the nature and character of the property from the point of view of the rights of Valdes and its nature
and character from the point of view of Nevers & Callaghan as a judgment creditor of the Altagracia Company and the rights derived by them
from the execution levied on the machinery placed by the corporation in the plant. Following the Code Napoleon, the Porto Rican Code treats
as immovable (real) property, not only land and buildings, but also attributes immovability in some cases to property of a movable nature, that
is, personal property, because of the destination to which it is applied. "Things," says section 334 of the Porto Rican Code, "may be
immovable either by their own nature or by their destination or the object to which they are applicable." Numerous illustrations are given in
the fifth subdivision of section 335, which is as follows: "Machinery, vessels, instruments or implements intended by the owner of the
tenements for the industrial or works that they may carry on in any building or upon any land and which tend directly to meet the needs of the
said industry or works." (See also Code Nap., articles 516, 518 et seq. to and inclusive of article 534, recapitulating the things which, though
in themselves movable, may be immobilized.) So far as the subject-matter with which we are dealing — machinery placed in the plant — it is
plain, both under the provisions of the Porto Rican Law and of the Code Napoleon, that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of the property or plant. Such result would not be accomplished, therefore, by the
placing of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry
et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et
seq.) The distinction rests, as pointed out by Demolombe, upon the fact that one only having a temporary right to the possession or
enjoyment of property is not presumed by the law to have applied movable property belonging to him so as to deprive him of it by causing it
by an act of immobilization to become the property of another. It follows that abstractly speaking the machinery put by the Altagracia
Company in the plant belonging to Sanchez did not lose its character of movable property and become immovable by destination. But in the
concrete immobilization took place because of the express provisions of the lease under which the Altagracia held, since the lease in
substance required the putting in of improved machinery, deprived the tenant of any right to charge against the lessor the cost such
machinery, and it was expressly stipulated that the machinery so put in should become a part of the plant belonging to the owner without
compensation to the lessee. Under such conditions the tenant in putting in the machinery was acting but as the agent of the owner in
compliance with the obligations resting upon him, and the immobilization of the machinery which resulted arose in legal effect from the act of
the owner in giving by contract a permanent destination to the machinery.

xxx xxx xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia Company, being, as regards
Nevers & Callaghan, movable property, it follows that they had the right to levy on it under the execution upon the judgment in their favor, and
the exercise of that right did not in a legal sense conflict with the claim of Valdes, since as to him the property was a part of the realty which,
as the result of his obligations under the lease, he could not, for the purpose of collecting his debt, proceed separately against. (Valdes vs.
Central Altagracia [192], 225 U.S., 58.)

Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance to be paid by the appellant.

Villa-Real, Imperial, Butte, and Goddard, JJ., concur.

Property 17
PASTOR D. AGO, petitioner, vs. THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court of First Instance of
Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK ENGINEERING, INC., respondents. Jose M. Luison for
petitioner. Norberto J. Quisumbing for respondent Grace Park Engineering, Inc. The Provincial Fiscal of Surigao for respondent
Sheriff of Surigao. LABRABOR, J.:

Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R entitled "Pastor D. Ago vs. The Provincial
Sheriff of Surigao, et al." which in part reads:
Property 18
In this case for certiorari and prohibition with preliminary injunction, it appears from the records that the respondent Judge of the Court of First
Instance of Agusan rendered judgment (Annex "A") in open court on January 28, 1959, basing said judgment on a compromise agreement
between the parties.

On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.

Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his counsel, did not receive a formal and valid notice of said
decision, which motion for reconsideration was denied by the court below in the order of November 14, 1959.

Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering the execution without valid and formal notice of
the decision.

A compromise agreement is binding between the parties and becomes the law between them. (Gonzales vs. Gonzales G.R. No. L-1254, May
21, 1948, 81 Phil. 38; Martin vs. Martin, G.R. No. L-12439, May 22, 1959) .

It is a general rule in this jurisdiction that a judgment based on a compromise agreement is not appealable and is immediately executory,
unless a motion is filed on the ground fraud, mistake or duress. (De los Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R. No. L-10089,
July 31, 1957)

Petitioner's claim that he was not notified or served notice of the decision is untenable. The judgment on the compromise agreement
rendered by the court below dated January 28, 1959, was given in open court. This alone is a substantial compliance as to notice. (De los
Reyes vs. Ugarte, supra)

IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction in ordering the execution of the judgment. The
petition for certiorari is hereby dismissed and the writ of preliminary injunction heretofore dissolved, with costs against the petitioner.

IT IS SO ORDERED.

The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought sawmill machineries and equipments from
respondent Grace Park Engineer domineering, Inc., executing a chattel mortgage over said machineries and equipments to secure the
payment of balance of the price remaining unpaid of P32,000.00, which petitioner agreed to pay on installment basis.

Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc. instituted extra-judicial foreclosure
proceedings of the mortgage. To enjoin said foreclosure, petitioner herein instituted Special Civil Case No. 53 in the Court of First Instance of
Agusan. The parties to the case arrived at a compromise agreement and submitted the same in court in writing, signed by Pastor D. Ago and
the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of the Court of First Instance of Agusan, then presiding, dictated a
decision in open court on January 28, 1959.

Petitioner continued to default in his payments as provided in the judgment by compromise, so Grace Park Engineering, Inc. filed with the
lower court a motion for execution, which was granted by the court on August 15, 1959. A writ of execution, dated September 23, 1959, later
followed.

The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the lower court, levied upon and ordered the
sale of the sawmill machineries and equipments in question. These machineries and equipments had been taken to and installed in a sawmill
building located in Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to whom, petitioner alleges, he had sold them on
February 16, 1959 (a date after the decision of the lower court but before levy by the Sheriff).

Having been advised by the sheriff that the public auction sale was set for December 4, 1959, petitioner, on December 1, 1959, filed the
petition for certiorari and prohibition with preliminary injunction with respondent Court of Appeals, alleging that a copy of the aforementioned
judgment given in open court on January 28, 1959 was served upon counsel for petitioner only on September 25, 1959 (writ of execution is
dated September 23, 1959); that the order and writ of execution having been issued by the lower court before counsel for petitioner received
a copy of the judgment, its resultant last order that the "sheriff may now proceed with the sale of the properties levied constituted a grave
abuse of discretion and was in excess of its jurisdiction; and that the respondent Provincial Sheriff of Surigao was acting illegally upon the
allegedly void writ of execution by levying the same upon the sawmill machineries and equipments which have become real properties of the
Golden Pacific sawmill, Inc., and is about to proceed in selling the same without prior publication of the notice of sale thereof in some
newspaper of general circulation as required by the Rules of Court.

The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the sheriff but it turned out that the latter had
already sold at public auction the machineries in question, on December 4, 1959, as scheduled. The respondent Grace Park Engineering,
Inc. was the only bidder for P15,000.00, although the certificate sale was not yet executed. The Court of Appeals constructed the sheriff to
suspend the issuance of a certificate of sale of the said sawmill machineries and equipment sold by him on December 4, 1959 until the final
decision of the case. On November 9, 1960 the Court of Appeals rendered the aforequoted decision.

Property 19
Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of judgment on compromise in open court
on January 1959 was a sufficient notice; and (2) in not resolving the other issues raised before it, namely, (a) the legality of the public auction
sale made by the sheriff, and (b) the nature of the machineries in question, whether they are movables or immovables.

The Court of Appeals held that as a judgment was entered by the court below in open court upon the submission of the compromise
agreement, the parties may be considered as having been notified of said judgment and this fact constitutes due notice of said judgment.
This raises the following legal question: Is the order dictated in open court of the judgment of the court, and is the fact the petitioner herein
was present in open court was the judgment was dictated, sufficient notice thereof? The provisions of the Rules of Court decree otherwise.
Section 1 of Rule 35 describes the manner in which judgment shall be rendered, thus:

SECTION 1. How judgment rendered. — All judgments determining the merits of cases shall be in writing personally and directly
prepared by the judge, and signed by him, stating clearly and distinctly the facts and the law on which it is based, filed with the clerk of the
court.

The court of first instance being a court of record, in order that a judgment may be considered as rendered, must not only be in writing,
signed by the judge, but it must also be filed with the clerk of court. The mere pronouncement of the judgment in open court with the
stenographer taking note thereof does not, therefore, constitute a rendition of the judgment. It is the filing of the signed decision with the clerk
of court that constitutes rendition. While it is to be presumed that the judgment that was dictated in open court will be the judgment of the
court, the court may still modify said order as the same is being put into writing. And even if the order or judgment has already been put into
writing and signed, while it has not yet been delivered to the clerk for filing it is still subject to amendment or change by the judge. It is only
when the judgment signed by the judge is actually filed with the clerk of court that it becomes a valid and binding judgment. Prior thereto, it
could still be subject to amendment and change and may not, therefore, constitute the real judgment of the court.

Regarding the notice of judgment, the mere fact that a party heard the judge dictating the judgment in open court, is not a valid notice of said
judgment. If rendition thereof is constituted by the filing with the clerk of court of a signed copy (of the judgment), it is evident that the fact that
a party or an attorney heard the order or judgment being dictated in court cannot be considered as notice of the real judgment. No judgment
can be notified to the parties unless it has previously been rendered. The notice, therefore, that a party has of a judgment that was being
dictated is of no effect because at the time no judgment has as yet been signed by the judge and filed with the clerk.

Besides, the Rules expressly require that final orders or judgments be served personally or by registered mail. Section 7 of Rule 27 provides
as follows:

SEC. 7. Service of final orders or judgments. — Final orders or judgments shall be served either personally or by registered mail.

In accordance with this provision, a party is not considered as having been served with the judgment merely because he heard the judgment
dictating the said judgment in open court; it is necessary that he be served with a copy of the signed judgment that has been filed with the
clerk in order that he may legally be considered as having been served with the judgment.

For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the judgment in open court, is not sufficient to constitute
the service of judgement as required by the above-quoted section 7 of Rule 2 the signed judgment not having been served upon the
petitioner, said judgment could not be effective upon him (petitioner) who had not received it. It follows as a consequence that the issuance of
the writ of execution null and void, having been issued before petitioner her was served, personally or by registered mail, a copy of the
decision.

The second question raised in this appeal, which has been passed upon by the Court of Appeals, concerns the validity of the proceedings of
the sheriff in selling the sawmill machineries and equipments at public auction with a notice of the sale having been previously published.

The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill machineries and equipments he assigned the same to
the Golden Pacific Sawmill, Inc. in payment of his subscription to the shares of stock of said corporation. Thereafter the sawmill machinery
and equipments were installed in a building and permanently attached to the ground. By reason of such installment in a building, the said
sawmill machineries and equipment became real estate properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus:

ART. 415. The following are immovable property:

xxx xxx xxx

(5) Machinery, receptacles, instruments or implements tended 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;

This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil. 683, held that the
installation of the machine and equipment in the central of the Mabalacat Sugar Co., Inc. for use in connection with the industry carried by the
company, converted the said machinery and equipment into real estate by reason of their purpose. Paraphrasing language of said decision
we hold that by the installment of the sawmill machineries in the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried
on in said building, the same became a necessary and permanent part of the building or real estate on which the same was constructed,

Property 20
converting the said machineries and equipments into real estate within the meaning of Article 415(5) above-quoted of the Civil Code of the
Philippines.

Considering that the machineries and equipments in question valued at more than P15,000.00 appear to have been sold without the
necessary advertisement of sale by publication in a newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, which is as follows:

SEC. 16. Notice of sale of property on execution. — Before the sale of property on execution, notice thereof must be given as
follows:

xxx xxx xxx

(c) In case of real property, by posting a similar notice particularly describing the property for twenty days in three public places in the
municipality or city where the property is situated, and also where the property is to be sold, and, if the assessed value of the property
exceeds four hundred pesos, by publishing a copy of the notice once a week, for the same period, in some newspaper published or having
general circulation in the province, if there be one. If there are newspapers published in the province in both the English and Spanish
languages, then a like publication for a like period shall be made in one newspaper published in the English language, and in one published
in the Spanish language.

the sale made by the sheriff must be declared null and void.

WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby set aside and We declare that the issuance of the writ of
execution in this case against the sawmill machineries and equipments purchased by petitioner Pastor D. Ago from the Grace Park
Engineering, Inc., as well as the sale of the same by the Sheriff of Surigao, are null and void. Costs shall be against the respondent Grace
Park Engineering, Inc.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Padilla, J., took no part.

Property 21
BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON CITY, petitioners, vs. MANILA
ELECTRIC COMPANY, respondent. Assistant City Attorney Jaime R. Agloro for petitioners. Ross, Selph and Carrascoso for
respondent. PAREDES, J.:

From the stipulation of facts and evidence adduced during the hearing, the following appear:

On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal Board of Manila to grant a franchise to
construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila and its suburbs to the
person or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions
of which were embodied in Ordinance No. 44 approved on March 24, 1903. Respondent Manila Electric Co. (Meralco for short), became the
transferee and owner of the franchise.

Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is transmitted to the City of Manila by
means of electric transmission wires, running from the province of Laguna to the said City. These electric transmission wires which carry high
voltage current, are fastened to insulators attached on steel towers constructed by respondent at intervals, from its hydro-electric plant in the
province of Laguna to the City of Manila. The respondent Meralco has constructed 40 of these steel towers within Quezon City, on land
belonging to it. A photograph of one of these steel towers is attached to the petition for review, marked Annex A. Three steel towers were
inspected by the lower court and parties and the following were the descriptions given there of by said court:

The first steel tower is located in South Tatalon, España Extension, Quezon City. The findings were as follows: the ground around one of the
four posts was excavated to a depth of about eight (8) feet, with an opening of about one (1) meter in diameter, decreased to about a quarter
of a meter as it we deeper until it reached the bottom of the post; at the bottom of the post were two parallel steel bars attached to the leg
means of bolts; the tower proper was attached to the leg three bolts; with two cross metals to prevent mobility; there was no concrete
foundation but there was adobe stone underneath; as the bottom of the excavation was covered with water about three inches high, it could
not be determined with certainty to whether said adobe stone was placed purposely or not, as the place abounds with this kind of stone; and
the tower carried five high voltage wires without cover or any insulating materials.

The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned by the petitioner approximate more than one
kilometer from the first tower. As in the first tower, the ground around one of the four legs was excavate from seven to eight (8) feet deep and
one and a half (1-½) meters wide. There being very little water at the bottom, it was seen that there was no concrete foundation, but there
soft adobe beneath. The leg was likewise provided with two parallel steel bars bolted to a square metal frame also bolted to each corner. Like
the first one, the second tower is made up of metal rods joined together by means of bolts, so that by unscrewing the bolts, the tower could
be dismantled and reassembled.

Property 22
The third tower examined is located along Kamias Road, Quezon City. As in the first two towers given above, the ground around the two legs
of the third tower was excavated to a depth about two or three inches beyond the outside level of the steel bar foundation. It was found that
there was no concrete foundation. Like the two previous ones, the bottom arrangement of the legs thereof were found to be resting on soft
adobe, which, probably due to high humidity, looks like mud or clay. It was also found that the square metal frame supporting the legs were
not attached to any material or foundation.

On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax
declaration Nos. 31992 and 15549. After denying respondent's petition to cancel these declarations, an appeal was taken by respondent to
the Board of Assessment Appeals of Quezon City, which required respondent to pay the amount of P11,651.86 as real property tax on the
said steel towers for the years 1952 to 1956. Respondent paid the amount under protest, and filed a petition for review in the Court of Tax
Appeals (CTA for short) which rendered a decision on December 29, 1958, ordering the cancellation of the said tax declarations and the
petitioner City Treasurer of Quezon City to refund to the respondent the sum of P11,651.86. The motion for reconsideration having been
denied, on April 22, 1959, the instant petition for review was filed.

In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the term "poles" which are declared exempt from
taxes under part II paragraph 9 of respondent's franchise; (2) the steel towers are personal properties and are not subject to real property tax;
and (3) the City Treasurer of Quezon City is held responsible for the refund of the amount paid. These are assigned as errors by the
petitioner in the brief.

The tax exemption privilege of the petitioner is quoted hereunder:

PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers, and
insulators), machinery and personal property as other persons are or may be hereafter required by law to pay ... Said percentage shall be
due and payable at the time stated in paragraph nineteen of Part One hereof, ... and shall be in lieu of all taxes and assessments of
whatsoever nature and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires, transformers, and
insulators of the grantee from which taxes and assessments the grantee is hereby expressly exempted. (Par. 9, Part Two, Act No. 484
Respondent's Franchise; emphasis supplied.)

The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as typically the stem of a small tree
stripped of its branches; also by extension, a similar typically cylindrical piece or object of metal or the like". The term also refers to "an
upright standard to the top of which something is affixed or by which something is supported; as a dovecote set on a pole; telegraph poles; a
tent pole; sometimes, specifically a vessel's master (Webster's New International Dictionary 2nd Ed., p. 1907.) Along the streets, in the City
of Manila, may be seen cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars joined
together by an interlacing metal rod. They are called "poles" notwithstanding the fact that they are no made of wood. It must be noted from
paragraph 9, above quoted, that the concept of the "poles" for which exemption is granted, is not determined by their place or location, nor by
the character of the electric current it carries, nor the material or form of which it is made, but the use to which they are dedicated. In
accordance with the definitions, pole is not restricted to a long cylindrical piece of wood or metal, but includes "upright standards to the top of
which something is affixed or by which something is supported. As heretofore described, respondent's steel supports consists of a framework
of four steel bars or strips which are bound by steel cross-arms atop of which are cross-arms supporting five high voltage transmission wires
(See Annex A) and their sole function is to support or carry such wires.

The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty. Several courts of last resort
in the United States have called these steel supports "steel towers", and they denominated these supports or towers, as electric poles. In
their decisions the words "towers" and "poles" were used interchangeably, and it is well understood in that jurisdiction that a transmission
tower or pole means the same thing.

In a proceeding to condemn land for the use of electric power wires, in which the law provided that wires shall be constructed upon suitable
poles, this term was construed to mean either wood or metal poles and in view of the land being subject to overflow, and the necessary
carrying of numerous wires and the distance between poles, the statute was interpreted to include towers or poles. (Stemmons and Dallas
Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and Phrases, p. 365.)

The term "poles" was also used to denominate the steel supports or towers used by an association used to convey its electric power
furnished to subscribers and members, constructed for the purpose of fastening high voltage and dangerous electric wires alongside public
highways. The steel supports or towers were made of iron or other metals consisting of two pieces running from the ground up some thirty
feet high, being wider at the bottom than at the top, the said two metal pieces being connected with criss-cross iron running from the bottom
to the top, constructed like ladders and loaded with high voltage electricity. In form and structure, they are like the steel towers in question.
(Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)

The term "poles" was used to denote the steel towers of an electric company engaged in the generation of hydro-electric power generated
from its plant to the Tower of Oxford and City of Waterbury. These steel towers are about 15 feet square at the base and extended to a
height of about 35 feet to a point, and are embedded in the cement foundations sunk in the earth, the top of which extends above the surface
of the soil in the tower of Oxford, and to the towers are attached insulators, arms, and other equipment capable of carrying wires for the
transmission of electric power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).

Property 23
In a case, the defendant admitted that the structure on which a certain person met his death was built for the purpose of supporting a
transmission wire used for carrying high-tension electric power, but claimed that the steel towers on which it is carried were so large that their
wire took their structure out of the definition of a pole line. It was held that in defining the word pole, one should not be governed by the wire
or material of the support used, but was considering the danger from any elevated wire carrying electric current, and that regardless of the
size or material wire of its individual members, any continuous series of structures intended and used solely or primarily for the purpose of
supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. v. Bryan 252 P. 1016).

It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the petitioner's franchise, should not be given a
restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles as contemplated thereon,
should be understood and taken as a part of the electric power system of the respondent Meralco, for the conveyance of electric current from
the source thereof to its consumers. If the respondent would be required to employ "wooden poles", or "rounded poles" as it used to do fifty
years back, then one should admit that the Philippines is one century behind the age of space. It should also be conceded by now that steel
towers, like the ones in question, for obvious reasons, can better effectuate the purpose for which the respondent's franchise was granted.

Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles, the logical
question posited is whether they constitute real properties, so that they can be subject to a real property tax. The tax law does not provide for
a definition of real property; but Article 415 of the Civil Code does, by stating the following are immovable property:

(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;

xxx xxx xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material
or deterioration of the object;

xxx xxx xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried
in a building or on a piece of land, and which tends directly to meet the needs of the said industry or works;

xxx xxx xxx

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do not constitute buildings
or constructions adhered to the soil. They are not construction analogous to buildings nor adhering to the soil. As per description, given by
the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be
dismantled and moved from place to place. They can not be included under paragraph 3, as they are not attached to an immovable in a fixed
manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each
of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by
unscrewing the bolts and reassembled by screwing the same. These steel towers or supports do not also fall under paragraph 5, for they are
not machineries, receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land.
Petitioner is not engaged in an industry or works in the land in which the steel supports or towers are constructed.

It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the sum of P11,651.86, despite the fact that
Quezon City is not a party to the case. It is argued that as the City Treasurer is not the real party in interest, but Quezon City, which was not
a party to the suit, notwithstanding its capacity to sue and be sued, he should not be ordered to effect the refund. This question has not been
raised in the court below, and, therefore, it cannot be properly raised for the first time on appeal. The herein petitioner is indulging in legal
technicalities and niceties which do not help him any; for factually, it was he (City Treasurer) whom had insisted that respondent herein pay
the real estate taxes, which respondent paid under protest. Having acted in his official capacity as City Treasurer of Quezon City, he would
surely know what to do, under the circumstances.

IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and Regala, JJ., concur.
Makalintal, J., concurs in the result.
Dizon, J., took no part.

MAKATI LEASING and FINANCE CORPORATION, petitioner, vs. WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF
APPEALS, respondents. Loreto C. Baduan for petitioner. Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner. Jose
V. Mancella for respondent. DE CASTRO, J.:

Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate Court) promulgated on August 27, 1981 in
CA-G.R. No. SP-12731, setting aside certain Orders later specified herein, of Judge Ricardo J. Francisco, as Presiding Judge of the Court of
First instance of Rizal Branch VI, issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981 of the said appellate
court, denying petitioner's motion for reconsideration.

Property 24
It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and Finance Corporation, the private
respondent Wearever Textile Mills, Inc., discounted and assigned several receivables with the former under a Receivable Purchase
Agreement. To secure the collection of the receivables assigned, private respondent executed a Chattel Mortgage over certain raw materials
inventory as well as a machinery described as an Artos Aero Dryer Stentering Range.

Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the properties mortgage to it. However, the Deputy
Sheriff assigned to implement the foreclosure failed to gain entry into private respondent's premises and was not able to effect the seizure of
the aforedescribed machinery. Petitioner thereafter filed a complaint for judicial foreclosure with the Court of First Instance of Rizal, Branch
VI, docketed as Civil Case No. 36040, the case before the lower court.

Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement of which was however subsequently
restrained upon private respondent's filing of a motion for reconsideration. After several incidents, the lower court finally issued on February
11, 1981, an order lifting the restraining order for the enforcement of the writ of seizure and an order to break open the premises of private
respondent to enforce said writ. The lower court reaffirmed its stand upon private respondent's filing of a further motion for reconsideration.

On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private respondent and removed the main drive motor of
the subject machinery.

The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private respondent, set aside the Orders of the
lower court and ordered the return of the drive motor seized by the sheriff pursuant to said Orders, after ruling that the machinery in suit
cannot be the subject of replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the new Civil Code,
the same being attached to the ground by means of bolts and the only way to remove it from respondent's plant would be to drill out or
destroy the concrete floor, the reason why all that the sheriff could do to enfore the writ was to take the main drive motor of said machinery.
The appellate court rejected petitioner's argument that private respondent is estopped from claiming that the machine is real property by
constituting a chattel mortgage thereon.

A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has brought the case to this Court for
review by writ of certiorari. It is contended by private respondent, however, that the instant petition was rendered moot and academic by
petitioner's act of returning the subject motor drive of respondent's machinery after the Court of Appeals' decision was promulgated.

The contention of private respondent is without merit. When petitioner returned the subject motor drive, it made itself unequivocably clear that
said action was without prejudice to a motion for reconsideration of the Court of Appeals decision, as shown by the receipt duly signed by
respondent's representative. 1 Considering that petitioner has reserved its right to question the propriety of the Court of Appeals' decision,
the contention of private respondent that this petition has been mooted by such return may not be sustained.

The next and the more crucial question to be resolved in this Petition is whether the machinery in suit is real or personal property from the
point of view of the parties, with petitioner arguing that it is a personality, while the respondent claiming the contrary, and was sustained by
the appellate court, which accordingly held that the chattel mortgage constituted thereon is null and void, as contended by said respondent.

A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143 where this Court, speaking through Justice J.B.L. Reyes,
ruled:

Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring a property by
way of chattel mortgage defendants-appellants could only have meant to convey the house as chattel, or at least, intended to treat the same
as such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise. Moreover, the subject house stood on
a rented lot to which defendants-appellants merely had a temporary right as lessee, and although this can not in itself alone determine the
status of the property, it does so when combined with other factors to sustain the interpretation that the parties, particularly the mortgagors,
intended to treat the house as personality. Finally, unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee vs. F.L.
Strong Machinery & Williamson, wherein third persons assailed the validity of the chattel mortgage, it is the defendants-appellants
themselves, as debtors-mortgagors, who are attacking the validity of the chattel mortgage in this case. The doctrine of estoppel therefore
applies to the herein defendants-appellants, having treated the subject house as personality.

Examining the records of the instant case, We find no logical justification to exclude the rule out, as the appellate court did, the present case
from the application of the abovequoted pronouncement. If a house of strong materials, like what was involved in the above Tumalad case,
may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree
and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature and
becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is
estopped from denying the existence of the chattel mortgage.

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

It must be pointed out that the characterization of the subject machinery as chattel by the private respondent is indicative of intention and
impresses upon the property the character determined by the parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it
Property 25
is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property, as long
as no interest of third parties would be prejudiced thereby.

Private respondent contends that estoppel cannot apply against it because it had never represented nor agreed that the machinery in suit be
considered as personal property but was merely required and dictated on by herein petitioner to sign a printed form of chattel mortgage which
was in a blank form at the time of signing. This contention lacks persuasiveness. As aptly pointed out by petitioner and not denied by the
respondent, the status of the subject machinery as movable or immovable was never placed in issue before the lower court and the Court of
Appeals except in a supplemental memorandum in support of the petition filed in the appellate court. Moreover, even granting that the charge
is true, such fact alone does not render a contract void ab initio, but can only be a ground for rendering said contract voidable, or annullable
pursuant to Article 1390 of the new Civil Code, by a proper action in court. There is nothing on record to show that the mortgage has been
annulled. Neither is it disclosed that steps were taken to nullify the same. On the other hand, as pointed out by petitioner and again not
refuted by respondent, the latter has indubitably benefited from said contract. Equity dictates that one should not benefit at the expense of
another. Private respondent could not now therefore, be allowed to impugn the efficacy of the chattel mortgage after it has benefited
therefrom,

From what has been said above, the error of the appellate court in ruling that the questioned machinery is real, not personal property,
becomes very apparent. Moreover, the case of Machinery and Engineering Supplies, Inc. v. CA, 96 Phil. 70, heavily relied upon by said court
is not applicable to the case at bar, the nature of the machinery and equipment involved therein as real properties never having been
disputed nor in issue, and they were not the subject of a Chattel Mortgage. Undoubtedly, the Tumalad case bears more nearly perfect parity
with the instant case to be the more controlling jurisprudential authority.

WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby reversed and set aside, and the Orders of the
lower court are hereby reinstated, with costs against the private respondent.

SO ORDERED.

Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero and Escolin JJ., concur.

Abad Santos, J., concurs in the result.

Property 26
[G.R. No. 137705. August 22, 2000]
SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING AND FINANCE, INC., respondent.
D E C I S I O N PANGANIBAN, J.:

After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable, a party is estopped from
subsequently claiming otherwise. Hence, such property is a proper subject of a writ of replevin obtained by the other contracting party.

The Case

Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision[1] of the Court of Appeals (CA)[2] in CA-GR SP No.
47332 and its February 26, 1999 Resolution[3] denying reconsideration. The decretal portion of the CA Decision reads as follows:

WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated March 31, 1998 in Civil Case No. Q-
98-33500 are hereby AFFIRMED. The writ of preliminary injunction issued on June 15, 1998 is hereby LIFTED.[4]

In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon City (Branch 218)[6] issued a Writ of Seizure.[7] The March 18,
1998 Resolution[8] denied petitioners Motion for Special Protective Order, praying that the deputy sheriff be enjoined from seizing
immobilized or other real properties in (petitioners) factory in Cainta, Rizal and to return to their original place whatever immobilized
machineries or equipments he may have removed.[9]

The Facts

The undisputed facts are summarized by the Court of Appeals as follows:[10]

On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for short) filed with the RTC-QC a complaint for [a] sum of
money (Annex E), with an application for a writ of replevin docketed as Civil Case No. Q-98-33500.

On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin (Annex B) directing its sheriff to
seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses.

On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory, seized one machinery with [the] word that he
[would] return for the other machineries.

On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking the power of the court to control the conduct of
its officers and amend and control its processes, praying for a directive for the sheriff to defer enforcement of the writ of replevin.

This motion was opposed by PCI Leasing (Annex F), on the ground that the properties [were] still personal and therefore still subject to
seizure and a writ of replevin.

In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as defined in Article 415 of the Civil Code, the
parties agreement to the contrary notwithstanding. They argued that to give effect to the agreement would be prejudicial to innocent third
parties. They further stated that PCI Leasing [was] estopped from treating these machineries as personal because the contracts in which the
alleged agreement [were] embodied [were] totally sham and farcical.

On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the remaining properties. He was able to take
two more, but was prevented by the workers from taking the rest.

On April 7, 1998, they went to [the CA] via an original action for certiorari.
Property 27
Ruling of the Court of Appeals

Citing the Agreement of the parties, the appellate court held that the subject machines were personal property, and that they had only been
leased, not owned, by petitioners. It also ruled that the words of the contract are clear and leave no doubt upon the true intention of the
contracting parties. Observing that Petitioner Goquiolay was an experienced businessman who was not unfamiliar with the ways of the trade,
it ruled that he should have realized the import of the document he signed. The CA further held:

Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the case below, since the merits of the whole
matter are laid down before us via a petition whose sole purpose is to inquire upon the existence of a grave abuse of discretion on the part of
the [RTC] in issuing the assailed Order and Resolution. The issues raised herein are proper subjects of a full-blown trial, necessitating
presentation of evidence by both parties. The contract is being enforced by one, and [its] validity is attacked by the other a matter x x x which
respondent court is in the best position to determine.

Hence, this Petition.[11]

The Issues

In their Memorandum, petitioners submit the following issues for our consideration:

A. Whether or not the machineries purchased and imported by SERGS became real property by virtue of immobilization.

B. Whether or not the contract between the parties is a loan or a lease.[12]

In the main, the Court will resolve whether the said machines are personal, not immovable, property which may be a proper subject of a writ
of replevin. As a preliminary matter, the Court will also address briefly the procedural points raised by respondent.

The Courts Ruling

The Petition is not meritorious.

Preliminary Matter:Procedural Questions

Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule 45 or Rule 65 of the Rules of Court. It
further alleges that the Petition erroneously impleaded Judge Hilario Laqui as respondent.

There is no question that the present recourse is under Rule 45. This conclusion finds support in the very title of the Petition, which is Petition
for Review on Certiorari.[13]

While Judge Laqui should not have been impleaded as a respondent,[14] substantial justice requires that such lapse by itself should not
warrant the dismissal of the present Petition. In this light, the Court deems it proper to remove, motu proprio, the name of Judge Laqui from
the caption of the present case.

Main Issue: Nature of the Subject Machinery

Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC, because they
were in fact real property. Serious policy considerations, they argue, militate against a contrary characterization.

Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only.[15] Section 3 thereof reads:

SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the corresponding writ of
replevin describing the personal property alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his
custody.

On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:

ART. 415. The following are immovable property:

x x x....................................x x x....................................x x x

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried
on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;

x x x....................................x x x....................................x x x

Property 28
In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own
land. Indisputably, they were essential and principal elements of their chocolate-making industry. Hence, although each of them was movable
or personal property on its own, all of them have become immobilized by destination because they are essential and principal elements in the
industry.[16] In that sense, petitioners are correct in arguing that the said machines are real, not personal, property pursuant to Article 415 (5)
of the Civil Code.[17]

Be that as it may, we disagree with the submission of the petitioners that the said machines are not proper subjects of the Writ of Seizure.

The Court has held that contracting parties may validly stipulate that a real property be considered as personal.[18] After agreeing to such
stipulation, they are consequently estopped from claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily
precluded from denying the truth of any material fact found therein.

Hence, in Tumalad v. Vicencio,[19] the Court upheld the intention of the parties to treat a house as a personal property because it had been
made the subject of a chattel mortgage. The Court ruled:

x x x. Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring a
property by way of chattel mortgage defendants-appellants could only have meant to convey the house as chattel, or at least, intended to
treat the same as such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise.

Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills[20] also held that the machinery used in a factory
and essential to the industry, as in the present case, was a proper subject of a writ of replevin because it was treated as personal property in
a contract. Pertinent portions of the Courts ruling are reproduced hereunder:

x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for purposes
of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby,
there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may
not be likewise treated as such. This is really because one who has so agreed is estopped from denying the existence of the chattel
mortgage.

In the present case, the Lease Agreement clearly provides that the machines in question are to be considered as personal property.
Specifically, Section 12.1 of the Agreement reads as follows:[21]

12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part thereof
may now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon, real property or any
building thereon, or attached in any manner to what is permanent.

Clearly then, petitioners are estopped from denying the characterization of the subject machines as personal property. Under the
circumstances, they are proper subjects of the Writ of Seizure.

It should be stressed, however, that our holding -- that the machines should be deemed personal property pursuant to the Lease Agreement
is good only insofar as the contracting parties are concerned.[22] Hence, while the parties are bound by the Agreement, third persons acting
in good faith are not affected by its stipulation characterizing the subject machinery as personal.[23] In any event, there is no showing that
any specific third party would be adversely affected.

Validity of the Lease Agreement

In their Memorandum, petitioners contend that the Agreement is a loan and not a lease.[24] Submitting documents supposedly showing that
they own the subject machines, petitioners also argue in their Petition that the Agreement suffers from intrinsic ambiguity which places in
serious doubt the intention of the parties and the validity of the lease agreement itself.[25] In their Reply to respondents Comment, they
further allege that the Agreement is invalid.[26]

These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the civil action pending before the RTC. A
resolution of these questions, therefore, is effectively a resolution of the merits of the case. Hence, they should be threshed out in the trial,
not in the proceedings involving the issuance of the Writ of Seizure.

Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the policy under Rule 60 was that questions involving title to the subject
property questions which petitioners are now raising -- should be determined in the trial. In that case, the Court noted that the remedy of
defendants under Rule 60 was either to post a counter-bond or to question the sufficiency of the plaintiffs bond. They were not allowed,
however, to invoke the title to the subject property. The Court ruled:

In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or delivery) on ground of
insufficiency of the complaint or of the grounds relied upon therefor, as in proceedings on preliminary attachment or injunction, and thereby
put at issue the matter of the title or right of possession over the specific chattel being replevied, the policy apparently being that said matter
should be ventilated and determined only at the trial on the merits.[28]

Property 29
Besides, these questions require a determination of facts and a presentation of evidence, both of which have no place in a petition for
certiorari in the CA under Rule 65 or in a petition for review in this Court under Rule 45.[29]

Reliance on the Lease Agreement

It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on record shows that it has been nullified or
annulled. In fact, petitioners assailed it first only in the RTC proceedings, which had ironically been instituted by respondent. Accordingly, it
must be presumed valid and binding as the law between the parties.

Makati Leasing and Finance Corporation[30] is also instructive on this point. In that case, the Deed of Chattel Mortgage, which characterized
the subject machinery as personal property, was also assailed because respondent had allegedly been required to sign a printed form of
chattel mortgage which was in a blank form at the time of signing. The Court rejected the argument and relied on the Deed, ruling as follows:

x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract void ab initio, but can only be a ground for
rendering said contract voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a proper action in court. There is nothing on
record to show that the mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the same. x x x

Alleged Injustice Committed on the Part of Petitioners

Petitioners contend that if the Court allows these machineries to be seized, then its workers would be out of work and thrown into the
streets.[31] They also allege that the seizure would nullify all efforts to rehabilitate the corporation.

Petitioners arguments do not preclude the implementation of the Writ. As earlier discussed, law and jurisprudence support its propriety.
Verily, the above-mentioned consequences, if they come true, should not be blamed on this Court, but on the petitioners for failing to avail
themselves of the remedy under Section 5 of Rule 60, which allows the filing of a counter-bond. The provision states:

SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond, or of the surety or sureties thereon, he
cannot immediately require the return of the property, but if he does not so object, he may, at any time before the delivery of the property to
the applicant, require the return thereof, by filing with the court where the action is pending a bond executed to the applicant, in double the
value of the property as stated in the applicants affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the
payment of such sum to him as may be recovered against the adverse party, and by serving a copy bond on the applicant.

WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against petitioners.

SO ORDERED.

G.R. No. L-30173 September 30, 1971

GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees, vs.
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants. Castillo & Suck for plaintiffs-appellees. Jose Q. Calingo for
defendants-appellants. REYES, J.B.L., J.:

Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R) for the reason that only questions of law are involved.

This case was originally commenced by defendants-appellants in the municipal court of Manila in Civil Case No. 43073, for ejectment.
Having lost therein, defendants-appellants appealed to the court a quo (Civil Case No. 30993) which also rendered a decision against them,
the dispositive portion of which follows:

Property 30
WHEREFORE, the court hereby renders judgment in favor of the plaintiffs and against the defendants, ordering the latter to pay jointly and
severally the former a monthly rent of P200.00 on the house, subject-matter of this action, from March 27, 1956, to January 14, 1967, with
interest at the legal rate from April 18, 1956, the filing of the complaint, until fully paid, plus attorney's fees in the sum of P300.00 and to pay
the costs.

It appears on the records that on 1 September 1955 defendants-appellants executed a chattel mortgage in favor of plaintiffs-appellees over
their house of strong materials located at No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over Lot Nos. 6-B and 7-B, Block No. 2554,
which were being rented from Madrigal & Company, Inc. The mortgage was registered in the Registry of Deeds of Manila on 2 September
1955. The herein mortgage was executed to guarantee a loan of P4,800.00 received from plaintiffs-appellees, payable within one year at
12% per annum. The mode of payment was P150.00 monthly, starting September, 1955, up to July 1956, and the lump sum of P3,150 was
payable on or before August, 1956. It was also agreed that default in the payment of any of the amortizations, would cause the remaining
unpaid balance to becomeimmediately due and Payable and —

the Chattel Mortgage will be enforceable in accordance with the provisions of Special Act No. 3135, and for this purpose, the Sheriff of the
City of Manila or any of his deputies is hereby empowered and authorized to sell all the Mortgagor's property after the necessary publication
in order to settle the financial debts of P4,800.00, plus 12% yearly interest, and attorney's fees... 2

When defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed, and on 27 March 1956, the house was sold at
public auction pursuant to the said contract. As highest bidder, plaintiffs-appellees were issued the corresponding certificate of sale.3
Thereafter, on 18 April 1956, plaintiffs-appellant commenced Civil Case No. 43073 in the municipal court of Manila, praying, among other
things, that the house be vacated and its possession surrendered to them, and for defendants-appellants to pay rent of P200.00 monthly from
27 March 1956 up to the time the possession is surrendered.4 On 21 September 1956, the municipal court rendered its decision —

... ordering the defendants to vacate the premises described in the complaint; ordering further to pay monthly the amount of P200.00 from
March 27, 1956, until such (time that) the premises is (sic) completely vacated; plus attorney's fees of P100.00 and the costs of the suit.5

Defendants-appellants, in their answers in both the municipal court and court a quo impugned the legality of the chattel mortgage, claiming
that they are still the owners of the house; but they waived the right to introduce evidence, oral or documentary. Instead, they relied on their
memoranda in support of their motion to dismiss, predicated mainly on the grounds that: (a) the municipal court did not have jurisdiction to try
and decide the case because (1) the issue involved, is ownership, and (2) there was no allegation of prior possession; and (b) failure to prove
prior demand pursuant to Section 2, Rule 72, of the Rules of Court.6

During the pendency of the appeal to the Court of First Instance, defendants-appellants failed to deposit the rent for November, 1956 within
the first 10 days of December, 1956 as ordered in the decision of the municipal court. As a result, the court granted plaintiffs-appellees'
motion for execution, and it was actually issued on 24 January 1957. However, the judgment regarding the surrender of possession to
plaintiffs-appellees could not be executed because the subject house had been already demolished on 14 January 1957 pursuant to the
order of the court in a separate civil case (No. 25816) for ejectment against the present defendants for non-payment of rentals on the land on
which the house was constructed.

The motion of plaintiffs for dismissal of the appeal, execution of the supersedeas bond and withdrawal of deposited rentals was denied for the
reason that the liability therefor was disclaimed and was still being litigated, and under Section 8, Rule 72, rentals deposited had to be held
until final disposition of the appeal.7

On 7 October 1957, the appellate court of First Instance rendered its decision, the dispositive portion of which is quoted earlier. The said
decision was appealed by defendants to the Court of Appeals which, in turn, certified the appeal to this Court. Plaintiffs-appellees failed to file
a brief and this appeal was submitted for decision without it.

Defendants-appellants submitted numerous assignments of error which can be condensed into two questions, namely: .

(a) Whether the municipal court from which the case originated had jurisdiction to adjudicate the same;

(b) Whether the defendants are, under the law, legally bound to pay rentals to the plaintiffs during the period of one (1) year provided by
law for the redemption of the extrajudicially foreclosed house.

We will consider these questions seriatim.

(a) Defendants-appellants mortgagors question the jurisdiction of the municipal court from which the case originated, and consequently, the
appellate jurisdiction of the Court of First Instance a quo, on the theory that the chattel mortgage is void ab initio; whence it would follow that
the extrajudicial foreclosure, and necessarily the consequent auction sale, are also void. Thus, the ownership of the house still remained with
defendants-appellants who are entitled to possession and not plaintiffs-appellees. Therefore, it is argued by defendants-appellants, the issue
of ownership will have to be adjudicated first in order to determine possession. lt is contended further that ownership being in issue, it is the
Court of First Instance which has jurisdiction and not the municipal court.

Property 31
Defendants-appellants predicate their theory of nullity of the chattel mortgage on two grounds, which are: (a) that, their signatures on the
chattel mortgage were obtained through fraud, deceit, or trickery; and (b) that the subject matter of the mortgage is a house of strong
materials, and, being an immovable, it can only be the subject of a real estate mortgage and not a chattel mortgage.

On the charge of fraud, deceit or trickery, the Court of First Instance found defendants-appellants' contentions as not supported by evidence
and accordingly dismissed the charge,8 confirming the earlier finding of the municipal court that "the defense of ownership as well as the
allegations of fraud and deceit ... are mere allegations."9

It has been held in Supia and Batiaco vs. Quintero and Ayala10 that "the answer is a mere statement of the facts which the party filing it
expects to prove, but it is not evidence;11 and further, that when the question to be determined is one of title, the Court is given the authority
to proceed with the hearing of the cause until this fact is clearly established. In the case of Sy vs. Dalman,12 wherein the defendant was also
a successful bidder in an auction sale, it was likewise held by this Court that in detainer cases the aim of ownership "is a matter of defense
and raises an issue of fact which should be determined from the evidence at the trial." What determines jurisdiction are the allegations or
averments in the complaint and the relief asked for. 13

Moreover, even granting that the charge is true, fraud or deceit does not render a contract void ab initio, and can only be a ground for
rendering the contract voidable or annullable pursuant to Article 1390 of the New Civil Code, by a proper action in court. 14 There is nothing
on record to show that the mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the same. Hence, defendants-
appellants' claim of ownership on the basis of a voidable contract which has not been voided fails.

It is claimed in the alternative by defendants-appellants that even if there was no fraud, deceit or trickery, the chattel mortgage was still null
and void ab initio because only personal properties can be subject of a chattel mortgage. The rule about the status of buildings as immovable
property is stated in Lopez vs. Orosa, Jr. and Plaza Theatre Inc.,15 cited in Associated Insurance Surety Co., Inc. vs. Iya, et al. 16 to the
effect that —

... it is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of what may constitute real properties
(art. 415, New Civil Code) could only mean one thing — that a building is by itself an immovable property irrespective of whether or not said
structure and the land on which it is adhered to belong to the same owner.

Certain deviations, however, have been allowed for various reasons. In the case of Manarang and Manarang vs. Ofilada,17 this Court stated
that "it is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property",
citing Standard Oil Company of New York vs. Jaramillo. 18 In the latter case, the mortgagor conveyed and transferred to the mortgagee by
way of mortgage "the following described personal property." 19 The "personal property" consisted of leasehold rights and a building. Again,
in the case of Luna vs. Encarnacion,20 the subject of the contract designated as Chattel Mortgage was a house of mixed materials, and this
Court hold therein that it was a valid Chattel mortgage because it was so expressly designated and specifically that the property given as
security "is a house of mixed materials, which by its very nature is considered personal property." In the later case of Navarro vs. Pineda,21
this Court stated that —

The view that parties to a deed of chattel mortgage may agree to consider a house as personal property for the purposes of said contract, "is
good only insofar as the contracting parties are concerned. It is based, partly, upon the principle of estoppel" (Evangelista vs. Alto Surety, No.
L-11139, 23 April 1958). In a case, a mortgaged house built on a rented land was held to be a personal property, not only because the deed
of mortgage considered it as such, but also because it did not form part of the land (Evangelists vs. Abad, [CA]; 36 O.G. 2913), for it is now
settled that an object placed on land by one who had only a temporary right to the same, such as the lessee or usufructuary, does not
become immobilized by attachment (Valdez vs. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc. vs. Castillo, et al., 61 Phil.
709). Hence, if a house belonging to a person stands on a rented land belonging to another person, it may be mortgaged as a personal
property as so stipulated in the document of mortgage. (Evangelista vs. Abad, Supra.) It should be noted, however that the principle is
predicated on statements by the owner declaring his house to be a chattel, a conduct that may conceivably estop him from subsequently
claiming otherwise. (Ladera vs. C.N. Hodges, [CA] 48 O.G. 5374): 22

In the contract now before Us, the house on rented land is not only expressly designated as Chattel Mortgage; it specifically provides that
"the mortgagor ... voluntarily CEDES, SELLS and TRANSFERS by way of Chattel Mortgage23 the property together with its leasehold rights
over the lot on which it is constructed and participation ..." 24 Although there is no specific statement referring to the subject house as
personal property, yet by ceding, selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant
to convey the house as chattel, or at least, intended to treat the same as such, so that they should not now be allowed to make an
inconsistent stand by claiming otherwise. Moreover, the subject house stood on a rented lot to which defendats-appellants merely had a
temporary right as lessee, and although this can not in itself alone determine the status of the property, it does so when combined with other
factors to sustain the interpretation that the parties, particularly the mortgagors, intended to treat the house as personalty. Finally unlike in the
Iya cases, Lopez vs. Orosa, Jr. and Plaza Theatre, Inc. 25 and Leung Yee vs. F. L. Strong Machinery and Williamson, 26 wherein third
persons assailed the validity of the chattel mortgage,27 it is the defendants-appellants themselves, as debtors-mortgagors, who are attacking
the validity of the chattel mortgage in this case. The doctrine of estoppel therefore applies to the herein defendants-appellants, having treated
the subject house as personalty.

(b) Turning to the question of possession and rentals of the premises in question. The Court of First Instance noted in its decision that
nearly a year after the foreclosure sale the mortgaged house had been demolished on 14 and 15 January 1957 by virtue of a decision
obtained by the lessor of the land on which the house stood. For this reason, the said court limited itself to sentencing the erstwhile
Property 32
mortgagors to pay plaintiffs a monthly rent of P200.00 from 27 March 1956 (when the chattel mortgage was foreclosed and the house sold)
until 14 January 1957 (when it was torn down by the Sheriff), plus P300.00 attorney's fees.

Appellants mortgagors question this award, claiming that they were entitled to remain in possession without any obligation to pay rent during
the one year redemption period after the foreclosure sale, i.e., until 27 March 1957. On this issue, We must rule for the appellants.

Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No. 1508.28 Section 14 of this Act allows the mortgagee to
have the property mortgaged sold at public auction through a public officer in almost the same manner as that allowed by Act No. 3135, as
amended by Act No. 4118, provided that the requirements of the law relative to notice and registration are complied with. 29 In the instant
case, the parties specifically stipulated that "the chattel mortgage will be enforceable in accordance with the provisions of Special Act No.
3135 ... ." 30 (Emphasis supplied).

Section 6 of the Act referred to 31 provides that the debtor-mortgagor (defendants-appellants herein) may, at any time within one year from
and after the date of the auction sale, redeem the property sold at the extra judicial foreclosure sale. Section 7 of the same Act 32 allows the
purchaser of the property to obtain from the court the possession during the period of redemption: but the same provision expressly requires
the filing of a petition with the proper Court of First Instance and the furnishing of a bond. It is only upon filing of the proper motion and the
approval of the corresponding bond that the order for a writ of possession issues as a matter of course. No discretion is left to the court. 33 In
the absence of such a compliance, as in the instant case, the purchaser can not claim possession during the period of redemption as a
matter of right. In such a case, the governing provision is Section 34, Rule 39, of the Revised Rules of Court 34 which also applies to
properties purchased in extrajudicial foreclosure proceedings.35 Construing the said section, this Court stated in the aforestated case of
Reyes vs. Hamada.

In other words, before the expiration of the 1-year period within which the judgment-debtor or mortgagor may redeem the property, the
purchaser thereof is not entitled, as a matter of right, to possession of the same. Thus, while it is true that the Rules of Court allow the
purchaser to receive the rentals if the purchased property is occupied by tenants, he is, nevertheless, accountable to the judgment-debtor or
mortgagor as the case may be, for the amount so received and the same will be duly credited against the redemption price when the said
debtor or mortgagor effects the redemption. Differently stated, the rentals receivable from tenants, although they may be collected by the
purchaser during the redemption period, do not belong to the latter but still pertain to the debtor of mortgagor. The rationale for the Rule, it
seems, is to secure for the benefit of the debtor or mortgagor, the payment of the redemption amount and the consequent return to him of his
properties sold at public auction. (Emphasis supplied)

The Hamada case reiterates the previous ruling in Chan vs. Espe.36

Since the defendants-appellants were occupying the house at the time of the auction sale, they are entitled to remain in possession during
the period of redemption or within one year from and after 27 March 1956, the date of the auction sale, and to collect the rents or profits
during the said period.

It will be noted further that in the case at bar the period of redemption had not yet expired when action was instituted in the court of origin,
and that plaintiffs-appellees did not choose to take possession under Section 7, Act No. 3135, as amended, which is the law selected by the
parties to govern the extrajudicial foreclosure of the chattel mortgage. Neither was there an allegation to that effect. Since plaintiffs-appellees'
right to possess was not yet born at the filing of the complaint, there could be no violation or breach thereof. W herefore, the original complaint
stated no cause of action and was prematurely filed. For this reason, the same should be ordered dismissed, even if there was no
assignment of error to that effect. The Supreme Court is clothed with ample authority to review palpable errors not assigned as such if it finds
that their consideration is necessary in arriving at a just decision of the cases. 37

It follows that the court below erred in requiring the mortgagors to pay rents for the year following the foreclosure sale, as well as attorney's
fees.

FOR THE FOREGOING REASONS, the decision appealed from is reversed and another one entered, dismissing the complaint. With costs
against plaintiffs-appellees.

Property 33
ENRIQUE LOPEZ, petitioner, vs. VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.
Nicolas Belmonte and Benjamin T. de Peralta for petitioner. Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co.,
Inc. Jose B. Macatangay for respondent Plaza Theatre, Inc.
G.R. Nos. L-10817-18 February 28, 1958 FELIX, J.:

Enrique Lopez is a resident of Balayan, Batangas, doing business under the trade name of Lopez-Castelo Sawmill. Sometime in
May, 1946, Vicente Orosa, Jr., also a resident of the same province, dropped at Lopez' house and invited him to make an investment in the
theatre business. It was intimated that Orosa, his family and close friends were organizing a corporation to be known as Plaza Theatre, Inc.,
that would engage in such venture. Although Lopez expressed his unwillingness to invest of the same, he agreed to supply the lumber
necessary for the construction of the proposed theatre, and at Orosa's behest and assurance that the latter would be personally liable for any
account that the said construction might incur, Lopez further agreed that payment therefor would be on demand and not cash on delivery
basis. Pursuant to said verbal agreement, Lopez delivered the lumber which was used for the construction of the Plaza Theatre on May 17,
1946, up to December 4 of the same year. But of the total cost of the materials amounting to P62,255.85, Lopez was paid only P20,848.50,
thus leaving a balance of P41,771.35.
We may state at this juncture that the Plaza Theatre was erected on a piece of land with an area of 679.17 square meters formerly
owned by Vicente Orosa, Jr., and was acquired by the corporation on September 25, 1946, for P6,000. As Lopez was pressing Orosa for
payment of the remaining unpaid obligation, the latter and Belarmino Rustia, the president of the corporation, promised to obtain a bank loan
by mortgaging the properties of the Plaza Theatre., out of which said amount of P41,771.35 would be satisfied, to which assurance Lopez
had to accede. Unknown to him, however, as early as November, 1946, the corporation already got a loan for P30,000 from the Philippine
National Bank with the Luzon Surety Company as surety, and the corporation in turn executed a mortgage on the land and building in favor of
said company as counter-security. As the land at that time was not yet brought under the operation of the Torrens System, the mortgage on
the same was registered on November 16, 1946, under Act No. 3344. Subsequently, when the corporation applied for the registration of the
land under Act 496, such mortgage was not revealed and thus Original Certificate of Title No. O-391 was correspondingly issued on October
25, 1947, without any encumbrance appearing thereon.
Persistent demand from Lopez for the payment of the amount due him caused Vicente Orosa, Jr. to execute on March 17, 1947, an
alleged "deed of assignment" of his 420 shares of stock of the Plaza Theater, Inc., at P100 per share or with a total value of P42,000 in favor
of the creditor, and as the obligation still remained unsettled, Lopez filed on November 12, 1947, a complaint with the Court of First Instance
of Batangas (Civil Case No. 4501 which later became R-57) against Vicente Orosa, Jr. and Plaza Theater, Inc., praying that defendants be
sentenced to pay him jointly and severally the sum of P41,771.35, with legal interest from the firing of the action; that in case defendants fail
to pay the same, that the building and the land covered by OCT No. O-391 owned by the corporation be sold at public auction and the
proceeds thereof be applied to said indebtedness; or that the 420 shares of the capital stock of the Plaza Theatre, Inc., assigned by Vicente

Property 34
Orosa, Jr., to said plaintiff be sold at public auction for the same purpose; and for such other remedies as may be warranted by the
circumstances. Plaintiff also caused the annotation of a notice of lis pendens on said properties with the Register of Deeds.
Defendants Vicente Orosa, Jr. and Plaza Theatre, Inc., filed separate answers, the first denying that the materials were delivered to
him as a promoter and later treasurer of the corporation, because he had purchased and received the same on his personal account; that the
land on which the movie house was constructed was not charged with a lien to secure the payment of the aforementioned unpaid obligation;
and that the 420 shares of stock of the Plaza Theatre, Inc., was not assigned to plaintiff as collaterals but as direct security for the payment of
his indebtedness. As special defense, this defendant contended that as the 420 shares of stock assigned and conveyed by the assignor and
accepted by Lopez as direct security for the payment of the amount of P41,771.35 were personal properties, plaintiff was barred from
recovering any deficiency if the proceeds of the sale thereof at public auction would not be sufficient to cover and satisfy the obligation. It was
thus prayed that he be declared exempted from the payment of any deficiency in case the proceeds from the sale of said personal properties
would not be enough to cover the amount sought to be collected.
Defendant Plaza Theatre, Inc., on the other hand, practically set up the same line of defense by alleging that the building materials delivered
to Orosa were on the latter's personal account; and that there was no understanding that said materials would be paid jointly and severally by
Orosa and the corporation, nor was a lien charged on the properties of the latter to secure payment of the same obligation. As special
defense, defendant corporation averred that while it was true that the materials purchased by Orosa were sold by the latter to the corporation,
such transactions were in good faith and for valuable consideration thus when plaintiff failed to claim said materials within 30 days from the
time of removal thereof from Orosa, lumber became a different and distinct specie and plaintiff lost whatever rights he might have in the same
and consequently had no recourse against the Plaza Theatre, Inc., that the claim could not have been refectionary credit, for such kind of
obligation referred to an indebtedness incurred in the repair or reconstruction of something already existing and this concept did not include
an entirely new work; and that the Plaza Theatre, Inc., having been incorporated on October 14, 1946, it could not have contracted any
obligation prior to said date. It was, therefore, prayed that the complaint be dismissed; that said defendant be awarded the sum P 5,000 for
damages, and such other relief as may be just and proper in the premises.
The surety company, in the meantime, upon discovery that the land was already registered under the Torrens System and that there was a
notice of lis pendens thereon, filed on August 17, 1948, or within the 1-year period after the issuance of the certificate of title, a petition for
review of the decree of the land registration court dated October 18, 1947, which was made the basis of OCT No. O-319, in order to annotate
the rights and interests of the surety company over said properties (Land Registration Case No. 17 GLRO Rec. No. 296). Opposition thereto
was offered by Enrique Lopez, asserting that the amount demanded by him constituted a preferred lien over the properties of the obligors;
that the surety company was guilty of negligence when it failed to present an opposition to the application for registration of the property; and
that if any violation of the rights and interest of said surety would ever be made, same must be subject to the lien in his favor.
The two cases were heard jointly and in a decision dated October 30, 1952, the lower Court, after making an exhaustive and
detailed analysis of the respective stands of the parties and the evidence adduced at the trial, held that defendants Vicente Orosa, Jr., and
the Plaza Theatre, Inc., were jointly liable for the unpaid balance of the cost of lumber used in the construction of the building and the plaintiff
thus acquired the materialman's lien over the same. In making the pronouncement that the lien was merely confined to the building and did
not extend to the land on which the construction was made, the trial judge took into consideration the fact that when plaintiff started the
delivery of lumber in May, 1946, the land was not yet owned by the corporation; that the mortgage in favor of Luzon Surety Company was
previously registered under Act No. 3344; that the codal provision (Art. 1923 of the old Spanish Civil Code) specifying that refection credits
are preferred could refer only to buildings which are also classified as real properties, upon which said refection was made. It was, however,
declared that plaintiff's lien on the building was superior to the right of the surety company. And finding that the Plaza Theatre, Inc., had no
objection to the review of the decree issued in its favor by the land registration court and the inclusion in the title of the encumbrance in favor
of the surety company, the court a quo granted the petition filed by the latter company. Defendants Orosa and the Plaza Theatre, Inc., were
thus required to pay jointly the amount of P41,771.35 with legal interest and costs within 90 days from notice of said decision; that in case of
default, the 420 shares of stock assigned by Orosa to plaintiff be sold at public auction and the proceeds thereof be applied to the payment of
the amount due the plaintiff, plus interest and costs; and that the encumbrance in favor of the surety company be endorsed at the back of
OCT No. O-391, with notation I that with respect to the building, said mortgage was subject to the materialman's lien in favor of Enrique
Lopez.
Plaintiff tried to secure a modification of the decision in so far as it declared that the obligation of therein defendants was joint instead of
solidary, and that the lien did not extend to the land, but same was denied by order the court of December 23, 1952. The matter was thus
appealed to the Court of appeals, which affirmed the lower court's ruling, and then to this Tribunal. In this instance, plaintiff-appellant raises 2
issues: (1) whether a materialman's lien for the value of the materials used in the construction of a building attaches to said structure alone
and does not extend to the land on which the building is adhered to; and (2) whether the lower court and the Court of Appeals erred in not
providing that the material mans liens is superior to the mortgage executed in favor surety company not only on the building but also on the
land.
It is to be noted in this appeal that Enrique Lopez has not raised any question against the part of the decision sentencing defendants
Orosa and Plaza Theatre, Inc., to pay jointly the sum of P41,771.35, so We will not take up or consider anything on that point. Appellant,
however, contends that the lien created in favor of the furnisher of the materials used for the construction, repair or refection of a building, is
also extended to the land which the construction was made, and in support thereof he relies on Article 1923 of the Spanish Civil Code,
pertinent law on the matter, which reads as follows:
ART. 1923. With respect to determinate real property and real rights of the debtor, the following are preferred:
xxx xxx xxx
5. Credits for refection, not entered or recorded, with respect to the estate upon which the refection was made, and only with respect to other
credits different from those mentioned in four preceding paragraphs.
It is argued that in view of the employment of the phrase real estate, or immovable property, and inasmuch as said provision does not contain
any specification delimiting the lien to the building, said article must be construed as to embrace both the land and the building or structure
adhering thereto. We cannot subscribe to this view, for while it is true that generally, real estate connotes the land and the building
constructed thereon, it is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of what may
Property 35
constitute real properties1 could mean only one thing — that a building is by itself an immovable property, a doctrine already pronounced by
this Court in the case of Leung Yee vs. Strong Machinery Co., 37 Phil., 644. Moreover, and in view of the absence of any specific provision of
law to the contrary, a building is an immovable property, irrespective of whether or not said structure and the land on which it is adhered to
belong to the same owner.
A close examination of the provision of the Civil Code invoked by appellant reveals that the law gives preference to unregistered refectionary
credits only with respect to the real estate upon which the refection or work was made. This being so, the inevitable conclusion must be that
the lien so created attaches merely to the immovable property for the construction or repair of which the obligation was incurred. Evidently,
therefore, the lien in favor of appellant for the unpaid value of the lumber used in the construction of the building attaches only to said
structure and to no other property of the obligors.
Considering the conclusion thus arrived at, i.e., that the materialman's lien could be charged only to the building for which the credit was
made or which received the benefit of refection, the lower court was right in, holding at the interest of the mortgagee over the land is superior
and cannot be made subject to the said materialman's lien.
Wherefore, and on the strength of the foregoing considerations, the decision appealed from is hereby affirmed, with costs against appellant. It
is so ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L. and Endencia, JJ., concur.

FELS ENERGY, INC., Petitioner, vs. THE PROVINCE OF BATANGAS and THE OFFICE OF THE PROVINCIAL ASSESSOR OF
BATANGAS, Respondents. G.R. No. 168557

NATIONAL POWER CORPORATION, Petitioner, vs LOCAL BOARD OF ASSESSMENT APPEALS OF BATANGAS, LAURO C. ANDAYA,
in his capacity as the Assessor of the Province of Batangas, and the Promulgated: ROVINCE OF BATANGAS represented by its
Provincial Assessor, G.R. No. 170628 February 16, 2007
Property 36
Respondents. Present: YNARES-SANTIAGO, J., Chairperson AUSTRIA-MARTINEZ, CALLEJO, SR. and CHICO-NAZARIO, JJ
DECISION CALLEJO, SR., J.:

Before us are two consolidated cases docketed as G.R. No. 168557 and G.R. No. 170628, which were filed by petitioners FELS Energy, Inc.
(FELS) and National Power Corporation (NPC), respectively. The first is a petition for review on certiorari assailing the August 25, 2004
Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 67490 and its Resolution[2] dated June 20, 2005; the second, also a petition for
review on certiorari, challenges the February 9, 2005 Decision[3] and November 23, 2005 Resolution[4]of the CA in CA-G.R. SP No. 67491.
Both petitions were dismissed on the ground of prescription.

The pertinent facts are as follows:

On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW diesel engine power barges moored
at Balayan Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion Agreement [5] (Agreement), was for a period of five
years. Article 10 reads:

10.1 RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes, import duties, fees, charges and other levies
imposed by the National Government of the Republic of the Philippines or any agency or instrumentality thereof to which POLAR may be or
become subject to or in relation to the performance of their obligations under this agreement (other than (i) taxes imposed or calculated on
the basis of the net income of POLAR and Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit
fees and other similar fees and charges) and (b) all real estate taxes and assessments, rates and other charges in respect of the Power
Barges.[6]

Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The NPC initially opposed the assignment of rights, citing
paragraph 17.2 of Article 17 of the Agreement.

On August 7, 1995, FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. Andaya
of Batangas City. The assessed tax, which likewise covered those due for 1994, amounted to P56,184,088.40 per annum. FELS referred the
matter to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the full power and authority to
represent it in any conference regarding the real property assessment of the Provincial Assessor.

In a letter[7] dated September 7, 1995, NPC sought reconsideration of the Provincial Assessors decision to assess real property taxes on the
power barges. However, the motion was denied on September 22, 1995, and the Provincial Assessor advised NPC to pay the
assessment.[8] This prompted NPC to file a petition with the Local Board of Assessment Appeals (LBAA) for the setting aside of the
assessment and the declaration of the barges as non-taxable items; it also prayed that should LBAA find the barges to be taxable, the
Provincial Assessor be directed to make the necessary corrections.[9]

In its Answer to the petition, the Provincial Assessor averred that the barges were real property for purposes of taxation under Section 199(c)
of Republic Act (R.A.) No. 7160.
Before the case was decided by the LBAA, NPC filed a Manifestation, informing the LBAA that the Department of Finance (DOF) had
rendered an opinion[10] dated May 20, 1996, where it is clearly stated that power barges are not real property subject to real property
assessment.
On August 26, 1996, the LBAA rendered a Resolution [11] denying the petition. The fallo reads:
WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real estate tax in the amount of P56,184,088.40, for the year
1994.

SO ORDERED.[12]

The LBAA ruled that the power plant facilities, while they may be classified as movable or personal property, are nevertheless considered
real property for taxation purposes because they are installed at a specific location with a character of permanency. The LBAA also pointed
out that the owner of the bargesFELS, a private corporationis the one being taxed, not NPC. A mere agreement making NPC responsible for
the payment of all real estate taxes and assessments will not justify the exemption of FELS; such a privilege can only be granted to NPC and
cannot be extended to FELS. Finally, the LBAA also ruled that the petition was filed out of time.

Aggrieved, FELS appealed the LBAAs ruling to the Central Board of Assessment Appeals (CBAA).

On August 28, 1996, the Provincial Treasurer of Batangas City issued a Notice of Levy and Warrant by Distraint[13] over the power barges,
seeking to collect real property taxes amounting to P232,602,125.91 as of July 31, 1996. The notice and warrant was officially served to
FELS on November 8, 1996. It then filed a Motion to Lift Levy dated November 14, 1996, praying that the Provincial Assessor be further
restrained by the CBAA from enforcing the disputed assessment during the pendency of the appeal.

On November 15, 1996, the CBAA issued an Order[14] lifting the levy and distraint on the properties of FELS in order not to preempt and
render ineffectual, nugatory and illusory any resolution or judgment which the Board would issue.

Property 37
Meantime, the NPC filed a Motion for Intervention [15] dated August 7, 1998 in the proceedings before the CBAA. This was approved by the
CBAA in an Order[16] dated September 22, 1998.

During the pendency of the case, both FELS and NPC filed several motions to admit bond to guarantee the payment of real property taxes
assessed by the Provincial Assessor (in the event that the judgment be unfavorable to them). The bonds were duly approved by the CBAA.

On April 6, 2000, the CBAA rendered a Decision[17] finding the power barges exempt from real property tax. The dispositive portion reads:

WHEREFORE, the Resolution of the Local Board of Assessment Appeals of the Province of Batangas is hereby reversed. Respondent-
appellee Provincial Assessor of the Province of Batangasis hereby ordered to drop subject property under ARP/Tax Declaration No. 018-
00958 from the List of Taxable Properties in the Assessment Roll. The Provincial Treasurer of Batangas is hereby directed to act accordingly.

SO ORDERED.[18]

Ruling in favor of FELS and NPC, the CBAA reasoned that the power barges belong to NPC; since they are actually, directly and exclusively
used by it, the power barges are covered by the exemptions under Section 234(c) of R.A. No. 7160. [19] As to the other jurisdictional issue, the
CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax exemption in accordance with Section 206 of R.A. No.
7160. The Provincial Assessor filed a motion for reconsideration, which was opposed by FELS and NPC.

In a complete volte face, the CBAA issued a Resolution[20] on July 31, 2001 reversing its earlier decision. The fallo of the resolution reads:

WHEREFORE, premises considered, it is the resolution of this Board that:

(a) The decision of the Board dated 6 April 2000 is hereby reversed.

(b) The petition of FELS, as well as the intervention of NPC, is dismissed.

(c) The resolution of the Local Board of Assessment Appeals of Batangas is hereby affirmed,

(d) The real property tax assessment on FELS by the Provincial Assessor of Batangas is likewise hereby affirmed.

SO ORDERED.[21]

FELS and NPC filed separate motions for reconsideration, which were timely opposed by the Provincial Assessor. The CBAA denied the said
motions in a Resolution[22]dated October 19, 2001.

Dissatisfied, FELS filed a petition for review before the CA docketed as CA-G.R. SP No. 67490. Meanwhile, NPC filed a separate petition,
docketed as CA-G.R. SP No. 67491.

On January 17, 2002, NPC filed a Manifestation/Motion for Consolidation in CA-G.R. SP No. 67490 praying for the consolidation of its
petition with CA-G.R. SP No. 67491. In a Resolution[23] dated February 12, 2002, the appellate court directed NPC to re-file its motion for
consolidation with CA-G.R. SP No. 67491, since it is the ponente of the latter petition who should resolve the request for reconsideration.

NPC failed to comply with the aforesaid resolution. On August 25, 2004, the Twelfth Division of the appellate court rendered judgment in CA-
G.R. SP No. 67490 denying the petition on the ground of prescription. The decretal portion of the decision reads:

WHEREFORE, the petition for review is DENIED for lack of merit and the assailed Resolutions dated July 31, 2001 and October 19, 2001 of
the Central Board of Assessment Appeals are AFFIRMED.

SO ORDERED.[24]

On September 20, 2004, FELS timely filed a motion for reconsideration seeking the reversal of the appellate courts decision in CA-G.R. SP
No. 67490.

Thereafter, NPC filed a petition for review dated October 19, 2004 before this Court, docketed as G.R. No. 165113, assailing the appellate
courts decision in CA-G.R. SP No. 67490. The petition was, however, denied in this Courts Resolution[25] of November 8, 2004, for NPCs
failure to sufficiently show that the CA committed any reversible error in the challenged decision. NPC filed a motion for reconsideration,
which the Court denied with finality in a Resolution [26] dated January 19, 2005.

Meantime, the appellate court dismissed the petition in CA-G.R. SP No. 67491. It held that the right to question the assessment of the
Provincial Assessor had already prescribed upon the failure of FELS to appeal the disputed assessment to the LBAA within the period
prescribed by law. Since FELS had lost the right to question the assessment, the right of the Provincial Government to collect the tax was
already absolute.
Property 38
NPC filed a motion for reconsideration dated March 8, 2005, seeking reconsideration of the February 5, 2005 ruling of the CA in CA-G.R. SP
No. 67491. The motion was denied in a Resolution [27] dated November 23, 2005.

The motion for reconsideration filed by FELS in CA-G.R. SP No. 67490 had been earlier denied for lack of merit in a
Resolution[28] dated June 20, 2005.

On August 3, 2005, FELS filed the petition docketed as G.R. No. 168557 before this Court, raising the following issues:

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

B.
Assuming that the subject power barges are real properties, whether they are exempt from real estate tax under Section 234 of the Local
Government Code (LGC).

C.
Assuming arguendo that the subject power barges are subject to real estate tax, whether or not it should be NPC which should be made to
pay the same under the law.

D.
Assuming arguendo that the subject power barges are real properties, whether or not the same is subject to depreciation just like any other
personal properties.

E.
Whether the right of the petitioner to question the patently null and void real property tax assessment on the petitioners personal properties is
imprescriptible.[29]

On January 13, 2006, NPC filed its own petition for review before this Court (G.R. No. 170628), indicating the following errors committed by
the CA:

I
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE APPEAL TO THE LBAA WAS FILED OUT OF TIME.

II
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE POWER BARGES ARE NOT SUBJECT TO REAL
PROPERTY TAXES.

III
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE ASSESSMENT ON THE POWER BARGES WAS NOT
MADE IN ACCORDANCE WITH LAW.[30]

Considering that the factual antecedents of both cases are similar, the Court ordered the consolidation of the two cases in a
Resolution[31] dated March 8, 2006.

In an earlier Resolution dated February 1, 2006, the Court had required the parties to submit their respective Memoranda within 30 days from
notice. Almost a year passed but the parties had not submitted their respective memoranda. Considering that taxesthe lifeblood of our
economyare involved in the present controversy, the Court was prompted to dispense with the said pleadings, with the end view of advancing
the interests of justice and avoiding further delay.

In both petitions, FELS and NPC maintain that the appeal before the LBAA was not time-barred. FELS argues that when NPC moved to have
the assessment reconsidered on September 7, 1995, the running of the period to file an appeal with the LBAA was tolled. For its part, NPC
posits that the 60-day period for appealing to the LBAA should be reckoned from its receipt of the denial of its motion for reconsideration.

Petitioners contentions are bereft of merit.

Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of 1991, provides:

SECTION 226. Local Board of Assessment Appeals. Any owner or person having legal interest in the property who is not satisfied with the
action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the
Property 39
written notice of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition under oath in the form
prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal.

We note that the notice of assessment which the Provincial Assessor sent to FELS on August 7, 1995, contained the following statement:

If you are not satisfied with this assessment, you may, within sixty (60) days from the date of receipt hereof, appeal to the Board of
Assessment Appeals of the province by filing a petition under oath on the form prescribed for the purpose, together with copies of ARP/Tax
Declaration and such affidavits or documents submitted in support of the appeal. [32]

Instead of appealing to the Board of Assessment Appeals (as stated in the notice), NPC opted to file a motion for reconsideration of the
Provincial Assessors decision, a remedy not sanctioned by law.

The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial, city or municipal assessor in the
assessment of the property. It follows then that the determination made by the respondent Provincial Assessor with regard to the taxability of
the subject real properties falls within its power to assess properties for taxation purposes subject to appeal before the LBAA. [33]

We fully agree with the rationalization of the CA in both CA-G.R. SP No. 67490 and CA-G.R. SP No. 67491. The two divisions of the
appellate court cited the case of Callanta v. Office of the Ombudsman,[34] where we ruled that under Section 226 of R.A. No 7160,[35] the last
action of the local assessor on a particular assessment shall be the notice of assessment; it is this last action which gives the owner of the
property the right to appeal to the LBAA. The procedure likewise does not permit the property owner the remedy of filing a motion for
reconsideration before the local assessor. The pertinent holding of the Court in Callanta is as follows:

x x x [T]he same Code is equally clear that the aggrieved owners should have brought their appeals before the LBAA. Unfortunately, despite
the advice to this effect contained in their respective notices of assessment, the owners chose to bring their requests for a
review/readjustment before the city assessor, a remedy not sanctioned by the law. To allow this procedure would indeed invite corruption in
the system of appraisal and assessment. It conveniently courts a graft-prone situation where values of real property may be initially set
unreasonably high, and then subsequently reduced upon the request of a property owner. In the latter instance, allusions of a possible
covert, illicit trade-off cannot be avoided, and in fact can conveniently take place. Such occasion for mischief must be prevented and excised
from our system.[36]

For its part, the appellate court declared in CA-G.R. SP No. 67491:

x x x. The Court announces: Henceforth, whenever the local assessor sends a notice to the owner or lawful possessor of real property of its
revised assessed value, the former shall no longer have any jurisdiction to entertain any request for a review or readjustment. The
appropriate forum where the aggrieved party may bring his appeal is the LBAA as provided by law. It follows ineluctably that the 60-day
period for making the appeal to the LBAA runs without interruption. This is what We held in SP 67490 and reaffirm today in SP 67491. [37]

To reiterate, if the taxpayer fails to appeal in due course, the right of

the local government to collect the taxes due with respect to the taxpayers property becomes absolute upon the expiration of the period to
appeal.[38] It also bears stressing that the taxpayers failure to question the assessment in the LBAA renders the assessment of the local
assessor final, executory and demandable, thus, precluding the taxpayer from questioning the correctness of the assessment, or from
invoking any defense that would reopen the question of its liability on the merits.[39]

In fine, the LBAA acted correctly when it dismissed the petitioners appeal for having been filed out of time; the CBAA and the appellate court
were likewise correct in affirming the dismissal. Elementary is the rule that the perfection of an appeal within the period therefor is both
mandatory and jurisdictional, and failure in this regard renders the decision final and executory.[40]

In the Comment filed by the Provincial Assessor, it is asserted that the instant petition is barred by res judicata; that the final and executory
judgment in G.R. No. 165113 (where there was a final determination on the issue of prescription), effectively precludes the claims herein; and
that the filing of the instant petition after an adverse judgment in G.R. No. 165113 constitutes forum shopping.

FELS maintains that the argument of the Provincial Assessor is completely misplaced since it was not a party to the erroneous petition which
the NPC filed in G.R. No. 165113. It avers that it did not participate in the aforesaid proceeding, and the Supreme Court never acquired
jurisdiction over it. As to the issue of forum shopping, petitioner claims that no forum shopping could have been committed since the
elements of litis pendentia or res judicata are not present.

We do not agree.

Res judicata pervades every organized system of jurisprudence and is founded upon two grounds embodied in various maxims of common
law, namely: (1) public policy and necessity, which makes it to the interest of the
State that there should be an end to litigation republicae ut sit litium; and (2) the hardship on the individual of being vexed twice for the same
cause nemo debet bis vexari et eadem causa. A conflicting doctrine would subject the public peace and quiet to the will and dereliction of
Property 40
individuals and prefer the regalement of the litigious disposition on the part of suitors to the preservation of the public tranquility and
happiness.[41] As we ruled in Heirs of Trinidad De Leon Vda. de Roxas v. Court of Appeals:[42]

x x x An existing final judgment or decree rendered upon the merits, without fraud or collusion, by a court of competent jurisdiction acting
upon a matter within its authority is conclusive on the rights of the parties and their privies. This ruling holds in all other actions or suits, in the
same or any other judicial tribunal of concurrent jurisdiction, touching on the points or matters in issue in the first suit.

xxx

Courts will simply refuse to reopen what has been decided. They will not allow the same parties or their privies to litigate anew a question
once it has been considered and decided with finality. Litigations must end and terminate sometime and somewhere. The effective and
efficient administration of justice requires that once a judgment has become final, the prevailing party should not be deprived of the fruits of
the verdict by subsequent suits on the same issues filed by the same parties.

This is in accordance with the doctrine of res judicata which has the following elements: (1) the former judgment must be final; (2) the court
which rendered it had jurisdiction over the subject matter and the parties; (3) the judgment must be on the merits; and (4) there must be
between the first and the second actions, identity of parties, subject matter and causes of action. The application of the doctrine of res
judicata does not require absolute identity of parties but merely substantial identity of parties. There is substantial identity of parties when
there is community of interest or privity of interest between a party in the first and a party in the second case even if the first case did not
implead the latter.[43]

To recall, FELS gave NPC the full power and authority to represent it in any proceeding regarding real property assessment. Therefore, when
petitioner NPC filed its petition for review docketed as G.R. No. 165113, it did so not only on its behalf but also on behalf of FELS. Moreover,
the assailed decision in the earlier petition for review filed in this Court was the decision of the appellate court in CA-G.R. SP No. 67490, in
which FELS was the petitioner. Thus, the decision in G.R. No. 165116 is binding on petitioner FELS under the principle of privity of interest.
In fine, FELS and NPC are substantially identical parties as to warrant the application of res judicata. FELSs argument that it is not bound by
the erroneous petition filed by NPC is thus unavailing.

On the issue of forum shopping, we rule for the Provincial Assessor. Forum shopping exists when, as a result of an adverse judgment in one
forum, a party seeks another and possibly favorable judgment in another forum other than by appeal or special civil action or certiorari. There
is also forum shopping when a party institutes two or more actions or proceedings grounded on the same cause, on the gamble that one or
the other court would make a favorable disposition. [44]

Petitioner FELS alleges that there is no forum shopping since the elements of res judicata are not present in the cases at bar; however, as
already discussed, res judicatamay be properly applied herein. Petitioners engaged in forum shopping when they filed G.R. Nos. 168557 and
170628 after the petition for review in G.R. No. 165116. Indeed, petitioners went from one court to another trying to get a favorable decision
from one of the tribunals which allowed them to pursue their cases.

It must be stressed that an important factor in determining the existence of forum shopping is the vexation caused to the courts and the
parties-litigants by the filing of similar cases to claim substantially the same reliefs. [45] The rationale against forum shopping is that a party
should not be allowed to pursue simultaneous remedies in two different fora. Filing multiple petitions or complaints constitutes abuse of court
processes, which tends to degrade the administration of justice, wreaks havoc upon orderly judicial procedure, and adds to the congestion of
the heavily burdened dockets of the courts.[46]

Thus, there is forum shopping when there exist: (a) identity of parties, or at least such parties as represent the same interests in both
actions, (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and (c) the identity of the two
preceding particulars is such that any judgment rendered in the pending case, regardless of which party is successful, would amount to res
judicata in the other.[47]

Having found that the elements of res judicata and forum shopping are present in the consolidated cases, a discussion of the other issues is
no longer necessary. Nevertheless, for the peace and contentment of petitioners, we shall shed light on the merits of the case.

As found by the appellate court, the CBAA and LBAA power barges are real property and are thus subject to real property tax. This is also
the inevitable conclusion, considering that G.R. No. 165113 was dismissed for failure to sufficiently show any reversible error. Tax
assessments by tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of proving
otherwise.[48] Besides, factual findings of administrative bodies, which have acquired expertise in their field, are generally binding and
conclusive upon the Court; we will not assume to interfere with the sensible exercise of the judgment of men especially trained in appraising
property. Where the judicial mind is left in doubt, it is a sound policy to leave the assessment undisturbed. [49] We find no reason to depart
from this rule in this case.

In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al.,[50] a power company brought an action to review
property tax assessment. On the citys motion to dismiss, the Supreme Court of New
York held that the barges on which were mounted gas turbine power plants designated to generate electrical power, the fuel oil barges which
supplied fuel oil to the power plant barges, and the accessory equipment mounted on the barges were subject to real property taxation.
Property 41
Moreover, Article 415 (9) of the New Civil Code provides that [d]ocks and structures which, though floating, are intended by their nature and
object to remain at a fixed place on a river, lake, or coast are considered immovable property. Thus, power barges are categorized
as immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work
which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work.[51]

Petitioners maintain nevertheless that the power barges are exempt from real estate tax under Section 234 (c) of R.A. No. 7160 because
they are actually, directly and exclusively used by petitioner NPC, a government- owned and controlled corporation engaged in the supply,
generation, and transmission of electric power.

We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS, which in fine, is the entity being
taxed by the local government. As stipulated under Section 2.11, Article 2 of the Agreement:

OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures, fittings, machinery and equipment on the Site
used in connection with the Power Barges which have been supplied by it at its own cost. POLAR shall operate, manage and maintain the
Power Barges for the purpose of converting Fuel of NAPOCOR into electricity. [52]

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

SECTION 234. Exemptions from Real Property Tax. The following are exempted from payment of the real property tax:

xxx

(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or controlled
corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; x x x

Indeed, the law states that the machinery must be actually, directly and exclusively used by the government owned or controlled corporation;
nevertheless, petitioner FELS still cannot find solace in this provision because Section 5.5, Article 5 of the Agreement provides:

OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply of the necessary Fuel pursuant to Article 6 and
to the other provisions hereof, it will operate the Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7. [53]

It is a basic rule that obligations arising from a contract have the force of law between the parties. Not being contrary to law, morals, good
customs, public order or public policy, the parties to the contract are bound by its terms and conditions.[54]

Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. [55] The law does not look with favor
on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to
be misinterpreted.[56] Thus, applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be
resolved in favor of provincial corporations, we hold that FELS is considered a taxable entity.

The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible for the payment of all real estate
taxes and assessments, does not justify the exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant
is between FELS and NPC and does not bind a third person not privy thereto, in this case, the Province of Batangas.

It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local governments deprivation of revenues. The
power to tax is an incident of sovereignty and is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security
against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay for
it.[57] The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is
consistent with the State policy to guarantee the autonomy of local governments [58] and the objective of the Local Government Code that they
enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as self-reliant communities and make
them effective partners in the attainment of national goals.[59]

In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed revenues to finance and support myriad
activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the
enhancement of peace, progress, and prosperity of the people. [60]

WHEREFORE, the Petitions are DENIED and the assailed Decisions and Resolutions AFFIRMED.

Property 42
SO ORDERED.

Property 43
Art. 419 cases

FELICIDAD VILLANUEVA, FERNANDO CAISIP, ANTONIO LIANG, FELINA MIRANDA, RICARDO PUNO, FLORENCIO LAXA, and
RENE OCAMPO, petitioners, vs. HON. MARIANO CASTAÑEDA, JR., Presiding Judge of the Court of First Instance respondents. 15.
G.R. No. L-61311 September 2l, 1987 CRUZ, J.:

There is in the vicinity of the public market of San Fernando, Pampanga, along Mercado Street, a strip of land measuring 12 by 77 meters on
which stands a conglomeration of vendors stalls together forming what is commonly known as a talipapa. This is the subject of the herein
petition. The petitioners claim they have a right to remain in and conduct business in this area by virtue of a previous authorization granted to
them by the municipal government. The respondents deny this and justify the demolition of their stalls as illegal constructions on public
property. At the petitioners' behest, we have issued a temporary restraining order to preserve the status quo between the parties pending our
decision. 1 Now we shall rule on the merits.

This dispute goes back to November 7, 1961, when the municipal council of San Fernando adopted Resolution No. 218 authorizing some 24
members of the Fernandino United Merchants and Traders Association to construct permanent stags and sell in the above-mentioned
place. 2 The action was protested on November 10, 1961, in Civil Case No. 2040, where the Court of First Instance of Pampanga, Branch 2,
issued a writ of preliminary injunction that prevented the defendants from constructing the said stalls until final resolution of the
controversy. 3 On January 18, 1964, while this case was pending, the municipal council of San Fernando adopted Resolution G.R. No. 29,
which declared the subject area as "the parking place and as the public plaza of the municipality, 4 thereby impliedly revoking Resolution No.
218, series of 1961. Four years later, on November 2, 1968, Judge Andres C. Aguilar decided the aforesaid case and held that the land
occupied by the petitioners, being public in nature, was beyond the commerce of man and therefore could not be the subject of private
occupancy. 5 The writ of preliminary injunction was made permanent. 6

The decision was apparently not enforced, for the petitioners were not evicted from the place; in fact, according to then they and the 128
other persons were in 1971 assigned specific areas or space allotments therein for which they paid daily fees to the municipal
government. 7 The problem appears to have festered for some more years under a presumably uneasy truce among the protagonists, none
of whom made any move, for some reason that does not appear in the record. Then, on January 12, 1982, the Association of Concerned
Citizens and Consumers of San Fernando filed a petition for the immediate implementation of Resolution No. 29, to restore the subject
property "to its original and customary use as a public plaza. 8

Acting thereon after an investigation conducted by the municipal attorney, 9 respondent Vicente A. Macalino, as officer-in-charge of the office
of the mayor of San Fernando, issued on June 14, 1982, a resolution requiring the municipal treasurer and the municipal engineer to
demolish the stalls in the subject place beginning July 1, 1982. 10The reaction of the petitioners was to file a petition for prohibition with the
Court of First Instance of Pampanga, docketed as Civil Case No. 6470, on June 26, 1982. The respondent judge denied the petition on July
19, 1982, 11 and the motion for reconsideration on August 5, 1982, 12 prompting the petitioners to come to this Court on certiorari to
challenge his decision. 13

As required, respondent Macalino filed his comment 14 on the petition, and the petitioners countered with their reply. 15 In compliance with
our resolution of February 2, 1983, the petitioners submitted their memorandum 16 and respondent Macalino, for his part, asked that his
comment be considered his memorandum. 17 On July 28, 1986, the new officer-in-charge of the office of the mayor of San Fernando,
Paterno S. Guevarra, was impleaded in lieu of Virgilio Sanchez, who had himself earlier replaced the original respondent Macalino. 18

After considering the issues and the arguments raised by the parties in their respective pleadings, we rule for the respondents. The petition
must be dismissed.

There is no question that the place occupied by the petitioners and from which they are sought to be evicted is a public plaza, as found by the
trial court in Civil Case No. 2040. This finding was made after consideration of the antecedent facts as especially established by the
testimony of former San Fernando Mayor Rodolfo Hizon, who later became governor of Pampanga, that the National Planning Commission
had reserved the area for a public plaza as early as 1951. This intention was reiterated in 1964 through the adoption of Resolution No. 29. 19

It does not appear that the decision in this case was appealed or has been reversed. In Civil Case G.R. No. 6740, which is the subject of this
petition, the respondent judge saw no reason to disturb the finding in Civil Case No. 2040 and indeed used it as a basis for his own decision
sustaining the questioned order. 20

The basic contention of the petitioners is that the disputed area is under lease to them by virtue of contracts they had entered into with the
municipal government, first in 1961 insofar as the original occupants were concerned, and later with them and the other petitioners by virtue
Property 44
of the space allocations made in their favor in 1971 for which they saw they are paying daily fees. 21 The municipal government has denied
making such agreements. In any case, they argue, since the fees were collected daily, the leases, assuming their validity, could be
terminated at will, or any day, as the claimed rentals indicated that the period of the leases was from day to day. 22

The parties belabor this argument needlessly.

A public plaza is beyond the commerce of man and so cannot be the subject of lease or any other contractual undertaking. This is
elementary. Indeed, this point was settled as early as in Municipality of Cavite vs. Rojas, 23decided in 1915, where the Court declared as null
and void the lease of a public plaza of the said municipality in favor of a private person.

Justice Torres said in that case:

According to article 344 of the Civil Code: "Property for public use in provinces and in towns comprises the provincial and
town roads, the squares, streets, fountains, and public waters, the promenades, and public works of general service
supported by said towns or provinces.

The said Plaza Soledad being a promenade for public use, the municipal council of Cavite could not in 1907 withdraw or
exclude from public use a portion thereof in order to lease it for the sole benefit of the defendant Hilaria Rojas. In leasing a
portion of said plaza or public place to the defendant for private use the plaintiff municipality exceeded its authority in the
exercise of its powers by executing a contract over a thing of which it could not dispose, nor is it empowered so to do.

The Civil Code, article 1271, prescribes that everything which is not outside the commerce of man may be the object of a
contract, and plazas and streets are outside of this commerce, as was decided by the supreme court of Spain in its
decision of February 12, 1895, which says: "communal things that cannot be sold because they are by their very nature
outside of commerce are those for public use, such as the plazas, streets, common lands, rivers, fountains, etc."

Therefore, it must be concluded that the contract, Exhibit C, whereby the municipality of Cavite leased to Hilaria Rojas a
portion of the Plaza Soledad is null and void and of no force or effect, because it is contrary to the law and the thing leased
cannot be the object of a was held that the City of contract.

In Muyot vs. de la Fuente, 24 it was held that the City of Manila could not lease a portion of a public sidewalk on Plaza Sta. Cruz, being
likewise beyond the commerce of man.

Echoing Rojas, the decision said:

Appellants claim that they had obtained permit from the present of the City of Manila, to connect booths Nos. 1 and 2,
along the premises in question, and for the use of spaces where the booths were constructed, they had paid and continued
paying the corresponding rentals. Granting this claim to be true, one should not entertain any doubt that such permit was
not legal, because the City of Manila does not have any power or authority at all to lease a portion of a public sidewalk. The
sidewalk in question, forming part of the public plaza of Sta. Cruz, could not be a proper subject matter of the contract, as it
was not within the commerce of man (Article 1347, new Civil Code, and article 1271, old Civil Code). Any contract entered
into by the City of Manila in connection with the sidewalk, is ipso facto null and ultra vires. (Municipality of Cavite vs. Roxas,
et a1, 30 Phil. 603.) The sidewalk in question was intended for and was used by the public, in going from one place to
another. "The streets and public places of the city shall be kept free and clear for the use of the public, and the sidewalks
and crossings for the pedestrians, and the same shall only be used or occupied for other purpose as provided by ordinance
or regulation; ..." (Sec. 1119, Revised Ordinances of the City of Manila.) The booths in question served as fruit stands for
their owners and often, if not always, blocked the fire passage of pedestrians who had to take the plaza itself which used to
be clogged with vehicular traffic.

Exactly in point is Espiritu vs. Municipal Council of Pozorrubio, 25 where the Supreme Court declared:

There is absolutely no question that the town plaza cannot be used for the construction of market stalls, specially of
residences, and that such structures constitute a nuisance subject to abatement according to law. Town plazas are
properties of public dominion, to be devoted to public use and to be made available to the public in general They are
outside the common of man and cannot be disposed of or even leased by the municipality to private parties.

Applying this well-settled doctrine, we rule that the petitioners had no right in the first place to occupy the disputed premises and cannot insist
in remaining there now on the strength of their alleged lease contracts. They should have realized and accepted this earlier, considering that
even before Civil Case No. 2040 was decided, the municipalcouncil of San Fernando had already adopted Resolution No. 29, series of 1964,
declaring the area as the parking place and public plaza of the municipality.

Property 45
It is the decision in Civil Case No. 2040 and the said resolution of the municipal council of San Fernando that respondent Macalino was
seeking to enforce when he ordered the demolition of the stags constructed in the disputed area. As officer-in-charge of the office of the
mayor, he had the duty to clear the area and restore it to its intended use as a parking place and public plaza of the municipality of San
Fernando, conformably to the aforementioned orders from the court and the council. It is, therefore, not correct to say that he had acted
without authority or taken the law into his hands in issuing his order.

Neither can it be said that he acted whimsically in exercising his authority for it has been established that he directed the demolition of the
stalls only after, upon his instructions, the municipal attorney had conducted an investigation, to look into the complaint filed by the
Association of Concerned Citizens and Consumers of San Fernando. 26 There is evidence that the petitioners were notified of this
hearing, 27which they chose to disregard. Photographs of the disputed area, 28 which does look congested and ugly, show that the complaint
was valid and that the area really needed to be cleared, as recommended by the municipal attorney.

The Court observes that even without such investigation and recommendation, the respondent mayor was justified in ordering the area
cleared on the strength alone of its status as a public plaza as declared by the judicial and legislative authorities. In calling first for the
investigation (which the petitioner saw fit to boycott), he was just scrupulously paying deference to the requirements of due process, to
remove an taint of arbitrariness in the action he was caged upon to take.

Since the occupation of the place in question in 1961 by the original 24 stallholders (whose number later ballooned to almost 200), it has
deteriorated increasingly to the great prejudice of the community in general. The proliferation of stags therein, most of them makeshift and of
flammable materials, has converted it into a veritable fire trap, which, added to the fact that it obstructs access to and from the public market
itself, has seriously endangered public safety. The filthy condition of the talipapa, where fish and other wet items are sold, has aggravated
health and sanitation problems, besides pervading the place with a foul odor that has spread into the surrounding areas. The entire place is
unsightly, to the dismay and embarrassment of the inhabitants, who want it converted into a showcase of the town of which they can all be
proud. The vendors in the talipapa have also spilled into the street and obstruct the flow of traffic, thereby impairing the convenience of
motorists and pedestrians alike. The regular stallholders in the public market, who pay substantial rentals to the municipality, are deprived of
a sizable volume of business from prospective customers who are intercepted by the talipapa vendors before they can reach the market
proper. On top of all these, the people are denied the proper use of the place as a public plaza, where they may spend their leisure in a
relaxed and even beautiful environment and civic and other communal activities of the town can be held.

The problems caused by the usurpation of the place by the petitioners are covered by the police power as delegated to the municipality under
the general welfare clause. 29 This authorizes the municipal council "to enact such ordinances and make such regulations, not repugnant to
law, as may be necessary to carry into effect and discharge the powers and duties conferred upon it by law and such as shall seem
necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort, and
convenience of the municipality and the inhabitants thereof, and for the protection of property therein." This authority was validly exercised in
this case through the adoption of Resolution No. 29, series of 1964, by the municipal council of San Fernando.

Even assuming a valid lease of the property in dispute, the resolution could have effectively terminated the agreement for it is settled that the
police power cannot be surrendered or bargained away through the medium of a contract. 30 In fact, every contract affecting the public
interest suffers a congenital infirmity in that it contains an implied reservation of the police power as a postulate of the existing legal
order. 31 This power can be activated at any time to change the provisions of the contract, or even abrogate it entirely, for the promotion or
protection of the general welfare. Such an act will not militate against the impairment clause, which is subject to and limited by the paramount
police power. 32

We hold that the respondent judge did not commit grave abuse of discretion in denying the petition for prohibition. On the contrary, he acted
correctly in sustaining the right and responsibility of the mayor to evict the petitioners from the disputed area and clear it of an the structures
illegally constructed therein.

The Court feels that it would have been far more amiable if the petitioners themselves, recognizing their own civic duty, had at the outset
desisted from their original stance and withdrawn in good grace from the disputed area to permit its peaceful restoration as a public plaza and
parking place for the benefit of the whole municipality. They owned this little sacrifice to the community in general which has suffered all
these many years because of their intransigence. Regrettably, they have refused to recognize that in the truly democratic society, the
interests of the few should yield to those of the greater number in deference to the principles that the welfare of the people is the supreme
law and overriding purpose. We do not see any altruism here. The traditional ties of sharing are absent here. What we find, sad to say, is a
cynical disdaining of the spirit of "bayanihan," a selfish rejection of the cordial virtues of "pakikisama " and "pagbibigayan" which are the
hallmarks of our people.

WHEREFORE, the petition is DISMISSED. The decision dated July 19, 1982, and the order-dated August 5, 1982, are AFFIRMED. The
temporary restraining order dated August 9, 1982, is LIFTED. This decision is immediately executory. Costs against the petitioners.

SO ORDERED.

Property 46
 16.) G.R. No. L-66575 September 30, 1986

ADRIANO MANECLANG, JULIETA, RAMONA, VICTOR, ANTONINA, LOURDES, TEODORO and MYRNA, all surnamed
MANECLANG, petitioners, vs. THE INTERMEDIATE APPELLATE COURT and ALFREDO MAZA, CORLETO CASTRO, SALOME
RODRIGUEZ, EDUCARDO CUISON, FERNANDO ZARCILLA, MARIANO GABRIEL, NICOMEDES CORDERO, CLETO PEDROZO,
FELIX SALARY and JOSE PANLILIO, respondents. FERNAN, J.:

Petitioners Adriano Maneclang, et. al. filed before the then Court of First Instance of Pangasinan, Branch XI a complaint for quieting of title
over a certain fishpond located within the four [41 parcels of land belonging to them situated in Barrio Salomague, Bugallon, Pangasinan, and
the annulment of Resolutions Nos. 38 and 95 of the Municipal Council of Bugallon Pangasinan. The trial court dismissed the complaint in a
decision dated August 15, 1975 upon a finding that the body of water traversing the titled properties of petitioners is a creek constituting a
tributary of the Agno River; therefore public in nature and not subject to private appropriation. The lower court likewise held that Resolution
No. 38, ordering an ocular inspection of the Cayangan Creek situated between Barrios Salomague Sur and Salomague Norte, and
Resolution No. 95 authorizing public bidding for the lease of all municipal ferries and fisheries, including the fishpond under consideration,
were passed by respondents herein as members of the Municipal Council of Bugallon, Pangasinan in the exercise of their legislative powers.
Property 47
Petitioners appealed said decision to the Intermediate Appellate Court, which affirmed the same on April 29, 1983. Hence, this petition for
review on certiorari.

Acting on the petition, the Court required the respondents to comment thereon. However, before respondents could do so, petitioners
manifested that for lack of interest on the part of respondent Alfredo Maza, the awardee in the public bidding of the fishpond, the parties
desire to amicably settle the case by submitting to the Court a Compromise Agreement praying that judgment be rendered recognizing the
ownership of petitioners over the land the body of water found within their titled properties, stating therein, among other things, that "to
pursue the case, the same will not amount to any benefit of the parties, on the other hand it is to the advantage and benefit of the municipality
if the ownership of the land and the water found therein belonging to petitioners be recognized in their favor as it is now clear that after the
National Irrigation Administration [NIA] had built the dike around the land, no water gets in or out of the land. 1

The stipulations contained in the Compromise Agreement partake of the nature of an adjudication of ownership in favor of herein petitioners
of the fishpond in dispute, which, as clearly found by the lower and appellate courts, was originally a creek forming a tributary of the Agno
River. Considering that as held in the case of Mercado vs. Municipal President of Macabebe, 59 Phil. 592 [1934], a creek, defined as a
recess or arm extending from a river and participating in the ebb and flow of the sea, is a property belonging to the public domain which is not
susceptible to private appropriation and acquisitive prescription, and as a public water, it cannot be registered under the Torrens System in
the name of any individual [Diego v. Court of Appeals, 102 Phil. 494; Mangaldan v. Manaoag, 38 Phil. 4551; and considering further that
neither the mere construction of irrigation dikes by the National Irrigation Administration which prevented the water from flowing in and out of
the subject fishpond, nor its conversion into a fishpond, alter or change the nature of the creek as a property of the public domain, the Court
finds the Compromise Agreement null and void and of no legal effect, the same being contrary to law and public policy.

The finding that the subject body of water is a creek belonging to the public domain is a factual determination binding upon this Court. The
Municipality of Bugallon, acting thru its duly-constituted municipal council is clothed with authority to pass, as it did the two resolutions dealing
with its municipal waters, and it cannot be said that petitioners were deprived of their right to due process as mere publication of the notice of
the public bidding suffices as a constructive notice to the whole world.

IN VIEW OF THE FOREGOING, the Court Resolved to set aside the Compromise Agreement and declare the same null and void for being
contrary to law and public policy. The Court further resolved to DISMISS the instant petition for lack of merit.

SO ORDERED.

Feria (Chairman), Alampay, Gutierrez, Jr. and Paras, JJ., concur.

17. G.R. No. 92013 July 25, 1990

SALVADOR H. LAUREL, petitioner, vs. RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary
of Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents.

Property 48
G.R. No. 92047 July 25, 1990

DIONISIO S. OJEDA, petitioner, vs. EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN
RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND BIDDING COMMITTEES ON
THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN, respondents. Arturo M.
Tolentino for petitioner in 92013. GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from proceeding with the bidding for
the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February 21, 1990. We
granted the prayer for a temporary restraining order effective February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes
for a writ of mandamus to compel the respondents to fully disclose to the public the basis of their decision to push through with the sale of the
Roppongi property inspire of strong public opposition and to explain the proceedings which effectively prevent the participation of Filipino
citizens and entities in the bidding process.

The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March 13, 1990. After G.R. No. 92047, Ojeda v.
Secretary Macaraig, et al. was filed, the respondents were required to file a comment by the Court's resolution dated February 22, 1990. The
two petitions were consolidated on March 27, 1990 when the memoranda of the parties in the Laurel case were deliberated upon.

The Court could not act on these cases immediately because the respondents filed a motion for an extension of thirty (30) days to file
comment in G.R. No. 92047, followed by a second motion for an extension of another thirty (30) days which we granted on May 8, 1990, a
third motion for extension of time granted on May 24, 1990 and a fourth motion for extension of time which we granted on June 5, 1990 but
calling the attention of the respondents to the length of time the petitions have been pending. After the comment was filed, the petitioner in
G.R. No. 92047 asked for thirty (30) days to file a reply. We noted his motion and resolved to decide the two (2) cases.

The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government under the Reparations
Agreement entered into with Japan on May 9, 1956, the other lots being:

(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of approximately 2,489.96 square meters, and
is at present the site of the Philippine Embassy Chancery;

(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square meters and categorized as a commercial
lot now being used as a warehouse and parking lot for the consulate staff; and

(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a residential lot which is now vacant.

The properties and the capital goods and services procured from the Japanese government for national development projects are part of the
indemnification to the Filipino people for their losses in life and property and their suffering during World War II.

The Reparations Agreement provides that reparations valued at $550 million would be payable in twenty (20) years in accordance with
annual schedules of procurements to be fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement). Rep. Act No.
1789, the Reparations Law, prescribes the national policy on procurement and utilization of reparations and development loans. The
procurements are divided into those for use by the government sector and those for private parties in projects as the then National Economic
Council shall determine. Those intended for the private sector shall be made available by sale to Filipino citizens or to one hundred (100%)
percent Filipino-owned entities in national development projects.

The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed under the heading
"Government Sector", through Reparations Contract No. 300 dated June 27, 1958. The Roppongi property consists of the land and building
"for the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503). As intended, it became the site of the
Philippine Embassy until the latter was transferred to Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to
the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that time.

A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J. Valdez, to make the
property the subject of a lease agreement with a Japanese firm - Kajima Corporation — which shall construct two (2) buildings in Roppongi
and one (1) building in Nampeidai and renovate the present Philippine Chancery in Nampeidai. The consideration of the construction would
be the lease to the foreign corporation of one (1) of the buildings to be constructed in Roppongi and the two (2) buildings in Nampeidai. The
other building in Roppongi shall then be used as the Philippine Embassy Chancery. At the end of the lease period, all the three leased
buildings shall be occupied and used by the Philippine government. No change of ownership or title shall occur. (See Annex "B" to Reply to
Comment) The Philippine government retains the title all throughout the lease period and thereafter. However, the government has not acted

Property 49
favorably on this proposal which is pending approval and ratification between the parties. Instead, on August 11, 1986, President Aquino
created a committee to study the disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan through Administrative
Order No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.

On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of separations' capital goods
and services in the event of sale, lease or disposition. The four properties in Japan including the Roppongi were specifically mentioned in the
first "Whereas" clause.

Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision to sell the
reparations properties starting with the Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225 million.
The first bidding was a failure since only one bidder qualified. The second one, after postponements, has not yet materialized. The last
scheduled bidding on February 21, 1990 was restrained by his Court. Later, the rules on bidding were changed such that the $225 million
floor price became merely a suggested floor price.

The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No. 92013 objects to the alienation of the
Roppongi property to anyone while the petitioner in G.R. No. 92047 adds as a principal objection the alleged unjustified bias of the Philippine
government in favor of selling the property to non-Filipino citizens and entities. These petitions have been consolidated and are resolved at
the same time for the objective is the same - to stop the sale of the Roppongi property.

The petitioner in G.R. No. 92013 raises the following issues:

(1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?; and

(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi property?

Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government to alienate the Roppongi property assails
the constitutionality of Executive Order No. 296 in making the property available for sale to non-Filipino citizens and entities. He also
questions the bidding procedures of the Committee on the Utilization or Disposition of Philippine Government Properties in Japan for being
discriminatory against Filipino citizens and Filipino-owned entities by denying them the right to be informed about the bidding requirements.

II

In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were acquired as part of the reparations from the
Japanese government for diplomatic and consular use by the Philippine government. Vice-President Laurel states that the Roppongi property
is classified as one of public dominion, and not of private ownership under Article 420 of the Civil Code (See infra).

The petitioner submits that the Roppongi property comes under "property intended for public service" in paragraph 2 of the above provision.
He states that being one of public dominion, no ownership by any one can attach to it, not even by the State. The Roppongi and related
properties were acquired for "sites for chancery, diplomatic, and consular quarters, buildings and other improvements" (Second Year
Reparations Schedule). The petitioner states that they continue to be intended for a necessary service. They are held by the State in
anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or to put it in
more simple terms, it cannot be alienated nor be the subject matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]).
Noting the non-use of the Roppongi property at the moment, the petitioner avers that the same remains property of public dominion so long
as the government has not used it for other purposes nor adopted any measure constituting a removal of its original purpose or use.

The respondents, for their part, refute the petitioner's contention by saying that the subject property is not governed by our Civil Code but by
the laws of Japan where the property is located. They rely upon the rule of lex situs which is used in determining the applicable law regarding
the acquisition, transfer and devolution of the title to a property. They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of
the Secretary of Justice which used the lex situs in explaining the inapplicability of Philippine law regarding a property situated in Japan.

The respondents add that even assuming for the sake of argument that the Civil Code is applicable, the Roppongi property has ceased to
become property of public dominion. It has become patrimonial property because it has not been used for public service or for diplomatic
purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and because the intention by the Executive Department and the
Congress to convert it to private use has been manifested by overt acts, such as, among others: (1) the transfer of the Philippine Embassy to
Nampeidai (2) the issuance of administrative orders for the possibility of alienating the four government properties in Japan; (3) the issuance
of Executive Order No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the Comprehensive Agrarian Reform Law] on June 10,
1988 which contains a provision stating that funds may be taken from the sale of Philippine properties in foreign countries; (5) the holding of
the public bidding of the Roppongi property but which failed; (6) the deferment by the Senate in Resolution No. 55 of the bidding to a future
date; thus an acknowledgment by the Senate of the government's intention to remove the Roppongi property from the public service purpose;
and (7) the resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which sought to enjoin the
second bidding of the Roppongi property scheduled on March 30, 1989.
Property 50
III

In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of Executive Order No. 296. He had earlier filed
a petition in G.R. No. 87478 which the Court dismissed on August 1, 1989. He now avers that the executive order contravenes the
constitutional mandate to conserve and develop the national patrimony stated in the Preamble of the 1987 Constitution. It also allegedly
violates:

(1) The reservation of the ownership and acquisition of alienable lands of the public domain to Filipino citizens. (Sections 2 and 3, Article XII,
Constitution; Sections 22 and 23 of Commonwealth Act 141).i•t•c-aüsl

(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering the national economy and patrimony
(Section 10, Article VI, Constitution);

(3) The protection given to Filipino enterprises against unfair competition and trade practices;

(4) The guarantee of the right of the people to information on all matters of public concern (Section 7, Article III, Constitution);

(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino citizens of capital goods received by the
Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act No. 1789); and

(6) The declaration of the state policy of full public disclosure of all transactions involving public interest (Section 28, Article III, Constitution).

Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive order is a misapplication of public funds
He states that since the details of the bidding for the Roppongi property were never publicly disclosed until February 15, 1990 (or a few days
before the scheduled bidding), the bidding guidelines are available only in Tokyo, and the accomplishment of requirements and the selection
of qualified bidders should be done in Tokyo, interested Filipino citizens or entities owned by them did not have the chance to comply with
Purchase Offer Requirements on the Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225 million from which price
capital gains tax under Japanese law of about 50 to 70% of the floor price would still be deducted.

IV

The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and the three related properties were through
reparations agreements, that these were assigned to the government sector and that the Roppongi property itself was specifically designated
under the Reparations Agreement to house the Philippine Embassy.

The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of the Reparations Agreement
and the corresponding contract of procurement which bind both the Philippine government and the Japanese government.

There can be no doubt that it is of public dominion unless it is convincingly shown that the property has become patrimonial. This, the
respondents have failed to do.

As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a special collective
ownership for general use and enjoyment, an application to the satisfaction of collective needs, and resides in the social group. The purpose
is not to serve the State as a juridical person, but the citizens; it is intended for the common and public welfare and cannot be the object of
appropration. (Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p.
26).

The applicable provisions of the Civil Code are:

ART. 419. Property is either of public dominion or of private ownership.

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.

Property 51
 ART. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial
property.

The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging to the State and
intended for some public service.

Has the intention of the government regarding the use of the property been changed because the lot has been Idle for some years? Has it
become patrimonial?

The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial
property. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481 [1975]). A property continues to be part of the public domain, not available for private appropriation or ownership until there is a
formal declaration on the part of the government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).

The respondents enumerate various pronouncements by concerned public officials insinuating a change of intention. We emphasize,
however, that an abandonment of the intention to use the Roppongi property for public service and to make it patrimonial property under
Article 422 of the Civil Code must be definiteAbandonment cannot be inferred from the non-use alone specially if the non-use was
attributable not to the government's own deliberate and indubitable will but to a lack of financial support to repair and improve the property
(See Heirs of Felino Santiago v. Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct legal
premises.

A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi property's original purpose. Even the
failure by the government to repair the building in Roppongi is not abandonment since as earlier stated, there simply was a shortage of
government funds. The recent Administrative Orders authorizing a study of the status and conditions of government properties in Japan were
merely directives for investigation but did not in any way signify a clear intention to dispose of the properties.

Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in its text expressly authorizing the sale of
the four properties procured from Japan for the government sector. The executive order does not declare that the properties lost their public
character. It merely intends to make the properties available to foreigners and not to Filipinos alone in case of a sale, lease or other
disposition. It merely eliminates the restriction under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens and one
hundred (100%) percent Filipino-owned entities. The text of Executive Order No. 296 provides:

Section 1. The provisions of Republic Act No. 1789, as amended, and of other laws to the contrary notwithstanding, the
above-mentioned properties can be made available for sale, lease or any other manner of disposition to non-Filipino
citizens or to entities owned by non-Filipino citizens.

Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the three other properties were earlier
converted into alienable real properties. As earlier stated, Rep. Act No. 1789 differentiates the procurements for the government sector and
the private sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can be sold to end-users who must be Filipinos
or entities owned by Filipinos. It is this nationality provision which was amended by Executive Order No. 296.

Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds for its implementation, the proceeds of
the disposition of the properties of the Government in foreign countries, did not withdraw the Roppongi property from being classified as one
of public dominion when it mentions Philippine properties abroad. Section 63 (c) refers to properties which are alienable and not to those
reserved for public use or service. Rep Act No. 6657, therefore, does not authorize the Executive Department to sell the Roppongi property. It
merely enumerates possible sources of future funding to augment (as and when needed) the Agrarian Reform Fund created under Executive
Order No. 299. Obviously any property outside of the commerce of man cannot be tapped as a source of funds.

The respondents try to get around the public dominion character of the Roppongi property by insisting that Japanese law and not our Civil
Code should apply.

It is exceedingly strange why our top government officials, of all people, should be the ones to insist that in the sale of extremely valuable
government property, Japanese law and not Philippine law should prevail. The Japanese law - its coverage and effects, when enacted, and
exceptions to its provision — is not presented to the Court It is simply asserted that the lex loci rei sitae or Japanese law should apply without
stating what that law provides. It is a ed on faith that Japanese law would allow the sale.

We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict of law situation arises only when:
(1) There is a dispute over the title or ownership of an immovable, such that the capacity to take and transfer immovables, the formalities of
conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are to be determined (See
Salonga, Private International Law, 1981 ed., pp. 377-383); and (2) A foreign law on land ownership and its conveyance is asserted to
conflict with a domestic law on the same matters. Hence, the need to determine which law should apply.
Property 52
In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the property belongs to the Philippines. The issue is
the authority of the respondent officials to validly dispose of property belonging to the State. And the validity of the procedures adopted to
effect its sale. This is governed by Philippine Law. The rule of lex situs does not apply.

The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex situs rule is misplaced. The opinion does not
tackle the alienability of the real properties procured through reparations nor the existence in what body of the authority to sell them. In
discussing who are capable of acquiring the lots, the Secretary merely explains that it is the foreign law which should determine who can
acquire the properties so that the constitutional limitation on acquisition of lands of the public domain to Filipino citizens and entities wholly
owned by Filipinos is inapplicable. We see no point in belaboring whether or not this opinion is correct. Why should we discuss who can
acquire the Roppongi lot when there is no showing that it can be sold?

The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the investigating committee to sell the
Roppongi property was premature or, at the very least, conditioned on a valid change in the public character of the Roppongi property.
Moreover, the approval does not have the force and effect of law since the President already lost her legislative powers. The Congress had
already convened for more than a year.

Assuming for the sake of argument, however, that the Roppongi property is no longer of public dominion, there is another obstacle to its sale
by the respondents.

There is no law authorizing its conveyance.

Section 79 (f) of the Revised Administrative Code of 1917 provides

Section 79 (f ) Conveyances and contracts to which the Government is a party. — In cases in which the Government of the
Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to any other
property the value of which is in excess of one hundred thousand pesos, the respective Department Secretary shall
prepare the necessary papers which, together with the proper recommendations, shall be submitted to the Congress of the
Philippines for approval by the same. Such deed, instrument, or contract shall be executed and signed by the President of
the Philippines on behalf of the Government of the Philippines unless the Government of the Philippines unless the
authority therefor be expressly vested by law in another officer. (Emphasis supplied)

The requirement has been retained in Section 48, Book I of the Administrative Code of 1987 (Executive Order No. 292).

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law
to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority
therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any
corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

It is not for the President to convey valuable real property of the government on his or her own sole will. Any such conveyance must be
authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence.

Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the Roppongi property does not withdraw the
property from public domain much less authorize its sale. It is a mere resolution; it is not a formal declaration abandoning the public character
of the Roppongi property. In fact, the Senate Committee on Foreign Relations is conducting hearings on Senate Resolution No. 734 which
raises serious policy considerations and calls for a fact-finding investigation of the circumstances behind the decision to sell the Philippine
government properties in Japan.

The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the constitutionality of Executive Order No. 296.
Contrary to respondents' assertion, we did not uphold the authority of the President to sell the Roppongi property. The Court stated that the
constitutionality of the executive order was not the real issue and that resolving the constitutional question was "neither necessary nor finally
determinative of the case." The Court noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the disposition of the
Roppongi property." In emphasizing that "the decision of the Executive to dispose of the Roppongi property to finance the CARP ... cannot be
questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court did not acknowledge the fact that the property became alienable nor did
it indicate that the President was authorized to dispose of the Roppongi property. The resolution should be read to mean that in case the
Property 53
Roppongi property is re-classified to be patrimonial and alienable by authority of law, the proceeds of a sale may be used for national
economic development projects including the CARP.

Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990 sale of the Roppongi property. We are
resolving the issues raised in these petitions, not the issues raised in 1989.

Having declared a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it alienable and a need
for legislative authority to allow the sale of the property, we see no compelling reason to tackle the constitutional issues raised by petitioner
Ojeda.

The Court does not ordinarily pass upon constitutional questions unless these questions are properly raised in appropriate cases and their
resolution is necessary for the determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional
question although properly presented by the record if the case can be disposed of on some other ground such as the application of a statute
or general law (Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).

The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:

The Roppongi property is not just like any piece of property. It was given to the Filipino people in reparation for the lives
and blood of Filipinos who died and suffered during the Japanese military occupation, for the suffering of widows and
orphans who lost their loved ones and kindred, for the homes and other properties lost by countless Filipinos during the
war. The Tokyo properties are a monument to the bravery and sacrifice of the Filipino people in the face of an invader; like
the monuments of Rizal, Quezon, and other Filipino heroes, we do not expect economic or financial benefits from them.
But who would think of selling these monuments? Filipino honor and national dignity dictate that we keep our properties in
Japan as memorials to the countless Filipinos who died and suffered. Even if we should become paupers we should not
think of selling them. For it would be as if we sold the lives and blood and tears of our countrymen. (Rollo- G.R. No. 92013,
p.147)

The petitioner in G.R. No. 92047 also states:

Roppongi is no ordinary property. It is one ceded by the Japanese government in atonement for its past belligerence for the
valiant sacrifice of life and limb and for deaths, physical dislocation and economic devastation the whole Filipino people
endured in World War II.

It is for what it stands for, and for what it could never bring back to life, that its significance today remains undimmed,
inspire of the lapse of 45 years since the war ended, inspire of the passage of 32 years since the property passed on to the
Philippine government.

Roppongi is a reminder that cannot — should not — be dissipated ... (Rollo-92047, p. 9)

It is indeed true that the Roppongi property is valuable not so much because of the inflated prices fetched by real property in Tokyo but more
so because of its symbolic value to all Filipinos — veterans and civilians alike. Whether or not the Roppongi and related properties will
eventually be sold is a policy determination where both the President and Congress must concur. Considering the properties' importance and
value, the laws on conversion and disposition of property of public dominion must be faithfully followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition is issued enjoining the respondents from
proceeding with the sale of the Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining Order is made
PERMANENT.

SO ORDERED.

Melencio-Herrera, Paras, Bidin, Griño-Aquino and Regalado, JJ., concur.

Separate Opinions

CRUZ, J., concurring:

I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations only for emphasis.

Property 54
It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property. When asked to do so at the
hearing on these petitions, the Solicitor General was at best ambiguous, although I must add in fairness that this was not his fault. The fact is
that there is -no such authority. Legal expertise alone cannot conjure that statutory permission out of thin air.

Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither does Rep. Act No. 6657,
which simply allows the proceeds of the sale of our properties abroad to be used for the comprehensive agrarian reform program. Senate
Res. No. 55 was a mere request for the deferment of the scheduled sale of tile Roppongi property, possibly to stop the transaction altogether;
and ill any case it is not a law. The sale of the said property may be authorized only by Congress through a duly enacted statute, and there is
no such law.

Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public official, from the lowest to
the highest, can act only by virtue of a valid authorization. I am happy to note that in the several cases where this Court has ruled against her,
the President of the Philippines has submitted to this principle with becoming grace.

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could help in further clarifying the
issues.

Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines policies. The President
executes such policies. The policies determined by Congress are embodied in legislative enactments that have to be approved by the
President to become law. The President, of course, recommends to Congress the approval of policies but, in the final analysis, it is Congress
that is the policy - determining branch of government.

The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and approved by the
President, and presidential acts implementing such laws, are in accordance with the Constitution.

The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between the Philippine and
Japanese governments. Under such agreement, this property was acquired by the Philippine government for a specific purpose, namely, to
serve as the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is a property of public dominion and intended for public
service, squarely falling within that class of property under Art. 420 of the Civil Code, which provides:

Art. 420. The following things are property of public dominion :

(1) ...

(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. (339a)

Public dominion property intended for public service cannot be alienated unless the property is first transformed into private property of the
state otherwise known as patrimonial property of the state. 1 The transformation of public dominion property to state patrimonial property
involves, to my mind, a policy decision. It is a policy decision because the treatment of the property varies according to its classification.
Consequently, it is Congress which can decide and declare the conversion of Roppongi from a public dominion property to a state patrimonial
property. Congress has made no such decision or declaration.

Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be approved by Congress, for
this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of the Administrative Code of 1987 provides:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law
to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President,
unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)

Property 55
But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any congressional authority
extended to the President to sell Roppongi thru public bidding or otherwise.

It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise without a prior congressional
approval, first, converting Roppongi from a public dominion property to a state patrimonial property, and, second, authorizing the President to
sell the same.

ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order earlier issued by this Court.

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of public dominion, and
hence, has become patrimonial property of the State. I understand that the parties are agreed that it was property intended for "public
service" within the contemplation of paragraph (2), of Article 430, of the Civil Code, and accordingly, land of State dominion, and beyond
human commerce. The lone issue is, in the light of supervening developments, that is non-user thereof by the National Government (for
diplomatic purposes) for the last thirteen years; the issuance of Executive Order No. 296 making it available for sale to any interested buyer;
the promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, making available for the program's financing, State
assets sold; the approval by the President of the recommendation of the investigating committee formed to study the property's utilization;
and the issuance of Resolution No. 55 of the Philippine Senate requesting for the deferment of its disposition it, "Roppongi", is still property of
the public dominion, and if it is not, how it lost that character.

When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have debated early. In a 1906
decision, 1 it was held that property of the public dominion, a public plaza in this instance, becomes patrimonial upon use thereof for purposes
other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been held that land, originally private property, has become of
public dominion upon its donation to the town and its conversion and use as a public plaza. 3 It is notable that under these three cases, the
character of the property, and any change occurring therein, depends on the actual use to which it is dedicated. 4

Much later, however, the Court held that "until a formal declaration on the part of the Government, through the executive department or the
Legislative, to the effect that the land . . . is no longer needed for [public] service- for public use or for special industries, [it] continue[s] to be
part of the public [dominion], not available for private expropriation or ownership." 5 So also, it was ruled that a political subdivision (the City of
Cebu in this case) alone may declare (under its charter) a city road abandoned and thereafter, to dispose of it. 6

In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it alienable and
a land for legislative authority to allow the sale of the property" 7 the majority lays stress to the fact that: (1) An affirmative act — executive or
legislative — is necessary to reclassify property of the public dominion, and (2) a legislative decree is required to make it alienable. It also
clears the uncertainties brought about by earlier interpretations that the nature of property-whether public or patrimonial is predicated on the
manner it is actually used, or not used, and in the same breath, repudiates the Government's position that the continuous non-use of
"Roppongi", among other arguments, for "diplomatic purposes", has turned it into State patrimonial property.

I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is presumed to be State
property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the same continue to be lands of the public
dominion unless and until reclassified by the Executive Branch of the Government; 9 and (3) All natural resources, under the Constitution,
and subject to exceptional cases, belong to the State. 10

I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.

For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku Tokyo, Japan
(hereinafter referred to as the "Roppongi property") may be characterized as property of public dominion, within the meaning of Article 420
(2) of the Civil Code:

[Property] which belong[s] to the State, without being for public use, and are intended for some public service -.

It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple threefold classification
found in Article 420 of the Civil Code ("property for public use property "intended for some public service" and property intended "for the
development of the national wealth") all property owned by the Republic of the Philippines whether found within the territorial boundaries of
the Republic or located within the territory of another sovereign State, is not self-evident. The first item of the classification property intended
Property 56
for public use — can scarcely be properly applied to property belonging to the Republic but found within the territory of another State. The
third item of the classification property intended for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil
Code of 1889, by mines or mineral properties. Again, mineral lands owned by a sovereign State are rarely, if ever, found within the territorial
base of another sovereign State. The task of examining in detail the applicability of the classification set out in Article 420 of our Civil Code to
property that the Philippines happens to own outside its own boundaries must, however, be left to academicians.

For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this Court. The issues before
us relate essentially to authority to sell the Roppongi property so far as Philippine law is concerned.

The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into patrimonial property or property
of the private domain of the State; and (b) assuming an affirmative answer to (a), whether or not there is legal authority to dispose of the
Roppongi property.

Addressing the first issue of conversion of property of public dominion intended for some public service, into property of the private domain of
the Republic, it should be noted that the Civil Code does not address the question of who has authority to effect such conversion. Neither
does the Civil Code set out or refer to any procedure for such conversion.

Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed out in his concurring
opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that if the land in question formed part of the public
domain, the trial court should have declared the same no longer necessary for public use or public purposes and which would, therefore,
have become disposable and available for private ownership. Mr. Justice Montemayor, speaking for the Court, said:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by the waters of the
sea and is not necessary for purposes of public utility, or for the establishment of special industries, or for coast-guard
service, the government shall declare it to be the property of the owners of the estates adjacent thereto and as an
increment thereof. We believe that only the executive and possibly the legislative departments have the authority and the
power to make the declaration that any land so gained by the sea, is not necessary for purposes of public utility, or for the
establishment of special industries, or for coast-guard service. If no such declaration has been made by said departments,
the lot in question forms part of the public domain. (Natividad v. Director of Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde v. Director of
Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).

... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine whether any public
land are to be used for the purposes specified in Article 4 of the Law of Waters. Consequently, until a formal declaration on
the part of the Government, through the executive department or the Legislature, to the effect that the land in question is no
longer needed for coast-guard service, for public use or for special industries, they continue to be part of the public domain
not available for private appropriation or ownership. (108 Phil. at 338-339; emphasis supplied)

Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of public dominion into
patrimonial property of the State. No particular formula or procedure of conversion is specified either in statute law or in case law. Article 422
of the Civil Code simply states 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". I respectfully submit, therefore, that the only requirement which is legitimately imposable is that
the intent to convert must be reasonably clear from a consideration of the acts or acts of the Executive Department or of the Legislative
Department which are said to have effected such conversion.

The same legal situation exists in respect of conversion of property of public dominion belonging to municipal corporations, i.e., local
governmental units, into patrimonial property of such entities. In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City Council
of Cebu by resolution declared a certain portion of an existing street as an abandoned road, "the same not being included in the city
development plan". Subsequently, by another resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through
public bidding. Although there was no formal and explicit declaration of conversion of property for public use into patrimonial property, the
Supreme Court said:

xxx xxx xxx

(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.

Property 57
 Article 422 of the Civil Code expressly provides that "Property of public dominion, when no longer intended for public use of
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, the withdrawal of the property in question from public use and its subsequent sale to the petitioner is
valid. Hence, the petitioner has a registrable title over the lot in question. (66 SCRA at 484-; emphasis supplied)

Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal corporations simple non-use
or the actual dedication of public property to some use other than "public use" or some "public service", was sufficient legally to convert such
property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124
[1913]; Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).

I would also add that such was the case not only in respect of' property of municipal corporations but also in respect of property of the State
itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has been carried over verbatim into our Civil Code by
Article 422 thereof, wrote:

La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de dominio publico dejan de
serlo. Si la Administracion o la autoridad competente legislative realizan qun acto en virtud del cual cesa el destino o uso
publico de los bienes de que se trata naturalmente la dificultad queda desde el primer momento resuelta. Hay un punto de
partida cierto para iniciar las relaciones juridicas a que pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion
expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el destino publico de los bienes; ahora bien, en este
caso, y para los efectos juridicos que resultan de entrar la cosa en el comercio de los hombres,' se entedera que se ha
verificado la conversion de los bienes patrimoniales?

El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por nuestra parte creemos que tal
debe ser la soluciion. El destino de las cosas no depende tanto de una declaracion expresa como del uso publico de las
mismas, y cuanda el uso publico cese con respecto de determinados bienes, cesa tambien su situacion en el dominio
publico. Si una fortaleza en ruina se abandona y no se repara, si un trozo de la via publica se abandona tambien por
constituir otro nuevo an mejores condiciones....ambos bienes cesan de estar Codigo, y leyes especiales mas o memos
administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis supplied)

The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or definitely, to convert the
Roppongi property into patrimonial property — of the Republic. Assuming that to be the case, it is respectfully submitted that cumulative
effect of the executive acts here involved was to convert property originally intended for and devoted to public service into patrimonial
property of the State, that is, property susceptible of disposition to and appropration by private persons. These executive acts, in their
totality if not each individual act, make crystal clear the intent of the Executive Department to effect such conversion. These executive acts
include:

(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the disposition/utilization of the Government's
property in Japan, The Committee was composed of officials of the Executive Department: the Executive Secretary; the Philippine
Ambassador to Japan; and representatives of the Department of Foreign Affairs and the Asset Privatization Trust. On 19 September 1988,
the Committee recommended to the President the sale of one of the lots (the lot specifically in Roppongi) through public bidding. On 4
October 1988, the President approved the recommendation of the Committee.

On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign Affairs of the Republic's
intention to dispose of the property in Roppongi. The Japanese Government through its Ministry of Foreign Affairs replied that it interposed
no objection to such disposition by the Republic. Subsequently, the President and the Committee informed the leaders of the House of
Representatives and of the Senate of the Philippines of the proposed disposition of the Roppongi property.

(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority opinion is right in saying that
Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property, it is here submitted with respect that Executive Order
No. 296 is more than sufficient to indicate an intention to convert the property previously devoted to public service into patrimonial property
that is capable of being sold or otherwise disposed of

(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming (but only arguendo) that
non-use does not, by itself, automatically convert the property into patrimonial property. I respectfully urge that prolonged non-use, conjoined
with the other factors here listed, was legally effective to convert the lot in Roppongi into patrimonial property of the State. Actually, as
already pointed out, case law involving property of municipal corporations is to the effect that simple non-use or the actual dedication of
Property 58
public property to some use other than public use or public service, was sufficient to convert such property into patrimonial property of the
local governmental entity concerned. Also as pointed out above, Manresa reached the same conclusion in respect of conversion of property
of the public domain of the State into property of the private domain of the State.

The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use was attributable not to the
Government's own deliberate and indubitable will but to lack of financial support to repair and improve the property" (Majority Opinion, p. 13).
With respect, it may be stressed that there is no abandonment involved here, certainly no abandonment of property or of property rights.
What is involved is the charge of the classification of the property from property of the public domain into property of the private domain of the
State. Moreover, if for fourteen (14) years, the Government did not see fit to appropriate whatever funds were necessary to maintain the
property in Roppongi in a condition suitable for diplomatic representation purposes, such circumstance may, with equal logic, be construed
as a manifestation of the crystalizing intent to change the character of the property.

(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in Roppongi. The circumstance
that this bidding was not successful certainly does not argue against an intent to convert the property involved into property that is disposable
by bidding.

The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on the part of the
Executive Department (with the knowledge of the Legislative Department) to convert the property involved into patrimonial property that is
susceptible of being sold.

II

Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of whether or not there exists
legal authority for the sale or disposition of the Roppongi property.

The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:

SEC. 79 (f). Conveyances and contracts to which the Government is a party. — In cases in which the Government of the
Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to any other
property the value of which is in excess of one hundred thousand pesos, the respective Department Secretary shall
prepare the necessary papers which, together with the proper recommendations, shall be submitted to the Congress of the
Philippines for approval by the same. Such deed, instrument, or contract shall be executed and signed by the President of
the Philippines on behalf of the Government of the Philippines unless the authority therefor be expressly vested by law in
another officer. (Emphasis supplied)

The majority opinion then goes on to state that: "[T]he requirement has been retained in Section 4, Book I of the Administrative Code of 1987
(Executive Order No. 292)" which reads:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law
to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority
therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any
corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

Two points need to be made in this connection. Firstly, the requirement of obtaining specific approval of Congress when the price of the real
property being disposed of is in excess of One Hundred Thousand Pesos (P100,000.00) under the Revised Administrative Code of 1917, has
been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the present Administrative Code refers to is authorization
by law for the conveyance. Section 48 does not purport to be itself a source of legal authority for conveyance of real property of the
Government. For Section 48 merely specifies the official authorized to execute and sign on behalf of the Government the deed of
conveyance in case of such a conveyance.

Secondly, examination of our statute books shows that authorization by law for disposition of real property of the private domain of the
Government, has been granted by Congress both in the form of (a) a general, standing authorization for disposition of patrimonial property of
the Government; and (b) specific legislation authorizing the disposition of particular pieces of the Government's patrimonial property.

Property 59
Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act No. 3038, entitled "An Act
Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of the Private Domain of the Government of the
Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full text of this statute is as follows:

Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the authority
of the same:

SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the Environment and Natural
Resources) is hereby authorized to sell or lease land of the private domain of the Government of the Philippine Islands, or
any part thereof, to such persons, corporations or associations as are, under the provisions of Act Numbered Twenty-eight
hundred and seventy-four, (now Commonwealth Act No. 141, as amended) known as the Public Land Act, entitled to apply
for the purchase or lease or agricultural public land.

SECTION 2. The sale of the land referred to in the preceding section shall, if such land is agricultural, be made in the
manner and subject to the limitations prescribed in chapters five and six, respectively, of said Public Land Act, and if it be
classified differently, in conformity with the provisions of chapter nine of said Act: Provided, however, That the land
necessary for the public service shall be exempt from the provisions of this Act.

SECTION 3. This Act shall take effect on its approval.

Approved, March 9, 1922. (Emphasis supplied)

Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be noted that Chapter 9 of the
old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act (Commonwealth Act No. 141, as amended) and that both
statutes refer to: "any tract of land of the public domain which being neither timber nor mineral land, is intended to be used for residential
purposes or for commercial or industrial purposes other than agricultural" (Emphasis supplied).i•t•c-aüsl In other words, the statute covers the
sale or lease or residential, commercial or industrial land of the private domain of the State.

Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December 1954, the then Secretary
of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled, respectively:
"Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the Republic of the Philippines"; and "Supplementary
Regulations Governing the Lease of Lands of Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).

1
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been repealed.

Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by certain earlier statutes. The
first of these was Act No. 1120, enacted on 26 April 1904, which provided for the disposition of the friar lands, purchased by the Government
from the Roman Catholic Church, to bona fide settlers and occupants thereof or to other persons. In Jacinto v. Director of Lands (49 Phil. 853
[1926]), these friar lands were held to be private and patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914,
authorized the sale of the San Lazaro Estate located in the City of Manila, which had also been purchased by the Government from the
Roman Catholic Church. In January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands and buildings owned by the
Hospital and the Foundation of San Lazaro theretofor leased by private persons, and which were also acquired by the Philippine
Government.

After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the President to dispose of a
specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953, which authorized the

President to sell an Identified parcel of land of the private domain of the National Government to the National Press Club of the Philippines,
and to other recognized national associations of professionals with academic standing, for the nominal price of P1.00. It appears relevant to
note that Republic Act No. 905 was not an outright disposition in perpetuity of the property involved- it provided for reversion of the property
to the National Government in case the National Press Club stopped using it for its headquarters. What Republic Act No. 905 authorized was
really a donation, and not a sale.

The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of the Roppongi property
which, in my view, has been converted into patrimonial property of the Republic. 2

To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the Philippines but also to
patrimonial property found outside the Philippines, may appear strange or unusual. I respectfully submit that such position is not any more
unusual or strange than the assumption that Article 420 of the Civil Code applies not only to property of the Republic located within Philippine
territory but also to property found outside the boundaries of the Republic.

Property 60
It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the President (Villena v.
Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of control exercised by the President over department
heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the function or duty that is specifically lodged in the
Secretary of the Department of Environment and Natural Resources (Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very least, the
President retains the power to approve or disapprove the exercise of that function or duty when done by the Secretary of Environment and
Natural Resources.

It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of existence of legal power or
authority. They have nothing to do with much debated questions of wisdom or propriety or relative desirability either of the proposed
disposition itself or of the proposed utilization of the anticipated proceeds of the property involved. These latter types of considerations He
within the sphere of responsibility of the political departments of government the Executive and the Legislative authorities.

For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.

Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.

Separate Opinions

CRUZ, J., concurring:

I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations only for emphasis.

It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property. When asked to do so at the
hearing on these petitions, the Solicitor General was at best ambiguous, although I must add in fairness that this was not his fault. The fact is
that there is -no such authority. Legal expertise alone cannot conjure that statutory permission out of thin air.

Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither does Rep. Act No. 6657,
which simply allows the proceeds of the sale of our properties abroad to be used for the comprehensive agrarian reform program. Senate
Res. No. 55 was a mere request for the deferment of the scheduled sale of tile Roppongi property, possibly to stop the transaction altogether;
and ill any case it is not a law. The sale of the said property may be authorized only by Congress through a duly enacted statute, and there is
no such law.

Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public official, from the lowest to
the highest, can act only by virtue of a valid authorization. I am happy to note that in the several cases where this Court has ruled against her,
the President of the Philippines has submitted to this principle with becoming grace.

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could help in further clarifying the
issues.

Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines policies. The President
executes such policies. The policies determined by Congress are embodied in legislative enactments that have to be approved by the
President to become law. The President, of course, recommends to Congress the approval of policies but, in the final analysis, it is Congress
that is the policy - determining branch of government.

The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and approved by the
President, and presidential acts implementing such laws, are in accordance with the Constitution.

The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between the Philippine and
Japanese governments. Under such agreement, this property was acquired by the Philippine government for a specific purpose, namely, to
serve as the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is a property of public dominion and intended for public
service, squarely falling within that class of property under Art. 420 of the Civil Code, which provides:

Art. 420. The following things are property of public dominion :

(1) ...

Property 61
 (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. (339a)

Public dominion property intended for public service cannot be alienated unless the property is first transformed into private property of the
state otherwise known as patrimonial property of the state. 1 The transformation of public dominion property to state patrimonial property
involves, to my mind, a policy decision. It is a policy decision because the treatment of the property varies according to its classification.
Consequently, it is Congress which can decide and declare the conversion of Roppongi from a public dominion property to a state patrimonial
property. Congress has made no such decision or declaration.

Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be approved by Congress, for
this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of the Administrative Code of 1987 provides:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law
to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President,
unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)

But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any congressional authority
extended to the President to sell Roppongi thru public bidding or otherwise.

It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise without a prior congressional
approval, first, converting Roppongi from a public dominion property to a state patrimonial property, and, second, authorizing the President to
sell the same.

ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order earlier issued by this Court.

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of public dominion, and
hence, has become patrimonial property of the State. I understand that the parties are agreed that it was property intended for "public
service" within the contemplation of paragraph (2), of Article 430, of the Civil Code, and accordingly, land of State dominion, and beyond
human commerce. The lone issue is, in the light of supervening developments, that is non-user thereof by the National Government (for
diplomatic purposes) for the last thirteen years; the issuance of Executive Order No. 296 making it available for sale to any interested buyer;
the promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, making available for the program's financing, State
assets sold; the approval by the President of the recommendation of the investigating committee formed to study the property's utilization;
and the issuance of Resolution No. 55 of the Philippine Senate requesting for the deferment of its disposition it, "Roppongi", is still property of
the public dominion, and if it is not, how it lost that character.

When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have debated early. In a 1906
decision, 1 it was held that property of the public dominion, a public plaza in this instance, becomes patrimonial upon use thereof for purposes
other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been held that land, originally private property, has become of
public dominion upon its donation to the town and its conversion and use as a public plaza. 3 It is notable that under these three cases, the
character of the property, and any change occurring therein, depends on the actual use to which it is dedicated. 4

Much later, however, the Court held that "until a formal declaration on the part of the Government, through the executive department or the
Legislative, to the effect that the land . . . is no longer needed for [public] service- for public use or for special industries, [it] continue[s] to be
part of the public [dominion], not available for private expropriation or ownership." 5 So also, it was ruled that a political subdivision (the City of
Cebu in this case) alone may declare (under its charter) a city road abandoned and thereafter, to dispose of it. 6

In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it alienable and
a land for legislative authority to allow the sale of the property" 7 the majority lays stress to the fact that: (1) An affirmative act — executive or
legislative — is necessary to reclassify property of the public dominion, and (2) a legislative decree is required to make it alienable. It also
clears the uncertainties brought about by earlier interpretations that the nature of property-whether public or patrimonial is predicated on the
manner it is actually used, or not used, and in the same breath, repudiates the Government's position that the continuous non-use of
"Roppongi", among other arguments, for "diplomatic purposes", has turned it into State patrimonial property.

Property 62
I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is presumed to be State
property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the same continue to be lands of the public
dominion unless and until reclassified by the Executive Branch of the Government; 9 and (3) All natural resources, under the Constitution,
and subject to exceptional cases, belong to the State. 10

I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.

For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku Tokyo, Japan
(hereinafter referred to as the "Roppongi property") may be characterized as property of public dominion, within the meaning of Article 420
(2) of the Civil Code:

[Property] which belong[s] to the State, without being for public use, and are intended for some public service -.

It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple threefold classification
found in Article 420 of the Civil Code ("property for public use property "intended for some public service" and property intended "for the
development of the national wealth") all property owned by the Republic of the Philippines whether found within the territorial boundaries of
the Republic or located within the territory of another sovereign State, is not self-evident. The first item of the classification property intended
for public use — can scarcely be properly applied to property belonging to the Republic but found within the territory of another State. The
third item of the classification property intended for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil
Code of 1889, by mines or mineral properties. Again, mineral lands owned by a sovereign State are rarely, if ever, found within the territorial
base of another sovereign State. The task of examining in detail the applicability of the classification set out in Article 420 of our Civil Code to
property that the Philippines happens to own outside its own boundaries must, however, be left to academicians.

For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this Court. The issues before
us relate essentially to authority to sell the Roppongi property so far as Philippine law is concerned.

The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into patrimonial property or property
of the private domain of the State; and (b) assuming an affirmative answer to (a), whether or not there is legal authority to dispose of the
Roppongi property.

Addressing the first issue of conversion of property of public dominion intended for some public service, into property of the private domain of
the Republic, it should be noted that the Civil Code does not address the question of who has authority to effect such conversion. Neither
does the Civil Code set out or refer to any procedure for such conversion.

Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed out in his concurring
opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that if the land in question formed part of the public
domain, the trial court should have declared the same no longer necessary for public use or public purposes and which would, therefore,
have become disposable and available for private ownership. Mr. Justice Montemayor, speaking for the Court, said:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by the waters of the
sea and is not necessary for purposes of public utility, or for the establishment of special industries, or for coast-guard
service, the government shall declare it to be the property of the owners of the estates adjacent thereto and as an
increment thereof. We believe that only the executive and possibly the legislative departments have the authority and the
power to make the declaration that any land so gained by the sea, is not necessary for purposes of public utility, or for the
establishment of special industries, or for coast-guard service. If no such declaration has been made by said departments,
the lot in question forms part of the public domain. (Natividad v. Director of Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde v. Director of
Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).

... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine whether any public
land are to be used for the purposes specified in Article 4 of the Law of Waters. Consequently, until a formal declaration on
the part of the Government, through the executive department or the Legislature, to the effect that the land in question is no

Property 63
 longer needed for coast-guard service, for public use or for special industries, they continue to be part of the public domain
not available for private appropriation or ownership. (108 Phil. at 338-339; emphasis supplied)

Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of public dominion into
patrimonial property of the State. No particular formula or procedure of conversion is specified either in statute law or in case law. Article 422
of the Civil Code simply states 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". I respectfully submit, therefore, that the only requirement which is legitimately imposable is that
the intent to convert must be reasonably clear from a consideration of the acts or acts of the Executive Department or of the Legislative
Department which are said to have effected such conversion.

The same legal situation exists in respect of conversion of property of public dominion belonging to municipal corporations, i.e., local
governmental units, into patrimonial property of such entities. In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City Council
of Cebu by resolution declared a certain portion of an existing street as an abandoned road, "the same not being included in the city
development plan". Subsequently, by another resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through
public bidding. Although there was no formal and explicit declaration of conversion of property for public use into patrimonial property, the
Supreme Court said: xxx xxx xxx

(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 of
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, the withdrawal of the property in question from public use and its subsequent sale to the petitioner is
valid. Hence, the petitioner has a registrable title over the lot in question. (66 SCRA at 484-; emphasis supplied)

Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal corporations simple non-use
or the actual dedication of public property to some use other than "public use" or some "public service", was sufficient legally to convert such
property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124
[1913]; Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).

I would also add that such was the case not only in respect of' property of municipal corporations but also in respect of property of the State
itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has been carried over verbatim into our Civil Code by
Article 422 thereof, wrote:

La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de dominio publico dejan de
serlo. Si la Administracion o la autoridad competente legislative realizan qun acto en virtud del cual cesa el destino o uso
publico de los bienes de que se trata naturalmente la dificultad queda desde el primer momento resuelta. Hay un punto de
partida cierto para iniciar las relaciones juridicas a que pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion
expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el destino publico de los bienes; ahora bien, en este
caso, y para los efectos juridicos que resultan de entrar la cosa en el comercio de los hombres,' se entedera que se ha
verificado la conversion de los bienes patrimoniales?

El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por nuestra parte creemos que tal
debe ser la soluciion. El destino de las cosas no depende tanto de una declaracion expresa como del uso publico de las
mismas, y cuanda el uso publico cese con respecto de determinados bienes, cesa tambien su situacion en el dominio
publico. Si una fortaleza en ruina se abandona y no se repara, si un trozo de la via publica se abandona tambien por
constituir otro nuevo an mejores condiciones....ambos bienes cesan de estar Codigo, y leyes especiales mas o memos
administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis supplied)

The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or definitely, to convert the
Roppongi property into patrimonial property — of the Republic. Assuming that to be the case, it is respectfully submitted that cumulative
effect of the executive acts here involved was to convert property originally intended for and devoted to public service into patrimonial
property of the State, that is, property susceptible of disposition to and appropration by private persons. These executive acts, in their
totality if not each individual act, make crystal clear the intent of the Executive Department to effect such conversion. These executive acts
include:

Property 64
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the disposition/utilization of the Government's
property in Japan, The Committee was composed of officials of the Executive Department: the Executive Secretary; the Philippine
Ambassador to Japan; and representatives of the Department of Foreign Affairs and the Asset Privatization Trust. On 19 September 1988,
the Committee recommended to the President the sale of one of the lots (the lot specifically in Roppongi) through public bidding. On 4
October 1988, the President approved the recommendation of the Committee.

On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign Affairs of the Republic's
intention to dispose of the property in Roppongi. The Japanese Government through its Ministry of Foreign Affairs replied that it interposed
no objection to such disposition by the Republic. Subsequently, the President and the Committee informed the leaders of the House of
Representatives and of the Senate of the Philippines of the proposed disposition of the Roppongi property.

(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority opinion is right in saying that
Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property, it is here submitted with respect that Executive Order
No. 296 is more than sufficient to indicate an intention to convert the property previously devoted to public service into patrimonial property
that is capable of being sold or otherwise disposed of

(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming (but only arguendo) that
non-use does not, by itself, automatically convert the property into patrimonial property. I respectfully urge that prolonged non-use, conjoined
with the other factors here listed, was legally effective to convert the lot in Roppongi into patrimonial property of the State. Actually, as
already pointed out, case law involving property of municipal corporations is to the effect that simple non-use or the actual dedication of
public property to some use other than public use or public service, was sufficient to convert such property into patrimonial property of the
local governmental entity concerned. Also as pointed out above, Manresa reached the same conclusion in respect of conversion of property
of the public domain of the State into property of the private domain of the State.

The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use was attributable not to the
Government's own deliberate and indubitable will but to lack of financial support to repair and improve the property" (Majority Opinion, p. 13).
With respect, it may be stressed that there is no abandonment involved here, certainly no abandonment of property or of property rights.
What is involved is the charge of the classification of the property from property of the public domain into property of the private domain of the
State. Moreover, if for fourteen (14) years, the Government did not see fit to appropriate whatever funds were necessary to maintain the
property in Roppongi in a condition suitable for diplomatic representation purposes, such circumstance may, with equal logic, be construed
as a manifestation of the crystalizing intent to change the character of the property.

(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in Roppongi. The circumstance
that this bidding was not successful certainly does not argue against an intent to convert the property involved into property that is disposable
by bidding.

The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on the part of the
Executive Department (with the knowledge of the Legislative Department) to convert the property involved into patrimonial property that is
susceptible of being sold.

II

Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of whether or not there exists
legal authority for the sale or disposition of the Roppongi property.

The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:

SEC. 79 (f). Conveyances and contracts to which the Government is a party. — In cases in which the Government of the
Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to any other
property the value of which is in excess of one hundred thousand pesos, the respective Department Secretary shall
prepare the necessary papers which, together with the proper recommendations, shall be submitted to the Congress of the
Philippines for approval by the same. Such deed, instrument, or contract shall be executed and signed by the President of
the Philippines on behalf of the Government of the Philippines unless the authority therefor be expressly vested by law in
another officer. (Emphasis supplied)

The majority opinion then goes on to state that: "[T]he requirement has been retained in Section 4, Book I of the Administrative Code of 1987
(Executive Order No. 292)" which reads:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law
to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

Property 65
 (1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority
therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any
corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

Two points need to be made in this connection. Firstly, the requirement of obtaining specific approval of Congress when the price of the real
property being disposed of is in excess of One Hundred Thousand Pesos (P100,000.00) under the Revised Administrative Code of 1917, has
been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the present Administrative Code refers to is authorization
by law for the conveyance. Section 48 does not purport to be itself a source of legal authority for conveyance of real property of the
Government. For Section 48 merely specifies the official authorized to execute and sign on behalf of the Government the deed of
conveyance in case of such a conveyance.

Secondly, examination of our statute books shows that authorization by law for disposition of real property of the private domain of the
Government, has been granted by Congress both in the form of (a) a general, standing authorization for disposition of patrimonial property of
the Government; and (b) specific legislation authorizing the disposition of particular pieces of the Government's patrimonial property.

Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act No. 3038, entitled "An Act
Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of the Private Domain of the Government of the
Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full text of this statute is as follows:

Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the authority
of the same:

SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the Environment and Natural
Resources) is hereby authorized to sell or lease land of the private domain of the Government of the Philippine Islands, or
any part thereof, to such persons, corporations or associations as are, under the provisions of Act Numbered Twenty-eight
hundred and seventy-four, (now Commonwealth Act No. 141, as amended) known as the Public Land Act, entitled to apply
for the purchase or lease or agricultural public land.

SECTION 2. The sale of the land referred to in the preceding section shall, if such land is agricultural, be made in the
manner and subject to the limitations prescribed in chapters five and six, respectively, of said Public Land Act, and if it be
classified differently, in conformity with the provisions of chapter nine of said Act: Provided, however, That the land
necessary for the public service shall be exempt from the provisions of this Act.

SECTION 3. This Act shall take effect on its approval.

Approved, March 9, 1922. (Emphasis supplied)

Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be noted that Chapter 9 of the
old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act (Commonwealth Act No. 141, as amended) and that both
statutes refer to: "any tract of land of the public domain which being neither timber nor mineral land, is intended to be used for residential
purposes or for commercial or industrial purposes other than agricultural" (Emphasis supplied). In other words, the statute covers the sale or
lease or residential, commercial or industrial land of the private domain of the State.

Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December 1954, the then Secretary
of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled, respectively:
"Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the Republic of the Philippines"; and "Supplementary
Regulations Governing the Lease of Lands of Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).

1
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been repealed.

Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by certain earlier statutes. The
first of these was Act No. 1120, enacted on 26 April 1904, which provided for the disposition of the friar lands, purchased by the Government
from the Roman Catholic Church, to bona fide settlers and occupants thereof or to other persons. In Jacinto v. Director of Lands (49 Phil. 853
[1926]), these friar lands were held to be private and patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914,
authorized the sale of the San Lazaro Estate located in the City of Manila, which had also been purchased by the Government from the
Roman Catholic Church. In January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands and buildings owned by the
Hospital and the Foundation of San Lazaro theretofor leased by private persons, and which were also acquired by the Philippine
Government.

Property 66
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the President to dispose of a
specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953, which authorized the

President to sell an Identified parcel of land of the private domain of the National Government to the National Press Club of the Philippines,
and to other recognized national associations of professionals with academic standing, for the nominal price of P1.00. It appears relevant to
note that Republic Act No. 905 was not an outright disposition in perpetuity of the property involved- it provided for reversion of the property
to the National Government in case the National Press Club stopped using it for its headquarters. What Republic Act No. 905 authorized was
really a donation, and not a sale.

The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of the Roppongi property
which, in my view, has been converted into patrimonial property of the Republic. 2

To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the Philippines but also to
patrimonial property found outside the Philippines, may appear strange or unusual. I respectfully submit that such position is not any more
unusual or strange than the assumption that Article 420 of the Civil Code applies not only to property of the Republic located within Philippine
territory but also to property found outside the boundaries of the Republic.

It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the President (Villena v.
Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of control exercised by the President over department
heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the function or duty that is specifically lodged in the
Secretary of the Department of Environment and Natural Resources (Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very least, the
President retains the power to approve or disapprove the exercise of that function or duty when done by the Secretary of Environment and
Natural Resources.

It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of existence of legal power or
authority. They have nothing to do with much debated questions of wisdom or propriety or relative desirability either of the proposed
disposition itself or of the proposed utilization of the anticipated proceeds of the property involved. These latter types of considerations He
within the sphere of responsibility of the political departments of government the Executive and the Legislative authorities.

For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.

Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.

Property 67
 18. G.R. No. L40474 August 29, 1975

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. Jose Antonio R Conde for petitioner. Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant
Solicitor General Octavio R. Ramirez and Trial Attorney David R. Hilario for respondents. CONCEPCION, Jr., J.:

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 only 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. 5

After hearing the parties, on October 11, 1974 the trial court issued an order dismissing the petitioner's application for registration of
title.6 Hence, the instant petition for review.

For the resolution of this case, the petitioner poses the following questions:

(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?

(1) 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:
xxx xxx xxx (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.

Property 68
 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, the 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.

WHEREFORE, the order dated October 11, 1974, rendered by the respondent court in Land Reg. Case No. N-948, LRC Rec. No. N-44531 is
hereby set aside, and the respondent court is hereby ordered to proceed with the hearing of the petitioner's application for registration of title.
SO ORDERED. Makalintal, C.J, Fernando, Barredo and Aquino, JJ., concur.

SPOUSES TEOFILO C. VILLARICO and MAXIMA A. FAUSTINO, petitioners, vs. HONORABLE COURT OF APPEALS, REPUBLIC OF
THE PHILIPPINES and MARCOS CAMARGO, respondents. D E C I S I O N [G.R. No. 105912. June 28, 1999]
PURISIMA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals [1] in CA-G.R. CV No. 22608, affirming the decision of
Branch 22 of the Regional Trial Court, Malolos, Bulacan, which dismissed the application for confirmation of title in LRC Case No. 604-V-77.
The facts that matter are as follows:
On May 31, 1977, an application for confirmation of title was filed by the spouses, Teofilo Villarico and Maxima Villarico, over a 1,834
square meter parcel of land in Ubihan, Meycauayan, Bulacan, docketed as LRC Case No. 604-V-77 before the then court of First Instance of
Bulacan. Among others, applicants alleged that they are the absolute owners of subject property, having bought the same from the spouses,
Segundo Villarico (Teofilo's father) and Mercedes Cardenas, that they and their predecessors-in-interest have been in actual, open, adverse
and continuous possession thereof for more than thirty (30) years, that they are not aware of any mortgage or encumbrance thereon nor of any
person having an estate or interest therein, and that the land involve is not within the forest zone or government reservation.
The application for land registration at bar was opposed by Marcos Camargo, who claims to be the real owner thereof.[2] The Government
interposed its opposition, through the Director of Forestry (now Director of Forest Management), averring that the land in question is part of the
public domain, within the unclassified area in Meycauayan, Bulacan per LC Map No. 637 dated March 1, 1927 of the Bureau of Forest
Management and consequently, not available for private appropriation.
On May 23, 1989, the trial court of origin dismissed the case, ratiocinating thus:

"It is well settled in this jurisdiction that a certificate of title is void when it covers property of the public domain classified as forest or timber
and mineral lands. Any title thus issued on non-disposable lots, even in the hands of an innocent purchaser for value, should be cancelled
(Lepanto Consolidated Mining vs. Dumyang, L-31666, April 30, 1979). There being no concrete evidence presented in this case that the
property in question was ever acquired by the applicants or by the private oppositor (as attested to by the proceedings of B.L. Claim No. 38
(N) before the Bureau of Lands) or by their respective predecessors-in-interest either by composition of title or by any other means for the
acquisition of public lands, the property in question must be held to be part of the public domain, especially so that the private parties had not
presented any Certification from the Bureau of Forestry attesting to the fact that the subject property is no longer within the unclassified
region of Meycauayan, Bulacan. Thus, if the land in question still forms part of the public forest, then, possession thereof, however long,
cannot convert it into private property as it is within the exclusive jurisdiction of the Bureau of Forestry and beyond the power and jurisdiction
of the cadastral court to register under the Torrens System (Republic vs. Court of Appeals, 89 SCRA 648).

WHEREFORE, premises considered, let this case be, as it is hereby DISMISSED.

Property 69
No pronouncement as to costs.

SO ORDERED."[3]

Therefrom, petitioners appealed to the Court of Appeals, which came out with a judgment of affirmance on June 26, 1992. Respondent
court affirmed the findings of facts below, holding that subject parcel of land is within the public domain not available for private appropriation.
Undaunted, petitioners found their way to this court via the present petition for review on certiorari; placing reliance on the assignment of
errors, that:
I

THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE FINDINGS OF THE TRIAL COURT THAT BEFORE 1948 THERE
WAS NO DOCUMENTATION IN FAVOR OF EITHER PARTIES.

II

THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE FINDING OF THE TRIAL COURT THAT BUENAVENTURA
VILLARICO APPARENTLY DIED PRIOR TO 1914.

III

THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE FINDING OF THE TRIAL COURT THAT TAX DECLARATION NO.
3912 IN THE NAME OF BUENAVENTURA VILLARICO COULD HAVE BEEN CONTRIVED SENSING THAT A CONFLICT OVER THE
PROPERTY IN THE NEAR FUTURE WAS INEVITABLE.

IV

THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE FINDING OF THE TRIAL COURT THAT THERE IS NO
CONCRETE EVIDENCE PRESENTED TO THE EFFECT THAT THE PROPERTY IN QUESTION WAS EVER ACQUIRED BY THE
APPLICANT OR BY THE PRIVATE OPPOSITOR OR BY THEIR RESPECTIVE PREDECESSORS-IN-INTEREST THROUGH LAWFUL
MEANS FOR THE ACQUISITION OF PUBLIC LANDS.

THE HONORABLE COURT OF APPEALS AND THE TRIAL COURT ERRED IN DISMISSING THE CASE AT BAR.

The appeal is without merit and cannot prosper.

It bears stressing that the first, second, and third assigned errors relate to factual and evidentiary matters which the Supreme Court does
not inquire into in an appeal on certiorari.[4] It is well-settled that in a petition for review on certiorari as a mode of appeal under Rule 45 of the
Rules of Court, only questions of law may be raised.[5] The Supreme Court is not a trier of facts.[6] Findings of fact by the trial court and the
Court of Appeals are binding on the Supreme Court. [7]
In the case under consideration, the Court discerns no compelling reason to reverse such findings arrived at by the trial court and affirmed
by the respondent court, absent any showing of any error, mistake, or misappreciation of facts. Records on hand indicate that the decisions
under attack accord with the law and the evidence.
As aptly observed by the respondent court, the primordial issue here is the character or classification of the property applied for registration
-- whether or not the same still forms part of the public domain. On this crucial question, the trial court a quo and the Court of Appeals correctly
adjudged the area at stake as within the unclassified forest zone incapable of private appropriation. Accordingly, the Court of Appeals held:

"xxx In the case at bar, as found by the court a quo, there has been no showing that a declassification has been made by the Director of
Forestry declaring the land in question as disposable or alienable. And the record indeed discloses that applicants have not introduced any
evidence which would have led the court a quo to find or rule otherwise. xxx

And so, considering the foregoing, possession of the land in question by the applicants and/or their predecessors-in-interest even for more
than 30 years, as they allege, cannot convert the land into private property capable of private appropriation." (Court of Appeals' Decision, pp.
4-5)

Property 70
 Indeed, forest lands cannot be owned by private persons.[8] Possession thereof, no matter how long, does not ripen into a registrable
title. The adverse possession which may be the basis of a grant of title or confirmation of an imperfect title refers only to alienable or disposable
portions of the public domain.[9]
WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in CA-G.R. CV No. 22608 AFFIRMED in toto. No
pronouncements as to costs.
SO ORDERED.
Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

20. THE DIRECTOR OF LANDS, petitioner, vs. MANILA ELECTRIC COMPANY and HON. RIZALINA BONIFACIO VERA, as
Presiding Judge, Court of First Instance of Rizal, Pasig, Branch XXIII, respondents. G.R. No. L-57461 September 11, 1987
CORTES, J.:

This is an appeal by certiorari of a decision of the respondent Judge in Land Registration Case No. N-10317 LRC Record No. N-54803
entitled "In Re: Application for Registration of Title, Manila Electric Company, applicant," dated May 29, 1981.

Property 71
The facts are not disputed. Manila Electric Company filed an amended application for registration of a parcel of land located in Taguig, Metro
Manila on December 4, 1979. On August 17, 1976, applicant acquired the land applied for registration by purchase from Ricardo Natividad
(Exhibit E) who in turn acquired the same from his father Gregorio Natividad as evidenced by a Deed of Original Absolute Sale executed on
December 28, 1970 (Exhibit E). Applicant's predecessors-in-interest have possessed the property under the concept of an owner for more
than 30 years. The property was declared for taxation purposes under the name of the applicant (Exhibit 1) and the taxes due thereon have
been paid (Exhibits J and J-1).

On May 29, 1981 respondent Judge rendered a decision ordering the registration of the property in the name of the private respondent. The
Director of Lands interposed this petition raising the issue of whether or not a corporation may apply for registration of title to land. After
comments were filed by the respondents, the Court gave the petition due course. The legal issue raised by the petitioner Director of Lands
has been squarely dealt with in two recent cases (The Director of Lands v. Intermediate Appellate Court and Acme Plywood & Veneer Co.,
Inc., etc., No. L-73002 (December 29, 1986), 146 SCRA 509. The Director of Lands v. Hon. Bengzon and Dynamarine Corporation, etc., No.
54045 (July 28, 1987)], and resolved in the affirmative. There can be no different answer in the case at bar.

In the Acme decision, this Court upheld the doctrine that open, exclusive and undisputed possession of alienable public land for the period
prescribed by law creates the legal fiction whereby the land, upon completion of the requisite period ipso jure and without the need of judicial
or other sanction, ceases to be public land and becomes private property.

As the Court said in that case:

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

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

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

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

WHEREFORE, the petition is DENIED. The questioned decision of the respondent Judge is AFFIRMED. SO ORDERED. Fernan
(Chairman), Feliciano and Bidin JJ., concur.

Separate Opinions
GUTIERREZ, JR., J.:, dissenting.

It is my view that Article XII, Section 3 of the Constitution which prohibits private corporations or associations from holding alienable lands of
the public domain except by lease is circumvented when we allow corporations to apply for judicial confirmation of imperfect titles to public
land. I, therefore, reiterate my vote in Meralco v. Castro Bartolome, (114 SCRA 799), Republic v. Villanueva and Iglesia ni Cristo (114 SCRA
875) and Director of Lands v. Intermediate Appellate Court (146 SCRA 509), and accordingly, dissent from the majority opinion in this case.

Separate Opinions

GUTIERREZ, JR., J.:, dissenting.

It is my view that Article XII, Section 3 of the Constitution which prohibits private corporations or associations from holding alienable lands of
the public domain except by lease is circumvented when we allow corporations to apply for judicial confirmation of imperfect titles to public

Property 72
land. I, therefore, reiterate my vote in Meralco v. Castro Bartolome, (114 SCRA 799), Republic v. Villanueva and Iglesia ni Cristo (114 SCRA
875) and Director of Lands v. Intermediate Appellate Court (146 SCRA 509), and accordingly, dissent from the majority opinion in this case.

21. G.R. No. L-12958 May 30, 1960

FAUSTINO IGNACIO, applicant-appellant,

vs.
THE DIRECTOR OF LANDS and LAUREANO VALERIANO, oppositors-appellees.

MONTEMAYOR, J.:

Faustino Ignacio is appealing the decision of the Court of First Instance of Rizal, dismissing his application for the registration of a parcel of
land.

On January 25, 1950, Ignacio filed an application for the registration of a parcel of land (mangrove), situated in barrio Gasac, Navotas, Rizal,
with an area of 37,877 square meters. Later, he amended his application by alleging among others that he owned the parcel applied for by
right of accretion. To the application, the Director of Lands, Laureano Valeriano and Domingo Gutierrez filed oppositions. Gutierrez later
withdrew his opposition. The Director of Lands claimed the parcel applied for as a portion of the public domain, for the reason that neither the
applicant nor his predecessor-in-interest possessed sufficient title thereto, not having acquired it either by composition title from the Spanish
government or by possessory information title under the Royal Decree of February 13, 1894, and that he had not possessed the same
openly, continuously and adversely under a bona fide claim of ownership since July 26, 1894. In his turn, Valeriano alleged he was holding
the land by virtue of a permit granted him by the Bureau of Fisheries, issued on January 13, 1947, and approved by the President.

It is not disputed that the land applied for adjoins a parcel owned by the applicant which he had acquired from the Government by virtue of a
free patent title in 1936. It has also been established that the parcel in question was formed by accretion and alluvial deposits caused by the
action of the Manila Bay which boarders it on the southwest. Applicant Ignacio claims that he had occupied the land since 1935, planting it
with api-api trees, and that his possession thereof had been continuous, adverse and public for a period of twenty years until said possession
was distributed by oppositor Valeriano.

On the other hand, the Director of Lands sought to prove that the parcel is foreshore land, covered by the ebb and flow of the tide and,
therefore, formed part of the public domain.

After hearing, the trial court dismissed the application, holding that the parcel formed part of the public domain. In his appeal, Ignacio assigns
the following errors:

I. The lower court erred in holding that the land in question, altho an accretion to the land of the applicant-appellant, does not belong
to him but forms part of the public domain.

II. Granting that the land in question forms part of the public domain, the lower court nevertheless erred in not declaring the same to
be the necessary for any public use or purpose and in not ordering in the present registration proceedings.

III. The lower court erred in not holding that the land in question now belongs to the applicant-appellant by virtue of acquisitive
prescription, the said land having ceased to be of the public domain and became the private or patrimonial property of the State.

IV. The lower court erred in not holding that the oppositor Director of Lands is now in estoppel from claiming the land in question as
a land of the public domain.

Appellant contends that the parcel belongs to him by the law of accretion, having been formed by gradual deposit by action of the Manila
Bay, and he cites Article 457 of the New Civil Code (Article 366, Old Civil Code), which provides that:

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.

Property 73
The article cited is clearly inapplicable because it refers to accretion or deposits on the banks of rivers, while the accretion in the present case
was caused by action of the Manila Bay.

Appellant next contends that Articles 1, 4 and 5 of the Law of Waters are not applicable because they refer to accretions formed by the sea,
and that Manila Bay cannot be considered as a sea. We find said contention untenable. A bay is a part of the sea, being a mere indentation
of the same:

Bay. — An opening into the land where the water is shut in on all sides except at the entrance; an inlet of the sea; an arm of the sea,
distinct from a river, a bending or curbing of the shore of the sea or of a lake. 7 C.J. 1013-1014 (Cited in Francisco, Philippine Law
of Waters and Water Rights p. 6)

Moreover, this Tribunal has some cases applied the Law of Waters on Lands bordering Manila Bay. (See the cases of Ker & Co. vs. Cauden,
6 Phil., 732, involving a parcel of land bounded on the sides by Manila Bay, where it was held that such land formed by the action of the sea
is property of the State; Francisco vs. Government of the P.I., 28 Phil., 505, involving a land claimed by a private person and subject to the
ebb and flow of the tides of the Manila Bay).

Then the applicant argues that granting that the land in question formed part of the public domain, having been gained from the sea, the trial
court should have declared the same no longer necessary for any public use or purpose, and therefore, became disposable and available for
private ownership. Article 4 of the Law of Waters of 1866 reads thus:

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

Interpreting Article 4 of the Law of Waters of 1866, in the case of Natividad vs. Director of Lands, (CA) 37 Off. Gaz., 2905, it was there held
that:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by the waters of the sea and is
not necessary for purposes of public utility, or for the establishment of special industries, or for coastguard service, the government
shall declare it to be the property of the owners of the estates adjacent thereto and as an increment thereof. We believe that only the
executive and possibly the legislative departments have the authority and the power to make the declaration that any land so gained
by the sea, is not necessary for purposes of public utility, or for the establishment of special industries, on for coast-guard service. If
no such declaration has been made by said departments, the lot in question forms part of the public domain. (Natividad vs. Director
of Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde vs. Director of Lands, 93 Phil., 134,
(cited in Velayo's Digest, VI. I, p. 52).

. . . is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine whether any public land are
to be used for the purposes specified in Article 4 of the Law of Waters.

Consequently, until a formal declaration on the part of the Government, through the executive department or the Legislature, to the effect that
the land in question is no longer needed for coast guard service, for public use or for special industries, they continue to be part of the public
domain, not available for private appropriation or ownership.

Appellant next contends that he had acquired the parcel in question through acquisitive prescription, having possessed the same for over ten
years. In answer, suffice it to say that land of the public domain is not subject to ordinary prescription. In the case of Insular Government vs.
Aldecoa & Co., 19 Phil., 505 this Court said:

The occupation or material possession of any land formed upon the shore by accretion, without previous permission from the proper
authorities, although the occupant may have held the same as owner for seventeen years and constructed a wharf on the land, is
illegal and is a mere detainer, inasmuch as such land is outside of the sphere of commerce; it pertains to the national domain; it is
intended for public uses and for the benefit of those who live nearby.

We deem it unnecessary to discuss the other points raised in the appeal.

In view of the foregoing, the appealed decision is hereby affirmed, with costs.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, and Gutierrez David, JJ., concur.
Property 74
 22. G.R. No. L-19570 April 27, 1967

JOSE V. HILARIO, JR., plaintiff-appellant, vs. THE CITY OF MANILA, defendant-appellee,

DIRECTOR OF PUBLIC WORKS, CITY ENGINEER OF MANILA, FERNANDO BUSUEGO and EUGENIO SESE,defendants-appellants,
MAXIMO CALALANG, intervenor;
DIRECTOR OF MINES, intervenor.

Maximo Calalang for plaintiff and appellant.

Gregorio Ejercito and Leandro L. Arguelles for defendant-appellee City of Manila.
Office of the Solicitor General for other defendants and appellants.

BENGZON, J.P., J.:

Dr. Jose Hilario was the registered owner of a large tract of land — around 49 hectares in area — located at Barrio Guinayang, in San Mateo,
Rizal.1 Upon his death, this property was inherited by his son, herein plaintiff-appellant Jose Hilario, Jr., to whom a new certificate of title 2 was
issued.

During the lifetime of plaintiff's father, the Hilario estate was bounded on the western side by the San Mateo River.3To prevent its entry into
the land, a bamboo and lumber post dike or ditch was constructed on the northwestern side. This was further fortified by a stonewall built on
the northern side. For years, these safeguards served their purpose. However, in 1937, a great and extraordinary flood occurred which
inundated the entire place including the neighboring barrios and municipalities. The river destroyed the dike on the northwest, left its original
bed and meandered into the Hilario estate, segregating from the rest thereof a lenticular place of land. The disputed area is on the eastern
side of this lenticular strip which now stands between the old riverbed site and the new course. 4

In 1945 the U.S. Army opened a sand and gravel plant within the premises5 and started scraping, excavating and extracting soil, gravel and
sand from the nearby areas the River. The operations eventually extended northward into this strip of land. Consequently, a claim for
damages was filed with the U.S. War Department by Luis Hilario, the then administrator of Dr. Hilario's estate. The U.S. Army paid. 6 In 1947,

Property 75
the plant was turned over to herein defendants-appellants and appellee who took over its operations and continued the extractions and
excavations of gravel and sand from the strip of land along an area near the River.

On October 22, 1949, plaintiff filed his complaint 7 for injunction and damages against the defendants City Engineer of Manila, District
Engineer of Rizal, the Director of Public Works, and Engr. Busuego, the Engineer-in-charge of the plant. It was prayed that the latter be
restrained from excavating, bulldozing and extracting gravel, sand and soil from his property and that they solidarily pay to him P5,000.00 as
damages. Defendants' answer alleged, in affirmative defense, that the extractions were made from the riverbed while counterclaiming with a
prayer for injunction against plaintiff—who, it was claimed, was preventing them from their operations.

Subsequently, the Bureau of Mines and Atty. Maximo Calalang were respectively allowed to join the litigation as intervenors. The former
complained that the disputed area was within the bed of the river so that plaintiff should not only be enjoined from making extractions
therefrom but should also be ordered to pay the fees and penalties for the materials taken by him. On the other hand, the latter claimed that
he was authorized by plaintiff to extract materials from the disputed area but this notwithstanding, the Provincial Treasurer of Rizal collected
from him a sand and gravel fee which would be an illegal exaction if the disputed area turns out to be of private ownership. Answers to the
two complaints in intervention were duly filed by the affected parties.

On March 14, 1954, defendants filed a petition for injunction against plaintiff and intervenor Calalang in the same case, alleging that the latter
have fenced off the disputed area in contravention of an agreement 8 had between the latter and the Director of Public Works wherein he
defendants were allowed to continue their operations but subject to the final outcome of the pending suit. It was prayed that plaintiff and
intervenor Calalang be ordered to remove the fence and allow defendants' men to continue their operations unhampered. Opposition to this
petition was filed by the other side, with a prayer for counter injunction. On March 23, 1954, the lower court issued an order maintaining the
status quo and allowing the defendants to continue their extractions from the disputed area provided a receipt9 in plaintiff's favor be issued for
all the materials taken.

On May 13, 1954, plaintiff amended his complaint. Impleaded as additional defendants were the City of Manila, 10the Provincial Treasurer of
Rizal,11 and Engr. Eugenio Sese, the new Engineer-in-charge of the plant. Plaintiff also converted his claim to one purely for damages
directed against the City of Manila and the Director of Public Works, solidarily, in the amount of P1,000,000.00, as the cost of materials taken
since 1949, as well as those to be extracted therefrom until defendants stop their operations.

Came the separate amended answers of the several defendants. Manila City denied ownership of the plant and claimed that the City
Engineer, acted merely as a deputy of the Public Works Director. The other defendants12 put up, as special defense, the agreement between
plaintiff and the Public Works Director, and asserted a P1.2 million counterclaim for damages against plaintiff. The rest 13 renewed the same
defense; that the disputed area was part of the public domain, since it was situated on the riverbanks.

On November 3, 1954, the defendant City Engineer of Manila filed a petition to delimit the area of excavation and asked the lower court to
authorize his men to extend their operations west of the camachile tree in the disputed area. This met vigorous opposition from plaintiff and
intervenor Calalang. On May 27, 1955, the petition was denied.

Finally, on December 21, 1956, the lower court rendered its decision on the merits. The dispositive portion provided:14

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

It is so ordered.

None of the parties litigants seemed satisfied with this decision and they all sought a reconsideration of the same. On August 30, 1957, the
lower court resolved the motions to reconsider with an order, the dispositive portion of which provided: 15

WHEREFORE, the court hereby denies the motion for reconsideration filed by plaintiff and intervenor Calalang; dismisses the
complaint with respect to defendant City of Manila; holds that the northern two-fifths portion of the area in controversy belongs to the
plaintiff with right to the immediate possession thereof and hereby enjoins the defendants and intervenor Bureau of Mines to vacate
the same and to stop from extracting gravel thereon. The Court however hereby dismisses the case against the defendant Bureau
of Public Works and its agents and employees insofar as the claim for money is concerned without prejudice to plaintiffs taking such
action as he may deem proper to enforce said claim against the proper party in accordance with law.

It is so ordered.

Property 76
Still unsatisfied, plaintiff and intervenor Calalang filed a second motion for reconsideration. The lower court stood firm on its ruling of August
30, 1957.16

Hence, this appeal.17 The defendants Director of Public Works, City Engineer of Manila, and Engrs. Busuego and Sese have also appealed
from the declaration made by the lower court that the northern two-fifths of the disputed area belongs to plaintiff Hilario.

The parties herein have presented before this Court mixed questions of law and fact for resolution and adjudication. Foremost among them is
this legal query; when a river, leaving its old bed, changes its original course and opens a new one through private property, would the new
riverbanks lining said course be of public ownership also? 18

The defendants answer in the affirmative. They claim that under the Law of Waters of August 3, 1866, the riverbanks are, by definition,
considered part of the riverbed which is always of public ownership. On the other hand, plaintiff would have the question resolved in the
negative. He maintains that not all riverbanks are of public ownership because: (1) Art. 372 of the old Civil Code, which governs this
particular case, speaks only of the new bed; nothing is said about the new banks; (2) Art. 73 of the Law of Waters which defines the phrase
"banks of a river" cannot be applied in the case at bar in conjunction with the other articles cited by defendants since that article applies only
to banks of natural riverbeds and the present, River is not in its natural bed; and (3) if all banks were of public ownership, then Art. 553 of the
old Civil Code and the second sentence, first paragraph of Art. 73 of the Law of Waters can never have any application.

Since the change in the course of the River took place in 1937, long before the present Civil Code took effect, 19 the question before Us
should be determined in accordance with the provisions of the old Civil Code and those of the Law of Waters of August 3, 1866.

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

Property of public ownership is —

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

Moreover, as correctly contended by defendants, the riverbank is part of the riverbed. Art. 73 of the Law of Waters which defines the phrase
"banks of a river" provides:

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

The use the of words "of its bed [de sus alveos]" clearly indicates the intent of the law to consider the banks — for all legal purposes
— as part of the riverbed. The lower court also ruled — correctly — that the banks of the River are paint of its bed.20 Since
undeniably all beds of rivers are of public ownership,21 it follows that the banks, which form part of them, are also of public
ownership.

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

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

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

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

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

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

Property 77
 A "river" consists of water, a bed and banks, these several parts constituting the river, the whole river. It is a compound idea; it
cannot exist without all its paints. Evaporate the water, and you have a dry hollow. If you could sink the bed, instead of a river, you
would have a fathomless gulf. Remove the banks, and you have a boundless flood. 25

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

Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al decir el Codigo Civil que los rios son de dominio
publico, parece que debe ir implicito el dominio publico de anquellos tres elementos que integran el rio. 27

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

Articles 70, 72 and 73 of the Law of Waters speak of natural beds and their banks. Plaintiff now equates the term "natural" with the word
"original" so that a change in the course of a river would render those articles inapplicable. However, the premise is incorrect. Diccionario De
La Real Academia Española defines the word "natural" as follows:

NATURAL — perteneciente a la naturaleza o conforme a la calidad o propriedad de las cosas; nativo, originario de un pueblo o
nacion; hecho con verdad, ni artificio, mezcla ni composicion alguna; ingenuo y sin doblez en su modo de proceder; diceze tambien
de las cosas que imitar a la naturaleza con propiedad; regular y que comunmente sucede, y por eso, facilmente creible; que se
produce por solas las fuerzas de la naturaleza, como contrapuesto a sobre natural y milagroso, (Emphasis supplied)

"Natural" is not made synonymous to "original" or "prior condition". On the contrary, even if a river should leave its original bed so long as it is
due to the force of nature, the new course would still fall within the scope of the definition provided above. Hence, the law must have used the
word "natural" only because it is in keeping with the ordinary nature and concept of a river always to have a bed and banks.

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

Las riberas de los rios, aun cuando sean de dominio privado, estan sujetas en toda su extension y en sus margenes, en una zona
de tres metros, a la servidumbre de uso publico en interes general de la navegacion, la flotacion, la pesca y el salvamento.
(Emphasis supplied) .

And plaintiff is not without jurisprudential backing for in Commonwealth vs. Gungun,28 it was said that the private ownership of the
banks was not prohibited. His point is then neatly brought home with the proposition that it is precisely when a river changes its
course and opens a new bed through a private estate that there can be private ownership of the banks.

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

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

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

The foregoing observation is confirmed by the still subsequent Law of Waters of June 13, 1879, which was principally based on the Law of
August 3, 1865.34 Art. 36 of the new law, which was a substantial reenactment of Art. 73 of the Law of Waters of August 3, 1866, reads:

Property 78
 Las riberas, aun cuando sean de dominio privado en virtud de antigue ley o de costumbre, estan sujetas en toda su extension las
margenes en una zona de tres metros, a la servidumbre de uso publico en interes general de la navegacion, la flotacion la pesca y
el salvamento. ... (Emphasis supplied)

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

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

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

Coming to the factual issues: both parties assail the conclusion made by the lower court that only the northern two-fifths of the disputed area
remained as plaintiff's private property. This conclusion was apparently based on the findings that the portion where rice and corn were
found38 in the ocular inspection of June 15, 1951, was on the northern two-fifths of the disputed area; that this cannot be a part of the bed
because of the existence of vegetation which could not have grown underwater, and that this portion is man-made. However, there is no
evidentiary basis for these findings. The area indicated by Nos. 1 and 2 in Exh. D-1 where no excavations had been made, appears to be
more on the south-western one-fourth of the disputed area. The American cases39 cited by the lower court cannot apply here. Our Law of
Waters, in defining "beds" and considers the latter is part of the former. Those cited cases did not involve a similar statutory provision. That
plants can and do grow on the banks which otherwise could not have grown in the bed which is constantly subjected to the flow of the waters
proves the distinction between "beds" and "banks" in the physical order. However, We are dealing with the legal order where legal definitions
prevail. And apart from these considerations, We also note the considerable difficulty which would attend the execution of the ruling of the
lower court. The latter failed to indicate fixed markers from which an exact delimitation of the boundaries of the portion could be made. This
flaw is conducive to future litigations.

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

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

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

This increasing width of the disputed area could be attributed to the gradual movement of the River to the east. Since it entered into the
Hilario estate, the River has not stayed put.46 Vicente Vicente, plaintiff's witness declared47that after the River changed its course in 1937, the
distance between the old and the new river sites was about 100 meters. Exh. D-2 shows that in 1943, the south end of the River was about 5
meters southeast of stake 24.48Honorato Sta. Maria, another witness for plaintiff, indicated the flow of this course with a blue line in Exh. D-
1.49 This blue line is about 100 meters from the line connecting stakes 25 and 26, which was also the east boundary of the old
River.50 Around 1945 to 1949, the River was about 193 meters 51 east of this line. This measurement is based on the testimonies of two
defense witnesses52 and stated that during that period, the River passed along the Excavated Area and the New Accretion Area 53 sites, as
shown in Exh. 54. By the later part of 1949 up to November 1950, the west waterline was from 248 to 270 meters54 east of the aforesaid
boundary line. And finally in January, 1953, based on the scale in Exh. 3-Calalang, the west waterline was from 300 to 305 meters away
already. Hence, from 100 meters in 1937, the River had moved to 305 meters eastward in 1953.

Property 79
There are two questions to be resolved here. First, where on the strip of land are the lateral borders of the western riverbank? And second,
where have defendants made their extractions?

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

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

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

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

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

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

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

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

Property 80
Magbayani Leaño, the Engineer-in-charge of the plant from August 1954. He testified69 that as of December 1955, when the disputed area
was underwater, the water reach was about 20 meters or less to the east from the camachile tree.

From all the foregoing, it can be safely concluded: (1) that from 1945 to 1949, the west bank of the River extended westward up to the
"secondary bank" line; (2) that from 1950 to 1952, this bank had moved, with the River, to the east its lateral borders running along a line just
20 meters west of the camachile tree; and (3) that from 1953 to 1955, the extremities of the west bank further receded eastward beyond the
camachile tree, until they lay just about 20 meters east of said tree.

To counteract the testimonies of the defense witnesses, plaintiff presented two rebuttal witnesses 70 who told a somewhat different story.
However, their testimonies are not convincing enough to offset the dovetailing testimonies of the defense witnesses who were much better
qualified and acquainted with the actual situs of the floods. And said defense witnesses were corroborated by plaintiffs' own evidence which
contradicts the aforesaid rebuttal witnesses.

However, plaintiff maintains that the floods which cover the area in question are merely accidental and hence, under Art. 77 of the Law of
Waters,71 and following the ruling in Government vs. Colegio de San Jose,72 he is deemed not to have lost the inundated area. This is
untenable. Plaintiff's own evidence73 shows that the river floods with annual regularity during the rainy season. These floods can hardly be
called "accidental." The Colegio de San Jose case is not exactly in point. What was mainly considered there was Art. 74 of the Law of Waters
relating to lakes, ponds and pools. In the case at bar, none of these is involved.

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

Plaintiff's assertion that the defendants also caused the unnatural widening of the River is unfounded. Reliance is made on the finding by the
lower court that in 1943, the River was only 60 meters wide as shown in Exh. D-2, whereas in 1950, it was already 140 meters wide as
shown in Exh. D. However, Exh. D-2 only shows the width of the River near the southwestern boundary of the Hilario estate. It does not
indicate how wide it was in the other parts, especially up north. And Eligio Lorenzo, plaintiff's own witness, admitted 75 on cross-examination
that the width of the new river was not uniform. This is confirmed by Exhs. D and D-1 which show that the new river was wider by as much as
50% up north than it was down south. The 140-meter distance in Exh. D was at the widest part up north whereas down south, near the mouth
of the Bulobok River, it was only 70 meters wide. Lastly, the scale in Exh. 3-Calalang will show that in January 1953, the River, near the
same point also, was less than 50 meters wide.

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

From 1947 to the early part of 1949, the defendants conducted their operations only in the New Accretion Area along a narrow longitudinal
zone contiguous to the watercourse then. This zone, marked as Exh. 2-City Engineer Manila, is about one (1) km. long and extends
northward up to pt. 50.35 in Exh. 54. However, no extractions nor excavations were undertaken west of this zone, i.e., above the "temporary
bank" line.76 These facts are corroborated by plaintiff's witnesses. That the extractions were near the river then finds support in Vicente's
testimony77 while Leon Angeles and Mrs. Salud Hilario confirm the fact that defendants have not gone westward beyond the "temporary
bank" line.78 This line is located east of the "secondary bank" line, the lateral extremity of the west bank then.

In the later part of 1949, plaintiff prohibited the defendants from extracting along the New Accretion Area and constructed a fence across the
same. This forced the defendants to go below southeast of — the "Excavated Area" and the New Accretion Area sites in Exh. 54. 79 Engr.
Busuego, testifying80 in 1952, indicated their are of extraction as that enclosed within the red dotted line in Exh. D-1 which lies on the south
end of the strip of land. Only a small portion of the southeastern boundary of the disputed area is included. The ocular inspection conducted
on June 15, 1951, confirms this.81 Exh. 4-Calalang shows the total amount of materials taken from within the area from 1949 to 1951. 82 Thus,
from 1950 up to 1953, although the defendants were able to continue their operations because of the agreement between the plaintiff and the
Director of Public Works,83 they were confined only to the southeastern portion of the disputed area. On the other hand, the lateral extremities
of the west bank then ran along a line about 20 meters west of the camachile tree in the New Accretion Area.

From 1954 to 1955, defendants' area of operation was still farther near of the New Accretion Area. They were working within a confined area
along the west waterline, the northern and western boundaries of which were 20 meters away east from the camachile tree.84 Ross
indicated85 this zone in Exh. 54 as that portion on the southern end of the disputed area between the blue lines going through the words
"Marikina River Bed" and the red zigzag line indicating the watercourse then. Engr. Leaño even stated, 86 that they got about 80% of the
Property 81
materials from the river itself and only 20% from the dry bed. The sand and gravel covered by Exhs. LL to LL-55 were all taken from here.
The foregoing facts are not only corroborated by Mrs. Hilario 87 but even admitted by the plaintiff in his opposition88 to defendants' petition to
extend their area of operation west of the camachile tree. And because their petition was denied, defendants could not, and have not,89 gone
beyond the lateral line about 20 meters east from said tree, which has already been established as the lateral extremity of the west bank
during the period.

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

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

First of all, We are not declaring that the entire channel, i.e., all that space between the "secondary bank" line and the "primary bank" line,
has permanently become part of the riverbed. What We are only holding is that at the time the defendants made their extractions, the
excavations were within the confines of the riverbanks then. The "secondary bank" line was the western limit of the west bank around 1945 to
1949 only. By 1955, this had greatly receded to the line just 20 meters east of the camachile tree in the New Accretion Area. All that space to
the west of said receding line90 would still be part of plaintiff's property — and also whatever portion adjoining the river is, at present, no
longer reached by the non-inundating ordinary floods.

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

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

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

Wherefore, the decision and orders appealed from are hereby set aside and another judgment is hereby entered as follows:

(1) Defendants City of Manila and the Director of Public Works and his agents and employees are hereby absolved from liability to
plaintiff since they did not extract materials from plaintiff's property but from the public domain.

(2) All that portion within the strip of land in question, starting from the line running parallel to the western waterline of the river and
twenty meters east from the camachile tree in the New Accretion Area measured along line AA in Exhs. 3-Calalang, 13 and 54, and
going to the west up to the western boundaries of the Hilario estate, is hereby declared as not part of the public domain and
confirmed as part of plaintiff's private property. No costs. So ordered.

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

REPUBLIC OF THE PHILIPPINES (DIRECTOR OF LANDS), petitioner, vs. THE HON. COURT OF APPEALS, BENJAMIN TANCINCO,
AZUCENA TANCINCO REYES, MARINA TANCINCO IMPERIAL and MARIO C. TANCINCO, respondents The Solicitor General for
petitioner. Martin B. Laurea for respondents. GUTIERREZ, JR., J.:ñé+.£ªwph!1

This is a petition for certiorari to set aside the decision of the respondent Court of Appeals (now Intermediate Appellate Court) affirming the
decision of the Court of First Instance of Bulacan, Fifth Judicial District, Branch VIII, which found that Lots 1 and 2 of Plan Psu-131892 are
accretion to the land covered by Transfer Certificate of Title No. 89709 and ordered their registration in the names of the private respondents.

Property 82
Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be "Maria") Tancinco Imperial and Mario C. Tancinco are
registered owners of a parcel of land covered by Transfer Certificate of Title No. T-89709 situated at Barrio Ubihan, Meycauayan, Bulacan
bordering on the Meycauayan and Bocaue rivers.

On June 24, 1973, the private respondents filed an application for the registration of three lots adjacent to their fishpond property and
particularly described as follows: têñ.£îhqwâ£

Lot 1-Psu-131892

(Maria C. Tancinco)

A parcel of land (lot 1 as shown on plan Psu-131892), situated in the Barrio of Ubihan, Municipality of Meycauayan, Province of Bulacan.
Bounded on the NE., along line 1-2, by Lot 3 of plan Psu-131892; on the SE., along lines 2-3-4, by Meycauayan River; on the S.W., along
fines 4-5-6-7-8-9, by Bocaue River; on the NE., along line 9-10, by property of Joaquina Santiago; on the E., NE., and NW., along lines 10-
11-12-1, by property of Mariano Tancinco (Lot 2, Psu-111877). ... containing an area of THIRTY THREE THOUSAND NINE HUNDRED
THIRTY SEVEN (33,937) SQUARE METERS. ...

Lot 2-Psu-131892

(Maria C. Tancinco)

A parcel of land (Lot 2 as shown on plan Psu-131892), situated in the Barrio of Ubihan, Municipality of Meycauayan, Province of Bulacan.
Bounded on the E., along line 1-2, by property of Rafael Singson; on the S., along line 2-3, by Meycauayan River; on the SW., along line 3-4,
by Lot 3 of plan Psu-131892; and on the N., along line 4-1, by property of Mariano Tancinco (Lot 1, Psu-111877). ... containing an area of
FIVE THOUSAND FOUR HUNDRED FIFTY THREE (5,453) SQUARE METERS. ...

Lot 3-Psu-131892

(Maria C. Tancinco)

A parcel of land (Lot 3 as shown on plan Psu-131892), situated in the Barrio of Ubihan, Municipality of Meycauayan, Province of Bulacan.
Bounded on the NE., along line 1-2, by property of Mariano Tancinco (Lot 1, Psu-111877); and along line 2-3, by Lot 2 of plan Psu-131892;
on the S., along line 3-4, by Meycauayan River, on the SW., along line 4-5, by Lot 1 of plan Psu-131892; and along line 5-6 by property of
Mariano Tancinco (Lot 2, Psu-111877), and on the NW., along line 6-1, by property of Joaquina Santiago. ... containing an area of ONE
THOUSAND NINE HUNDRED EIGHTY FIVE (1,985) SQUARE METERS. ...

On April 5, 1974, Assistant Provincial Fiscal Amando C. Vicente, in representation of the Bureau of Lands filed a written opposition to the
application for registration.

On March 6, 1975, the private respondents filed a partial withdrawal of the application for registration with respect to Lot 3 of Plan Psu-
131892 in line with the recommendation of the Commissioner appointed by the Court.

On March 7, 1975, Lot 3 was ordered withdrawn from the application and trial proceeded only with respect to Lots 1 and 2 covered by Plan
Psu-131892.

Property 83
On June 26, 1976, the lower court rendered a decision granting the application on the finding that the lands in question are accretions to the
private respondents' fishponds covered by Transfer Certificate of Title No. 89709. The dispositive portion of the decision reads: têñ.£îhqwâ£

WHEREFORE, it appearing that Lots 1 & 2 of plan Psu-131892 (Exh. H) are accretions to the land covered by Transfer Certificate of Title No.
89709 of the Register of Deeds of Bulacan, they belong to the owner of said property. The Court, therefore, orders the registration of lots 1 &
2 situated in the barrio of Ubihan, municipality of Meycauayan, province of Bulacan, and more particularly described in plan Psu-131892
(Exh. H) and their accompanying technical descriptions (Exhs. E, E-1) in favor of Benjamin Tancinco, married to Alma Fernandez and
residing at 3662 Heatherdown, Toledo, Ohio 43614 U.S.A.; Azucena Tancinco Reyes, married to Alex Reyes, Jr., residing at 4th St., New
Manila, Quezon City; Marina Tancinco Imperial, married to Juan Imperial, residing at Pasay Road, Dasmariñas Village, Makati, Rizal; and
Mario C. Tancinco, married to Leticia Regidor, residing at 1616 Cypress St., Dasmariñas Village, Makati, Rizal, all of legal age, all Filipino
citizens.

On July 30, 1976, the petitioner Republic appealed to the respondent Court of Appeals.

On August, 19, 1982, the respondent Court rendered a decision affirming in toto the decision of the lower court. The dispositive portion of the
decision reads: têñ.£îhqwâ£

DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa kanyang kabuuan nang walang bayad.

The rule that the findings of fact of the trial court and the Court of Appeals are binding upon this Court admits of certain exceptions. Thus in
Carolina Industries Inc. v. CMS Stock Brokerage, Inc. (97 SCRA 734) we held that this Court retains the power to review and rectify the
findings of fact of said courts when (1) the conclusion is a finding grounded entirely on speculations, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd, and impossible; (3) where there is grave abuse of discretion, (4) when the judgment is based
on a misapprehension of facts; and (5) when the court, in making its findings, went beyond the issues of the case and the same are contrary
to the admissions of both appellant and appellee.

There are facts and circumstances in the record which render untenable the findings of the trial court and the Court of Appeals that the lands
in question are accretions to the private respondents' fishponds.

The petitioner submits that there is no accretion to speak of under Article 457 of the New Civil Code because what actually happened is that
the private respondents simply transferred their dikes further down the river bed of the Meycauayan River, and thus, if there is any accretion
to speak of, it is man-made and artificial and not the result of the gradual and imperceptible sedimentation by the waters of the river.

On the other hand, the private respondents rely on the testimony of Mrs. Virginia Acuña to the effect that: têñ.£îhqwâ£

xxx xxx xxx

... when witness first saw the land, namely, Lots 1 & 2, they were already dry almost at the level of the Pilapil of the property of Dr. Tancinco,
and that from the boundaries of the lots, for about two (2) arms length the land was still dry up to the edge of the river; that sometime in 1951,
a new Pilapil was established on the boundaries of Lots 1 & 2 and soil from the old Pilapil was transferred to the new Pilapil and this was
done sometime in 1951; that the new lots were then converted into fishpond, and water in this fishpond was two (2) meters deep on the side
of the Pilapil facing the fishpond ... .

Property 84
The private respondents submit that the foregoing evidence establishes the fact of accretion without human intervention because the transfer
of the dike occurred after the accretion was complete.

We agree with the petitioner.

Article 457 of the New Civil Code provides: têñ.£îhqwâ£

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.

The above-quoted article requires the concurrence of three requisites before an accretion covered by this particular provision is said to have
taken place. They are (1) that the deposit be gradual and imperceptible; (2) that it be made through the effects of the current of the water;
and (3) that the land where accretion takes place is adjacent to the banks of rivers.

The requirement that the deposit should be due to the effect of the current of the river is indispensable. This excludes from Art. 457 of the
New Civil Code all deposits caused by human intervention. Alluvion must be the exclusive work of nature. In the instant case, there is no
evidence whatsoever to prove that the addition to the said property was made gradually through the effects of the current of the Meycauayan
and Bocaue rivers. We agree with the observation of the Solicitor General that it is preposterous to believe that almost four (4) hectares of
land came into being because of the effects of the Meycauayan and Bocaue rivers. The lone witness of the private respondents who happens
to be their overseer and whose husband was first cousin of their father noticed the four hectare accretion to the twelve hectare fishpond only
in 1939. The respondents claim that at this point in time, accretion had already taken place. If so, their witness was incompetent to testify to a
gradual and imperceptible increase to their land in the years before 1939. However, the witness testified that in that year, she observed an
increase in the area of the original fishpond which is now the land in question. If she was telling the truth, the accretion was sudden.
However, there is evidence that the alleged alluvial deposits were artificial and man-made and not the exclusive result of the current of the
Meycauayan and Bocaue rivers. The alleged alluvial deposits came into being not because of the sole effect of the current of the rivers but as
a result of the transfer of the dike towards the river and encroaching upon it. The land sought to be registered is not even dry land cast
imperceptibly and gradually by the river's current on the fishpond adjoining it. It is under two meters of water. The private respondents' own
evidence shows that the water in the fishpond is two meters deep on the side of the pilapil facing the fishpond and only one meter deep on
the side of the pilapil facing the river

The reason behind the law giving the riparian owner the right to any land or alluvion deposited by a river is to compensate him for the danger
of loss that he suffers because of the location of his land. If estates bordering on rivers are exposed to floods and other evils produced by the
destructive force of the waters and if by virtue of lawful provisions, said estates are subject to incumbrances and various kinds of easements,
it is proper that the risk or danger which may prejudice the owners thereof should be compensated by the right of accretion. (Cortes v. City of
Manila, 10 Phil. 567). Hence, the riparian owner does not acquire the additions to his land caused by special works expressly intended or
designed to bring about accretion. When the private respondents transferred their dikes towards the river bed, the dikes were meant for
reclamation purposes and not to protect their property from the destructive force of the waters of the river.

We agree with the submission of the Solicitor General that the testimony of the private respondents' lone witness to the effect that as early as
1939 there already existed such alleged alluvial deposits, deserves no merit. It should be noted that the lots in question were not included in
the survey of their adjacent property conducted on May 10, 1940 and in the Cadastral Survey of the entire Municipality of Meycauayan
conducted between the years 1958 to 1960. The alleged accretion was declared for taxation purposes only in 1972 or 33 years after it had
supposedly permanently formed. The only valid conclusion therefore is that the said areas could not have been there in 1939. They existed
only after the private respondents transferred their dikes towards the bed of the Meycauayan river in 1951. What private respondents claim
as accretion is really an encroachment of a portion of the Meycauayan river by reclamation.

The lower court cannot validly order the registration of Lots 1 & 2 in the names of the private respondents. These lots were portions of the
bed of the Meycauayan river and are therefore classified as property of the public domain under Article 420 paragraph 1 and Article 502,

Property 85
paragraph 1 of the Civil Code of the Philippines. They are not open to registration under the Land Registration Act. The adjudication of the
lands in question as private property in the names of the private respondents is null and void.

WHEREFORE, the instant petition is GRANTED. The decision appealed from is hereby REVERSED and SET ASIDE. The private
respondents are ordered to move back the dikes of their fishponds to their original location and return the disputed property to the river to
which it belongs.

SO ORDERED.1äwphï1.ñët

24. [G.R. No. 98045. June 26, 1996]

DESAMPARADO VDA. DE NAZARENO and LETICIA NAZARENO TAPIA, petitioners, vs. THE COURT OF APPEALS, MR. & MRS. JOSE
SALASALAN, MR. & MRS. LEO RABAYA, AVELINO LABIS, HON. ROBERTO G. HILARIO, ROLLEO I. IGNACIO, ALBERTO M.
GILLERA and HON. ABELARDO G. PALAD, JR., in their official and/or private capacities, respondents.
SYLLABUS
1. CIVIL LAW; OWNERSHIP; RIGHTS OF ACCESSION WITH RESPECT TO IMMOVABLE PROPERTY; ARTICLE 457; REQUISITES.- In
the case of Meneses vs. CA, this Court held that accretion, as a mode of acquiring property under Art. 457 of the Civil Code, requires the
concurrence of these requisites: (1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the
action of the waters of the river (or sea); and (3) that the land where accretion takes place is adjacent to the banks of rivers (or the sea
coast). These are called the rules on alluvion which if present in a case, give to the owners of lands adjoining the banks of rivers or
streams any accretion gradually received from the effects of the current of waters.
2. ID.; ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR.- Where the accretion was formed by the dumping of boulders, soil and other filling
materials on portions of the Balacanas Creek and the Cagayan River bounding petitioner's land, it cannot be claimed that the accumulation
was gradual and imperceptible, resulting from the action of the waters or the current of the creek and the river. In Hilario vs. City of
Manila, this Court held that the word current indicates the participation of the body of water in the ebb and flow of waters due to high and
low tide. Not having met the first and second requirements of the rules of alluvion, petitioners cannot claim the rights of a riparian owner.
3. ID.; ID.; ID.; ID.; ID.; THAT DEPOSIT IS DUE TO THE CURRENT OF THE RIVER, MANDATORY.- In Republic vs. CA, this Court ruled
that the requirement that the deposit should be due to the effect of the current of the river is indispensable. This excludes from Art. 457 of
the Civil Code all deposits caused by human intervention. Putting it differently, alluvion must be the exclusive work of nature. Thus,
in Tiongco vs. Director of Lands, et al., where the land was not formed solely by the natural effect of the water current of the river bordering
said land but is also the consequence of the direct and deliberate intervention of man, it was deemed a man-made accretion and, as
such, part of the public domain. In the case at bar, the subject land was the direct result of the dumping of sawdust by the Sun Valley
Lumber Co. consequent to its sawmill operations.
4. ID.; PUBLIC LANDS; FINDINGS AS SUCH BY THE BUREAU OF LANDS, RESPECTED.- The mere filing of the Miscellaneous Sales
Application constituted an admission that the land being applied for was public land, having been the subject of a Survey Plan wherein
said land was described as an orchard. Furthermore, the Bureau of Lands classified the subject land as an accretion area which was
formed by deposits of sawdust in the Balacanas Creek and the Cagayan river, in accordance with the ocular inspection conducted by the
Bureau of Lands. This Court has often enough held that findings of administrative agencies which have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not only respect but even finality. Again, when said factual findings are
affirmed by the Court of Appeals, the same are conclusive on the parties and not reviewable by this Court.
Property 86
5. ID.; PUBLIC LAND LAW; JURISDICTION OVER PUBLIC LANDS.- Having determined that the subject land is public land, a fortiori, the
Bureau of Lands, as well as the Office of the Secretary of Agriculture and Natural Resources have jurisdiction over the same in accordance
with the Public Land Law. Under Sections 3 and 4 thereof, the Director of Lands has jurisdiction, authority and control over public
lands. Here respondent Palad as Director of Lands, is authorized to exercise executive control over any form of concession, disposition
and management of the lands of the public domain. He may issue decisions and orders as he may see fit under the circumstances as
long as they are based on the findings of fact. In the case of Calibo vs. Ballesteros, this Court held that where, in the disposition of public
lands, the Director of Lands bases his decision on the evidence thus presented, he clearly acts within his jurisdiction, and if he errs in
appraising the evidence, the error is one of judgment, but not an act of grave abuse of discretion annullable by certiorari.
6. ADMINISTRATIVE LAW; ADMINISTRATIVE REMEDIES; EXHAUSTED IN CASE AT BAR.- The administrative remedies have been
exhausted. Petitioners could not have intended to appeal to respondent Ignacio as an Officer-In-Charge of the Bureau of Lands. The
decision being appealed from was the decision of respondent Hilario who was the Regional Director of the Bureau of Lands. Said decision
was made "for and by authority of the Director of Lands." It would be incongruous to appeal the decision of the Regional Director of the
Bureau of Lands acting for the Director of the Bureau of Lands to an Officer-In-Charge of the Bureau of Lands. In any case, respondent
Ignacio's official designation was "Undersecretary of the Department of Agriculture and Natural Resources." He was only an "Officer-In-
Charge" of the Bureau of Lands. When he acted on the late Antonio Nazareno's motion for reconsideration by affirming or adopting
respondent Hilario's decision, he was acting on said motion as an Undersecretary on behalf of the Secretary of the Department. In the
case ofHamoy vs. Secretary of Agriculture and Natural Resources, this Court held that the Undersecretary of Agriculture and Natural
Resources may modify, adopt, or set aside the orders or decisions of the Director of Lands with respect to questions involving public
lands under the administration and control of the Bureau of Lands and the Department of Agriculture and Natural Resources. He cannot,
therefore, be said to have acted beyond the bounds of his jurisdiction under Sections 3, 4 and 5 of Commonwealth Act No. 141.
APPEARANCES OF COUNSEL
Manolo L. Tagarda, Sr. for petitioners.
Arturo R. Legaspi for private respondents.

DECISION
ROMERO, J.:

Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia challenge the decision of the Court of Appeals which affirmed
the dismissal of petitioners' complaint by the Regional Trial Court of Misamis Oriental, Branch 22. The complaint was for annulment of the
verification, report and recommendation, decision and order of the Bureau of Lands regarding a parcel of public land.
The only issue involved in this petition is whether or not petitioners exhausted administrative remedies before having recourse to the
courts.
The subject of this controversy is a parcel of land situated in Telegrapo, Puntod, Cagayan de Oro City. Said land was formed as a result
of sawdust dumped into the dried-up Balacanas Creek and along the banks of the Cagayan river.
Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya leased the subject lots on which their houses stood from one
Antonio Nazareno, petitioners' predecessor-in-interest. In the latter part of 1982, private respondents allegedly stopped paying rentals. As a
result, Antonio Nazareno and petitioners filed a case for ejectment with the Municipal Trial Court of Cagayan de Oro City, Branch 4. A decision
was rendered against private respondents, which decision was affirmed by the Regional Trial Court of Misamis Oriental, Branch 20.
The case was remanded to the municipal trial court for execution of judgment after the same became final and executory. Private
respondents filed a case for annulment of judgment before the Regional Trial Court of Misamis Oriental, Branch 24 which dismissed the
same. Antonio Nazareno and petitioners again moved for execution of judgment but private respondents filed another case for certiorari with
prayer for restraining order and/or writ of preliminary injunction with the Regional Trial Court of Misamis Oriental, Branch 25 which was likewise
dismissed. The decision of the lower court was finally enforced with the private respondents being ejected from portions of the subject lots they
occupied.
Before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the survey plan designated as Plan Csd-106-00571
with a view to perfecting his title over the accretion area being claimed by him. Before the approved survey plan could be released to the
applicant, however, it was protested by private respondents before the Bureau of Lands.
In compliance with the order of respondent District Land Officer Alberto M. Gillera, respondent Land Investigator Avelino G. Labis
conducted an investigation and rendered a report to the Regional Director recommending that Survey Plan No. MSI-10-06-000571-D
(equivalent to Lot No. 36302, Cad. 237) in the name of Antonio Nazareno, be cancelled and that private respondents be directed to file
appropriate public land applications.
Based on said report, respondent Regional Director of the Bureau of Lands Roberto Hilario rendered a decision ordering the amendment
of the survey plan in the name of Antonio Nazareno by segregating therefrom the areas occupied by the private respondents who, if qualified,
may file public land applications covering their respective portions.
Antonio Nazareno filed a motion for reconsideration with respondent Rolleo Ignacio, Undersecretary of the Department of Natural
Resources and Officer-in-Charge of the Bureau of Lands who denied the motion. Respondent Director of Lands Abelardo Palad then ordered
Property 87
him to vacate the portions adjudicated to private respondents and remove whatever improvements they have introduced thereon. He also
ordered that private respondents be placed in possession thereof.
Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners Desamparado Vda. de Nazareno and Leticia Tapia
Nazareno, filed a case before the RTC, Branch 22 for annulment of the following: order of investigation by respondent Gillera, report and
recommendation by respondent Labis, decision by respondent Hilario, order by respondent Ignacio affirming the decision of respondent Hilario
and order of execution by respondent Palad. The RTC dismissed the complaint for failure to exhaust administrative remedies which resulted in
the finality of the administrative decision of the Bureau of Lands.
On appeal, the Court of Appeals affirmed the decision of the RTC dismissing the complaint. Applying Section 4 of C.A. No. 141, as
amended, it contended that the approval of the survey plan belongs exclusively to the Director of Lands. Hence, factual findings made by the
Metropolitan Trial Court respecting the subject land cannot be held to be controlling as the preparation and approval of said survey plans belong
to the Director of Lands and the same shall be conclusive when approved by the Secretary of Agriculture and Natural Resources. [1]
Furthermore, the appellate court contended that the motion for reconsideration filed by Antonio Nazareno cannot be considered as an
appeal to the Office of the Secretary of Agriculture and Natural Resources, as mandated by C.A. No. 141 inasmuch as the same had been
acted upon by respondent Undersecretary Ignacio in his capacity as Officer-in-Charge of the Bureau of Lands and not as Undersecretary acting
for the Secretary of Agriculture and Natural Resources. For the failure of Antonio Nazareno to appeal to the Secretary of Agriculture and Natural
Resources, the present case does not fall within the exception to the doctrine of exhaustion of administrative remedies. It also held that there
was no showing of oppressiveness in the manner in which the orders were issued and executed.
Hence, this petition.
Petitioners assign the following errors:
I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE
DECISION OF THE LOWER COURT WHICH IS CONTRARY TO THE PREVAILING FACTS AND THE LAW ON THE MATTER;
II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL, ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE
DECISION OF THE LOWER COURT DISMISSING THE ORIGINAL CASE WHICH FAILED TO CONSIDER THAT THE
EXECUTION ORDER OF PUBLIC RESPONDENT ABELARDO G. PALAD, JR., DIRECTOR OF LANDS, MANILA,
PRACTICALLY CHANGED THE DECISION OF PUBLIC RESPONDENT ROBERTO HILARIO, REGIONAL DIRECTOR,
BUREAU OF LANDS, REGION 10, THUS MAKING THE CASE PROPER SUBJECT FOR ANNULMENT WELL WITHIN THE
JURISDICTION OF THE LOWER COURT.
The resolution of the above issues, however, hinges on the question of whether or not the subject land is public land. Petitioners claim
that the subject land is private land being an accretion to his titled property, applying Article 457 of the Civil Code which provides:

"To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the
waters."

In the case of Meneses v. CA,[2] this Court held that accretion, as a mode of acquiring property under Art. 457 of the Civil Code, requires
the concurrence of these requisites: (1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action
of the waters of the river (or sea); and (3) that the land where accretion takes place is adjacent to the banks or rivers (or the sea coast). These
are called the rules on alluvion which if present in a case, give to the owners of lands adjoining the banks of rivers or streams any accretion
gradually received from the effects of the current of waters.
For petitioners to insist on the application of these rules on alluvion to their case, the above-mentioned requisites must be
present. However, they admit that the accretion was formed by the dumping of boulders, soil and other filling materials on portions of the
Balacanas Creek and the Cagayan River bounding their land. [3] It cannot be claimed, therefore, that the accumulation of such boulders, soil
and other filling materials was gradual and imperceptible, resulting from the action of the waters or the current of the Balacanas Creek and the
Cagayan River. In Hilario v. City of Manila,[4] this Court held that the word "current" indicates the participation of the body of water in the ebb
and flow of waters due to high and low tide. Petitioners' submission not having met the first and second requirements of the rules on alluvion,
they cannot claim the rights of a riparian owner.
In any case, this court agrees with private respondents that petitioners are estopped from denying the public character of the subject land,
as well as the jurisdiction of the Bureau of Lands when the late Antonio Nazareno filed his Miscellaneous Sales Application MSA (G-6)
571.[5] The mere filing of said Application constituted an admission that the land being applied for was public land, having been the subject of
Survey Plan No. MSI-10-06-000571-D (Equivalent to Lot No. 36302, Cad-237) which was conducted as a consequence of Antonio Nazareno's
Miscellaneous Sales Application wherein said land was described as an orchard. Said description by Antonio Nazareno was, however,
controverted by respondent Labis in his investigation report to respondent Hilario based on the findings of his ocular inspection that said land
actually covers a dry portion of Balacanas Creek and a swampy portion of Cagayan River. The investigation report also states that except for
the swampy portion which is fully planted to nipa palms, the whole area is fully occupied by a part of a big concrete bodega of petitioners and
several residential houses made of light materials, including those of private respondents which were erected by themselves sometime in the
early part of 1978.[6]
Furthermore, the Bureau of Lands classified the subject land as an accretion area which was formed by deposits of sawdust in the
Balacanas Creek and the Cagayan river, in accordance with the ocular inspection conducted by the Bureau of Lands. [7] This Court has often
Property 88
enough held that findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters
are generally accorded not only respect but even finality. [8] Again, when said factual findings are affirmed by the Court of Appeals, the same
are conclusive on the parties and not reviewable by this Court. [9]
It is this Court's irresistible conclusion, therefore, that the accretion was man-made or artificial. In Republic v. CA,[10] this Court ruled that
the requirement that the deposit should be due to the effect of the current of the river is indispensable. This excludes from Art. 457 of the Civil
Code all deposits caused by human intervention. Putting it differently, alluvion must be the exclusive work of nature. Thus, in Tiongco v. Director
of Lands, et al.,[11] where the land was not formed solely by the natural effect of the water current of the river bordering said land but is also the
consequence of the direct and deliberate intervention of man, it was deemed a man-made accretion and, as such, part of the public domain.
In the case at bar, the subject land was the direct result of the dumping of sawdust by the Sun Valley Lumber Co. consequent to its
sawmill operations.[12] Even if this Court were to take into consideration petitioners' submission that the accretion site was the result of the late
Antonio Nazareno's labor consisting in the dumping of boulders, soil and other filling materials into the Balacanas Creek and Cagayan River
bounding his land,[13] the same would still be part of the public domain.
Having determined that the subject land is public land, a fortiori, the Bureau of Lands, as well as the Office of the Secretary of Agriculture
and Natural Resources have Jurisdiction over the same in accordance with the Public Land Law. Accordingly, the court a quo dismissed
petitioners' complaint for non-exhaustion of administrative remedies which ruling the Court of Appeals affirmed.
However, this Court agrees with petitioners that administrative remedies have been exhausted. Petitioners could not have intended to
appeal to respondent Ignacio as an Officer-in-Charge of the Bureau of Lands. The decision being appealed from was the decision of respondent
Hilario who was the Regional Director of The Bureau of Lands. Said decision was made "for and by authority of the Director of Lands." [14] It
would be incongruous to appeal the decision of the Regional Director of the Bureau of Lands acting for the Director of the Bureau of Lands to
an Officer-In-Charge of the Bureau of Lands.
In any case, respondent Rolleo Ignacio's official designation was "Undersecretary of the Department of Agriculture and Natural
Resources." He was only an "Officer-In-Charge" of the Bureau of Lands. When he acted on the late Antonio Nazareno's motion for
reconsideration by affirming or adopting respondent's Hilario's decision, he was acting on said motion as an Undersecretary on behalf of the
Secretary of the Department. In the case of Hamoy v. Secretary of Agriculture and Natural Resources, [15] This Court held that the
Undersecretary of Agriculture and Natural Resources may modify, adopt, or set aside the orders or decisions of the Director of Lands with
respect to questions involving public lands under the administration and control of the Bureau of Lands and the Department of Agriculture and
Natural Resources. He cannot therefore, be said to have acted beyond the bounds of his jurisdiction under Sections 3, 4 and 5 of
Commonwealth Act No. 141.[16]
As borne out by the administrative findings, the controverted land is public land, being an artificial accretion of sawdust. As such, the
Director of Lands has jurisdiction, authority and control over the same, as mandated under Sections 3 and 4 of the Public Land Law (C.A. No.
141) which states, thus:

"Sec. 3. The Secretary of Agriculture and Natural Resources shall be the exclusive officer charged with carrying out the provisions of this Act
through the Director of Lands who shall act under his immediate control.

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

In connection with the second issue, petitioners ascribe whim, arbitrariness or capriciousness in the execution order of public respondent
Abelardo G. Palad, the Director of Lands. This Court finds otherwise since said decision was based on the conclusive finding that the subject
land was public land. Thus, this Court agrees with the Court of Appeals that the Director of Lands acted within his rights when he issued the
assailed execution order, as mandated by the aforecited provisions.
Petitioners' allegation that respondent Palad's execution order directing them to vacate the subject land practically changed respondent
Hilario's decision is baseless. It is incorrect for petitioners to assume that respondent Palad awarded portions of the subject land to private
respondents Salasalans and Rayabas as they had not yet been issued patents or titles over the subject land. The execution order merely
directed the segregation of petitioners' titled lot from the subject land which was actually being occupied by private respondents before they
were ejected from it. Based on the finding that private respondents were actually in possession or were actually occupying the subject land
instead of petitioners, respondent Palad, being the Director of Lands and in the exercise of this administrative discretion, directed petitioners
to vacate the subject land on the ground that private respondents have a preferential right, being the occupants thereof.
While private respondents may not have filed their application over the land occupied by them, they nevertheless filed their protest or
opposition to petitioners' Miscellaneous Sales Application, the same being preparatory to the filing of an application as they were in fact directed
to do so. In any case, respondent Palad's execution order merely implements respondent Hilario's order. It should be noted that petitioners'
own application still has to be given due course. [17]
As Director of lands, respondent Palad is authorized to exercise executive control over any form of concession, disposition and
management of the lands of the public domain.[18] He may issue decisions and orders as he may see fit under the circumstances as long as
they are based on the findings of fact.

Property 89
 In the case of Calibo v. Ballesteros,[19] this Court held that where, in the disposition of public lands, the Director of Lands bases his decision
on the evidence thus presented, he clearly acts within his jurisdiction, and if he errs in appraising the evidence, the error is one of judgment,
but not an act or grave abuse of discretion annullable by certiorari. Thus, except for the issue of non-exhaustion of administrative remedies,
this Court finds no reversible error nor grave abuse of discretion in the decision of the Court of Appeals.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Regalado (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

25. G.R. No. L-31934 July 29, 1977

RAMON LANZAR, petitioner

vs.
DIRECTOR OF LANDS and CITY OF ILOILO, respondents.

Ramon A. Gonzales for petitioner.

Solicitor General Felix Q. Antonio, Assistant Solicitor General Bernardo P. Pardo and Solicitor Jose A. Janolo for respondents.

FERNANDEZ, J.:

This is a petition to review on certiorari the decision of the Court of Appeals in CA-G. R. No. 34333-R entitled "Ramon Lanzar, Applicant-
Appellee, versus The Director of Lands and The City of Iloilo, Oppositors-Appellants", declaring the property sought to be registered as the
property of the public domain devoted to public use not susceptible of private appropriation.

In May 1960, the petitioner, Ramon Lanzar, filed an application for registration of title to a parcel of land located in the District of Molo, Iloilo
City in the Court of First Instance of Iloilo alleging that he is the owner in fee simple of the land in question and asking that the title thereto be
registered in his name.

In August 1961, the Director of Lands and the City of Iloilo filed an opposition to the application on the ground that the land in question a
foreshore land which forms part of the public domain and is needed by the City of Iloilo as a road right of way of the Molo Arevalo Boulevard,
and that the applicant had not possessed the property in such a manner as to warrant an implied grant entitled him to confirmation of his title
thereto.

After trial, the Court of First Instance of Iloilo rendered a decision in March 1963 holding that the property in question, having been possessed
by the applicant and his predecessors-in-interest, publicly, continuously and adversely for more than 30 years, the same was adjudicated to
the petitioner, it appearing that no proof had been adduced that the said land is necessary for public utility or establishment of special
industries (Record on Appeal, pp. 30-37).

The Director of Lands and the City of Iloilo appealed to the Court of Appeals which on March 24, 1970 reversed the decision of the Court of
First Instance of Iloilo and held that the land in question, being an accretion formed by the action of the sea, is property of the public domain
and not susceptible of private appropriation.

Hence, the applicant-appellee, Ramon Lanzar, filed this petition for certiorari to review the aforesaid decision of the Court of Appeals. The
petitioner assigns the following errors:

THE COURT OF APPEALS ERRED IN HOLDING THAT LANDS FORMED BY ACTION OF THE SEA AS ACCRETION
TO THE SHORES ARE PROPERTY OF PUBLIC DOMINION, ON THE AUTHORITY OF ART. 4, LAW OF WATERS, KER
& CO. VS GAUDEN AND GOVERNMENT VS. ALDECOA.

II

Property 90
 THE COURT OF APPEALS ERRED IN RELYING ON MONTEVERDE VS. DIRECTOR OF LANDS, 93 PHIL. 134
HOLDING THAT ONLY THE EXECUTIVE OR LEGISLATURE CAN DECLARE THE LAND AS NO LONGER INTENDED
FOR PUBLIC USE AND SO SHALL BELONG TO THE ADJACENT OWNER.

III

THE COURT OF APPEALS ERRED IN HOLDING THAT SINCE ART. 422 OF THE NEW CIVIL CODE PROVIDES THAT
PROPERTY OF PUBLIC DOMAIN WHEN NO LONGER INTENDED FOR PUBLIC USE, SUCH INTENTION CAN ONLY
BE SPELLED OUT BY THE EXECUTIVE OR LEGISLATURE, NOT BY THE COURTS.

IV

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONER HAS ACQUIRED THE PROPERTY THRU
ACQUISITIVE PRESCRIPTION.

(Petitioner's Brief, pp. 1-2)

The pertinent facts are not disputed.

The petitioner has applied for the registration of his title to a parcel of land which is admittedly an accretion of Lot No. 1899 of the Cadastral
Survey of Iloilo, it having been formed by the gradual action of the sea before 1,922. Ignacio Arroyo, the registered owner of Lot 1899, leased
in 19M the property to Maximo Tonogbanua who possessed the whole of Lot 1899 and its accretion. In 1927, Ignacio Arroyo donated Lot
1899 of the Cadastral Survey of Iloilo, together with its accretion, to Beaterio de Santissimo Rosario de Molo, which in turn the property to the
applicant, Ramon Lanzar. The lessee planted coconuts and bananas on the land and a portion thereof was devoted to palay. A verification of
Lot 1899 by the Bureau of Lands disclosed that the portion of land applied for and described in the plan, Exhibit A, and in its technical
description, is outside of Lot 1899, the same being an accretion thereto formed by the action of the sea. Beaterio de Santissimo Rosario de
Molo and the applicant entered into an agreement, Exhibit 1, on August 13,1959, under which Beaterio de Santissimo Rosario de Molo
assigned all its rights to the accretion, the title to which is sought to be registered by the applicant. Beaterio de Santissimo Rosario de Molo
had possessed Lot 1899 and its accretion through its lessee, openly, publicly, uninterruptedly and adversely to all claimants and under claim
of ownership. The Beaterio had declared Lot 1899 for taxation and when it assigned the rights to the applicant, he caused the tax declaration
to be transferred to his name in May 1960, Exhibit J.

During the Cadastral Survey of 1911-1912, the lot in question was non-existent (Exhibit 2, Director of Lands). Hence, said land as an
accretion to Lot 1899 must have gradually developed from 1912 to 1922 and thereafter. It is now separated by the Arevalo-Molo Boulevard
from the sea.

The only issue to be resolved is whether or not the title to the land in question which was formed by action of the sea as an accretion to Lot
1899 may be registered in the name of the applicant on the basis of adverse possession for over 30 years.

Article 4 of the Law of Waters provides:

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

In Ker & Co. vs. Cauden, 6 Phil. 732, this Court said:

This case is directly covered by the first part of said article 4. There is therein an express declaration that land formed in
the way this land was formed is public property. Nothing could be more explicit and the effect of this declaration is not in
any way limited by the subsequent provisions of the same article. The claim of the appellants that these subsequent
provisions indicate that the ownership of such land is in the private persons who own the adjoining property, and that the
declaration which is spoken of is simply proof of that ownership, can not be sustained. It is in direct conflict with the
statement made in the first part of the article. The true construction of the article is that when these lands which belong to
the State are not needed for the purposes mentioned therein, then the State shall grant them to the adjoining owners. No
attempt was made by the appellants to prove any such grant or concession in this case and, in fact, it is apparent from the
evidence that the conditions upon which the adjoining owners would be entitled to such a grant have never existed
because for a long time the property was by the Spanish navy and it is now occupied by the present government as a naval
station, and works costing more than $500,000, money of the United States, have been erected thereon. (Idem. p. 736)

Property 91
It is contended by the petitioner that:

As found by the Court of Appeals, the accretion began before 1922, but after 1912, as shown by the undisputed evidence,
hence, during the regime of the Spanish Civil Code, which became effective on December 8, 1889, and consequently, its
nature shall be determined by the said code. Now, the said code provides:

ARTICLE 399. The following are property of public domain:

l. Those things intended for public use, as roads, canals, rivers, torrents, ports and bridges constructed
by the State, riverbanks, shores, roadsteads and others of a like nature.

(Brief for Petitioner-Appellant, pp. 10-11)

However, in Insular Government vs. Aldecoa and Company, 19 Phil. 505, this Court held:

The Civil Code, which went into effect in these Islands on December 7, 1889, the twentieth day of its publication in the
Gaceta de Manila of the 17th of November of the same year, confirms the provisions of the said Law of Waters, since, in its
article 339, it prescribes that:

Property of public ownership is —

l. That destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges constructed by the State, and
banks, shores, roadsteads, and that of a similar character.

Article 341 of the same code provides:

Property of public ownership, when no longer devoted to general uses or to the requirements of the defense of the territory,
shall become a part of the State property.

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

The occupation or material possession of any land formed upon the shore by accretions and alluvium deposits occasioned
by the sea, where the occupant or possessor is a private person and holds without previous permission or authorization
from the Government, granted in due form, although he may have had the intention to hold it for the purpose of making it
his own, is illegal possession on his part and amounts to nothing more than a mere detainer of the land, which is out of the
sphere of the commerce of men, as belonging to the public domain and being alloted to public uses and for the use of all
persons who live at the place where it is situated. (Idem, pp. 514-515)

It is thus seen that the petitioner could not acquire the land in question by prescription.

The contention of the petitioner-appellant that by "thus expanding the meaning of shores to include inland property formed by the action of
the sea, Government vs. Aldecoa is guilty of judicial legislation ..." (Brief of Petitioner-Appellant, p. 15) has no merit.

Articles 339 and 340 of the Spanish Civil Code are not repugnant to Article 4 of the Spanish Law of Waters of 1866. The said provisions of
the said Spanish Code did not provide that lands added to the shores by action of the sea form part of the patrimonial property of the State.

As stated by this Court in Insular Government vs. Aldecoa, supra, p. 541, the Civil Code of Spain confirms the provisions of Article 4 of the
Law of Waters, citing Article 339 of said code. This Court has been consistent in ruling that lands formed by the action of the sea belong to
the public domain. Thus in Monteverde vs. Director of Lands, 93 Phil. 134, it was held:

Lots Nos. 1 and 2 were admittedly formed and added to the shores by the natural. action of the sea, and the petitioners
herein have claimed title thereto as accretion to their adjoining lots, in accordance with article 4 of the Law of Waters of
August 3, 1966, which provides as follows:

Property 92
 'Lands added to the shores by accretion and alluvial deposits caused by action of the sea, form part of
the public domain. When they are no longer washed by the water of the sea and are not necessary for
purposes of public utility, or for the establishment of special industries, or for coast-guard service, the
Government shall declare them to be property of the owners of the estates adjacent thereto and as
increment thereof.'

(Idem. pp. 135-136)

In view of the foregoing, the Court of Appeals did not err in declaring the property sought to be registered as part of the public domain
devoted to public use not susceptible of private appropriation. The land in question is needed by the City of Iloilo for the expansion of the
Arevalo-Molo Boulevard.

WHEREFORE, the petition for review is hereby dismissed and the decision of the Court of Appeals sought to be reviewed is affirmed, without
pronouncement as to costs.

SO ORDERED.

26. [G.R. No. 133250. July 9, 2002]

FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION, respondents. D E C I S I O N CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary restraining order. The petition
seeks to compel the Public Estates Authority (PEA for brevity) to disclose all facts on PEAs then on-going renegotiations with Amari Coastal
Bay and Development Corporation (AMARI for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing
a new agreement with AMARI involving such reclamation.

The Facts

Property 93
 On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with the Construction and
Development Corporation of the Philippines (CDCP for brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The contract
also included the construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in
consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA
to reclaim land, including foreshore and submerged areas, and to develop, improve, acquire, x x x lease and sell any and all kinds of lands. [1] On
the same date, then President Marcos issued Presidential Decree No. 1085 transferring to PEA the lands reclaimed in the foreshore and
offshore of the Manila Bay[2] under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with CDCP, so that [A]ll future
works in MCCRRP x x x shall be funded and owned by PEA. Accordingly, PEA and CDCP executed a Memorandum of Agreement dated
December 29, 1981, which stated:

(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may be agreed upon by the parties, to be
paid according to progress of works on a unit price/lump sum basis for items of work to be agreed upon, subject to price escalation, retention
and other terms and conditions provided for in Presidential Decree No. 1594. All the financing required for such works shall be provided by
PEA.

xxx

(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in favor of PEA, all of the rights, title, interest
and participation of CDCP in and to all the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have not yet
been sold, transferred or otherwise disposed of by CDCP as of said date, which areas consist of approximately Ninety-Nine Thousand Four
Hundred Seventy Three (99,473) square meters in the Financial Center Area covered by land pledge No. 5 and approximately Three Million
Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying elevations above
Mean Low Water Level located outside the Financial Center Area and the First Neighborhood Unit. [3]

On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and transferring to PEA the parcels of
land so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total area of one million nine
hundred fifteen thousand eight hundred ninety four (1,915,894) square meters. Subsequently, on April 9, 1988, the Register of Deeds of the
Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three reclaimed
islands known as the Freedom Islands located at the southern portion of the Manila-Cavite Coastal Road, Paraaque City. The Freedom Islands
have a total land area of One Million Five Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841
hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for brevity) with AMARI, a private corporation, to develop the
Freedom Islands. The JVA also required the reclamation of an additional 250 hectares of submerged areas surrounding these islands to
complete the configuration in the Master Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the
JVA through negotiation without public bidding. [4] On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245, confirmed the
JVA. [5] On June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved the JVA. [6]
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and denounced the JVA as
the grandmother of all scams. As a result, the Senate Committee on Government Corporations and Public Enterprises, and the Committee on
Accountability of Public Officers and Investigations, conducted a joint investigation. The Senate Committees reported the results of their
investigation in Senate Committee Report No. 560 dated September 16, 1997.[7] Among the conclusions of their report are: (1) the reclaimed
lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the government has not classified as alienable
lands and therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA
itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a Legal Task Force to
conduct a study on the legality of the JVA in view of Senate Committee Report No. 560. The members of the Legal Task Force were the
Secretary of Justice,[8] the Chief Presidential Legal Counsel,[9] and the Government Corporate Counsel.[10] The Legal Task Force upheld the
legality of the JVA, contrary to the conclusions reached by the Senate Committees. [11]
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going renegotiations between PEA
and AMARI under an order issued by then President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman
Arsenio Yulo and retired Navy Officer Sergio Cruz composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the Issuance of a Temporary
Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the petition for
unwarranted disregard of judicial hierarchy, without prejudice to the refiling of the case before the proper court.[12]
On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a taxpayer, filed the instant Petition for Mandamus with Prayer for
the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order. Petitioner contends the government stands to lose billions
of pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the
Property 94
JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to information on matters of
public concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant violation of Section 3, Article XII of the 1987
Constitution prohibiting the sale of alienable lands of the public domain to private corporations. Finally, petitioner asserts that he seeks to enjoin
the loss of billions of pesos in properties of the State that are of public dominion.
After several motions for extension of time, [13] PEA and AMARI filed their Comments on October 19, 1998 and June 25, 1998,
respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of the renegotiated
PEA-AMARI contract; (b) for issuance of a temporary restraining order; and (c) to set the case for hearing on oral argument. Petitioner filed a
Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the parties to file their respective
memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement (Amended JVA, for brevity). On May 28, 1999, the
Office of the President under the administration of then President Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on constitutional and statutory grounds
the renegotiated contract be declared null and void. [14]

The Issues

The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:

I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND ACADEMIC BECAUSE OF
SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE PRINCIPLE GOVERNING THE
HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL INFORMATION ON ON-GOING
NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER TO AMARI OF
CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF WHETHER THE AMENDED JOINT
VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.

The Courts Ruling

First issue: whether the principal reliefs prayed for in the petition are moot and academic because of subsequent events.

The petition prays that PEA publicly disclose the terms and conditions of the on-going negotiations for a new agreement. The petition also
prays that the Court enjoin PEA from privately entering into, perfecting and/or executing any new agreement with AMARI.
PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June 21, 1999 a copy of the signed
Amended JVA containing the terms and conditions agreed upon in the renegotiations. Thus, PEA has satisfied petitioners prayer for a public
disclosure of the renegotiations. Likewise, petitioners prayer to enjoin the signing of the Amended JVA is now moot because PEA and AMARI
have already signed the Amended JVA on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on May 28,
1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking the signing and approval of the
Amended JVA before the Court could act on the issue. Presidential approval does not resolve the constitutional issue or remove it from the
ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President cannot operate to moot the petition
and divest the Court of its jurisdiction. PEA and AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the
Amended JVA on constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI have signed

Property 95
one in violation of the Constitution. Petitioners principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of
the Constitution, which prohibits the government from alienating lands of the public domain to private corporations. If the Amended JVA indeed
violates the Constitution, it is the duty of the Court to enjoin its implementation, and if already implemented, to annul the effects of such
unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership to 367.5 hectares of
reclaimed lands and submerged areas of Manila Bay to a single private corporation. It now becomes more compelling for the Court to
resolve the issue to insure the government itself does not violate a provision of the Constitution intended to safeguard the national
patrimony. Supervening events, whether intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation
of the Constitution. In the instant case, if the Amended JVA runs counter to the Constitution, the Court can still prevent the transfer of title and
ownership of alienable lands of the public domain in the name of AMARI. Even in cases where supervening events had made the cases moot,
the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar, and the
public.[17]
Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3, Article XII of the 1987
Constitution, or its counterpart provision in the 1973 Constitution,[18] covered agricultural lands sold to private corporations which acquired
the lands from private parties. The transferors of the private corporations claimed or could claim the right to judicial confirmation of their
imperfect titles[19] under Title II of Commonwealth Act. 141 (CA No. 141 for brevity). In the instant case, AMARI seeks to acquire from PEA,
a public corporation, reclaimed lands and submerged areas for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA)
and Title III of CA No. 141. Certain undertakings by AMARI under the Amended JVA constitute the consideration for the purchase. Neither
AMARI nor PEA can claim judicial confirmation of their titles because the lands covered by the Amended JVA are newly reclaimed or still to be
reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive and notorious occupation of agricultural lands of the
public domain for at least thirty years since June 12, 1945 or earlier. Besides, the deadline for filing applications for judicial confirmation of
imperfect title expired on December 31, 1987.[20]
Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of the possible transfer at any time
by PEA to AMARI of title and ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is obligated to transfer to AMARI
the latters seventy percent proportionate share in the reclaimed areas as the reclamation progresses. The Amended JVA even allows AMARI
to mortgage at any time the entire reclaimed area to raise financing for the reclamation project. [21]

Second issue: whether the petition merits dismissal for failing to observe the principle governing the hierarchy of courts.

PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The principle of hierarchy of courts
applies generally to cases involving factual questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues. The
instant case, however, raises constitutional issues of transcendental importance to the public. [22] The Court can resolve this case without
determining any factual issue related to the case. Also, the instant case is a petition for mandamus which falls under the originaljurisdiction of
the Court under Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction over the instant case.

Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies.

PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain information without first asking PEA
the needed information. PEA claims petitioners direct resort to the Court violates the principle of exhaustion of administrative remedies. It also
violates the rule that mandamus may issue only if there is no other plain, speedy and adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the Court granted the petition for mandamus even if the petitioners
there did not initially demand from the Office of the President the publication of the presidential decrees. PEA points out that in Taada, the
Executive Department had an affirmative statutory duty under Article 2 of the Civil Code[24] and Section 1 of Commonwealth Act No. 638[25] to
publish the presidential decrees. There was, therefore, no need for the petitioners in Taada to make an initial demand from the Office of the
President. In the instant case, PEA claims it has no affirmative statutory duty to disclose publicly information about its renegotiation of the
JVA. Thus, PEA asserts that the Court must apply the principle of exhaustion of administrative remedies to the instant case in view of the failure
of petitioner here to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation. Under Section 79 of the Government
Auditing Code,[26]2 the disposition of government lands to private parties requires public bidding. PEA was under a positive legal duty to
disclose to the public the terms and conditions for the sale of its lands. The law obligated PEA to make this public disclosure even without
demand from petitioner or from anyone. PEA failed to make this public disclosure because the original JVA, like the Amended JVA, was the
result of a negotiated contract, not of a public bidding. Considering that PEA had an affirmative statutory duty to make the public disclosure,
and was even in breach of this legal duty, petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative remedies does not apply when the
issue involved is a purely legal or constitutional question. [27] The principal issue in the instant case is the capacity of AMARI to acquire lands
Property 96
held by PEA in view of the constitutional ban prohibiting the alienation of lands of the public domain to private corporations. We rule that the
principle of exhaustion of administrative remedies does not apply in the instant case.

Fourth issue: whether petitioner has locus standi to bring this suit

PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his constitutional right to information without a
showing that PEA refused to perform an affirmative duty imposed on PEA by the Constitution. PEA also claims that petitioner has not shown
that he will suffer any concrete injury because of the signing or implementation of the Amended JVA. Thus, there is no actual controversy
requiring the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayers suit because the petition seeks to compel PEA to comply with its constitutional
duties. There are two constitutional issues involved here. First is the right of citizens to information on matters of public concern. Second is the
application of a constitutional provision intended to insure the equitable distribution of alienable lands of the public domain among Filipino
citizens. The thrust of the first issue is to compel PEA to disclose publicly information on the sale of government lands worth billions of pesos,
information which the Constitution and statutory law mandate PEA to disclose. The thrust of the second issue is to prevent PEA from alienating
hundreds of hectares of alienable lands of the public domain in violation of the Constitution, compelling PEA to comply with a constitutional
duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v. PCGG,[28] the Court upheld the right of a
citizen to bring a taxpayers suit on matters of transcendental importance to the public, thus -

Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an issue of transcendental importance to the
public. He asserts that ordinary taxpayers have a right to initiate and prosecute actions questioning the validity of acts or orders of
government agencies or instrumentalities, if the issues raised are of paramount public interest, and if they immediately affect the social,
economic and moral well being of the people.

Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the proceeding involves the assertion of a
public right, such as in this case. He invokes several decisions of this Court which have set aside the procedural matter of locus standi, when
the subject of the case involved public interest.

xxx

In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of mandamus is to obtain the enforcement
of a public duty, the people are regarded as the real parties in interest; and because it is sufficient that petitioner is a citizen and as such is
interested in the execution of the laws, he need not show that he has any legal or special interest in the result of the action. In the aforesaid
case, the petitioners sought to enforce their right to be informed on matters of public concern, a right then recognized in Section 6, Article IV
of the 1973 Constitution, in connection with the rule that laws in order to be valid and enforceable must be published in the Official Gazette or
otherwise effectively promulgated. In ruling for the petitioners' legal standing, the Court declared that the right they sought to be enforced is a
public right recognized by no less than the fundamental law of the land.

Legaspi v. Civil Service Commission, while reiterating Taada, further declared that when a mandamus proceeding involves the assertion of a
public right, the requirement of personal interest is satisfied by the mere fact that petitioner is a citizen and, therefore, part of the general
'public' which possesses the right.

Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved under the questioned contract for the
development, management and operation of the Manila International Container Terminal, public interest [was] definitely involved considering
the important role [of the subject contract] . . . in the economic development of the country and the magnitude of the financial consideration
involved. We concluded that, as a consequence, the disclosure provision in the Constitution would constitute sufficient authority for upholding
the petitioner's standing.

Similarly, the instant petition is anchored on the right of the people to information and access to official records, documents and papers a
right guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of the
satisfaction of the two basic requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public
right (2) espoused by a Filipino citizen, we rule that the petition at bar should be allowed.

We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights - to information and to the
equitable diffusion of natural resources - matters of transcendental public importance, the petitioner has the requisite locus standi.

Property 97
 Fifth issue: whether the constitutional right to information includes official information on on-going negotiations before a final
agreement.

Section 7, Article III of the Constitution explains the peoples right to information on matters of public concern in this manner:

Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to
documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such limitations as may be provided by law. (Emphasis supplied)

The State policy of full transparency in all transactions involving public interest reinforces the peoples right to information on matters of public
concern. This State policy is expressed in Section 28, Article II of the Constitution, thus:

Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its
transactions involving public interest. (Emphasis supplied)

These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the government, as well
as provide the people sufficient information to exercise effectively other constitutional rights. These twin provisions are essential to the exercise
of freedom of expression. If the government does not disclose its official acts, transactions and decisions to citizens, whatever citizens say,
even if expressed without any restraint, will be speculative and amount to nothing. These twin provisions are also essential to hold public
officials at all times x x x accountable to the people, [29] for unless citizens have the proper information, they cannot hold public officials
accountable for anything. Armed with the right information, citizens can participate in public discussions leading to the formulation of
government policies and their effective implementation. An informed citizenry is essential to the existence and proper functioning of any
democracy. As explained by the Court in Valmonte v. Belmonte, Jr.[30]

An essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the
people. It is in the interest of the State that the channels for free political discussion be maintained to the end that the government may
perceive and be responsive to the peoples will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and
thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have access to
information relating thereto can such bear fruit.

PEA asserts, citing Chavez v. PCGG,[31] that in cases of on-going negotiations the right to information is limited to definite propositions
of the government. PEA maintains the right does not include access to intra-agency or inter-agency recommendations or communications
during the stage when common assertions are still in the process of being formulated or are in the exploratory stage.
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the closing of the transaction. To support
its contention, AMARI cites the following discussion in the 1986 Constitutional Commission:

Mr. Suarez. And when we say transactions which should be distinguished from contracts, agreements, or treaties or whatever, does the
Gentleman refer to the steps leading to the consummation of the contract, or does he refer to the contract itself?

Mr. Ople: The transactions used here, I suppose is generic and therefore, it can cover both steps leading to a contract and already
a consummated contract, Mr. Presiding Officer.

Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of the transaction.

Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.

Mr. Suarez: Thank you.[32] (Emphasis supplied)

AMARI argues there must first be a consummated contract before petitioner can invoke the right. Requiring government officials to reveal their
deliberations at the pre-decisional stage will degrade the quality of decision-making in government agencies. Government officials will hesitate
to express their real sentiments during deliberations if there is immediate public dissemination of their discussions, putting them under all kinds
of pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA to disclose publicly, and information the constitutional
right to information requires PEA to release to the public. Before the consummation of the contract, PEA must, on its own and without demand
from anyone, disclose to the public matters relating to the disposition of its property.These include the size, location, technical description and
nature of the property being disposed of, the terms and conditions of the disposition, the parties qualified to bid, the minimum price and similar
information. PEA must prepare all these data and disclose them to the public at the start of the disposition process, long before the

Property 98
consummation of the contract, because the Government Auditing Code requires public bidding. If PEA fails to make this disclosure, any
citizen can demand from PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being undertaken by the bidding or review committee is
not immediately accessible under the right to information. While the evaluation or review is still on-going, there are no official acts, transactions,
or decisions on the bids or proposals. However, once the committee makes its official recommendation, there arises a definite
proposition on the part of the government. From this moment, the publics right to information attaches, and any citizen can access all the non-
proprietary information leading to such definite proposition. In Chavez v. PCGG,[33] the Court ruled as follows:

Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the PCGG and its officers, as well as other
government representatives, to disclose sufficient public information on any proposed settlement they have decided to take up with the
ostensible owners and holders of ill-gotten wealth. Such information, though, must pertain to definite propositions of the government, not
necessarily to intra-agency or inter-agency recommendations or communications during the stage when common assertions are still in the
process of being formulated or are in the exploratory stage. There is need, of course, to observe the same restrictions on disclosure of
information in general, as discussed earlier such as on matters involving national security, diplomatic or foreign relations, intelligence and
other classified information. (Emphasis supplied)

Contrary to AMARIs contention, the commissioners of the 1986 Constitutional Commission understood that the right to
information contemplates inclusion of negotiations leading to the consummation of the transaction. Certainly, a consummated contract
is not a requirement for the exercise of the right to information. Otherwise, the people can never exercise the right if no contract is consummated,
and if one is consummated, it may be too late for the public to expose its defects.
Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly disadvantageous to the
government or even illegal, becomes a fait accompli.This negates the State policy of full transparency on matters of public concern, a situation
which the framers of the Constitution could not have intended. Such a requirement will prevent the citizenry from participating in the public
discussion of any proposed contract, effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation
of a constitutional right, nor a retreat by the State of its avowed policy of full disclosure of all its transactions involving public interest.
The right covers three categories of information which are matters of public concern, namely: (1) official records; (2) documents and
papers pertaining to official acts, transactions and decisions; and (3) government research data used in formulating policies. The first category
refers to any document that is part of the public records in the custody of government agencies or officials. The second category refers to
documents and papers recording, evidencing, establishing, confirming, supporting, justifying or explaining official acts, transactions or decisions
of government agencies or officials. The third category refers to research data, whether raw, collated or processed, owned by the government
and used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation reports, recommendations, legal and
expert opinions, minutes of meetings, terms of reference and other documents attached to such reports or minutes, all relating to the
JVA. However, the right to information does not compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of
the JVA.[34] The right only affords access to records, documents and papers, which means the opportunity to inspect and copy them. One who
exercises the right must copy the records, documents and papers at his expense. The exercise of the right is also subject to reasonable
regulations to protect the integrity of the public records and to minimize disruption to government operations, like rules specifying when and
how to conduct the inspection and copying.[35]
The right to information, however, does not extend to matters recognized as privileged information under the separation of powers. [36] The
right does not also apply to information on military and diplomatic secrets, information affecting national security, and information on
investigations of crimes by law enforcement agencies before the prosecution of the accused, which courts have long recognized as
confidential.[37] The right may also be subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of powers. The
information does not cover Presidential conversations, correspondences, or discussions during closed-door Cabinet meetings which, like
internal deliberations of the Supreme Court and other collegiate courts, or executive sessions of either house of Congress,[38] are recognized
as confidential. This kind of information cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure by interested parties, is essential to protect the independence of decision-making of
those tasked to exercise Presidential, Legislative and Judicial power. [39] This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official information on on-going negotiations before a final
contract. The information, however, must constitute definite propositions by the government and should not cover recognized exceptions like
privileged information, military and diplomatic secrets and similar matters affecting national security and public order.[40] Congress has also
prescribed other limitations on the right to information in several legislations. [41]

Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate the
Constitution.

Property 99
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which holds that the State owns
all lands and waters of the public domain.Upon the Spanish conquest of the Philippines, ownership of all lands, territories and possessions in
the Philippines passed to the Spanish Crown. [42] The King, as the sovereign ruler and representative of the people, acquired and owned all
lands and territories in the Philippines except those he disposed of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of the King, as the owner
of all lands and waters of the public domain.The Regalian doctrine is the foundation of the time-honored principle of land ownership that all
lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain. [43] Article 339 of the Civil Code
of 1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition of reclaimed lands in the
Philippines. On May 18, 1907, the Philippine Commission enacted Act No. 1654 which provided for the lease, but not the sale, of reclaimed
lands of the government to corporations and individuals. Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874,
the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to corporations and
individuals. On November 7, 1936, the National Assembly passed Commonwealth Act No. 141, also known as the Public Land Act, which
authorized the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. CA No. 141 continues to
this day as the general law governing the classification and disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the maritime zone of the Spanish territory
belonged to the public domain for public use. [44] The Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5, which
provided as follows:

Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private persons,
with proper permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant
of authority.

Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the reclamation, provided the government
issued the necessary permit and did not reserve ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:

Art. 339. Property of public dominion is

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores,
roadsteads, and that of a similar character;
2. That belonging exclusively to the State which, without being of general public use, is employed in some public service, or in the
development of the national wealth, such as walls, fortresses, and other works for the defense of the territory, and mines, until
granted to private individuals.
Property devoted to public use referred to property open for use by the public. In contrast, property devoted to public service referred to property
used for some specific public service and open only to those authorized to use the property.
Property of public dominion referred not only to property devoted to public use, but also to property not so used but employed to develop
the national wealth. This class of property constituted property of public dominion although employed for some economic or commercial
activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into private property, to wit:

Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the territory, shall become a part of the
private property of the State.

This provision, however, was not self-executing. The legislature, or the executive department pursuant to law, must declare the property no
longer needed for public use or territorial defense before the government could lease or alienate the property to private parties.[45]
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of reclaimed and foreshore lands. The
salient provisions of this law were as follows:

Property 100
Section 1. The control and disposition of the foreshore as defined in existing law, and the title to all Government or public lands made
or reclaimed by the Government by dredging or filling or otherwise throughout the Philippine Islands, shall be retained by the
Government without prejudice to vested rights and without prejudice to rights conceded to the City of Manila in the Luneta Extension.

Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or reclaimed by the Government by dredging or
filling or otherwise to be divided into lots or blocks, with the necessary streets and alleyways located thereon, and shall cause plats and plans
of such surveys to be prepared and filed with the Bureau of Lands.

(b) Upon completion of such plats and plans the Governor-General shall give notice to the public that such parts of the lands so made
or reclaimed as are not needed for public purposes will be leased for commercial and business purposes, x x x.

xxx

(e) The leases above provided for shall be disposed of to the highest and best bidder therefore, subject to such regulations and
safeguards as the Governor-General may by executive order prescribe. (Emphasis supplied)

Act No. 1654 mandated that the government should retain title to all lands reclaimed by the government. The Act also vested in the
government control and disposition of foreshore lands. Private parties could lease lands reclaimed by the government only if these lands were
no longer needed for public purpose. Act No. 1654 mandated public bidding in the lease of government reclaimed lands. Act No. 1654 made
government reclaimed lands sui generis in that unlike other public lands which the government could sell to private parties, these reclaimed
lands were available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654 did not prohibit private parties from
reclaiming parts of the sea under Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by private parties with government
permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act. [46] The salient provisions of Act No. 2874,
on reclaimed lands, were as follows:

Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture and Natural Resources, shall from time to
time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.

Sec. 7. For the purposes of the government and disposition of alienable or disposable public lands, the Governor-General, upon
recommendation by the Secretary of Agriculture and Natural Resources, shall from time to time declare what lands are open to
disposition or concession under this Act.

Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited or classified x x x.
xxx

Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be classified as suitable for residential
purposes or for commercial, industrial, or other productive purposes other than agricultural purposes, and shall be open to
disposition or concession, shall be disposed of under the provisions of this chapter, and not otherwise.

Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.

Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed of to private parties by lease only and
not otherwise, as soon as the Governor-General, upon recommendation by the Secretary of Agriculture and Natural
Resources, shall declare that the same are not necessary for the public service and are open to disposition under this chapter. The
lands included in class (d) may be disposed of by sale or lease under the provisions of this Act. (Emphasis supplied)

Property 101
 Section 6 of Act No. 2874 authorized the Governor-General to classify lands of the public domain into x x x alienable or
disposable[47] lands. Section 7 of the Act empowered the Governor-General to declare what lands are open to disposition or concession. Section
8 of the Act limited alienable or disposable lands only to those lands which have been officially delimited and classified.
Section 56 of Act No. 2874 stated that lands disposable under this title [48] shall be classified as government reclaimed, foreshore and
marshy lands, as well as other lands. All these lands, however, must be suitable for residential, commercial, industrial or other productive non-
agricultural purposes. These provisions vested upon the Governor-General the power to classify inalienable lands of the public domain into
disposable lands of the public domain. These provisions also empowered the Governor-General to classify further such disposable lands of
the public domain into government reclaimed, foreshore or marshy lands of the public domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified as government reclaimed,
foreshore and marshy lands shall be disposed of to private parties by lease only and not otherwise. The Governor-General, before
allowing the lease of these lands to private parties, must formally declare that the lands were not necessary for the public service. Act No. 2874
reiterated the State policy to lease and not to sell government reclaimed, foreshore and marshy lands of the public domain, a policy first
enunciated in 1907 in Act No. 1654. Government reclaimed, foreshore and marshy lands remained sui generis, as the only alienable or
disposable lands of the public domain that the government could not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for non-agricultural purposes
retain their inherent potential as areas for public service. This is the reason the government prohibited the sale, and only allowed the lease, of
these lands to private parties. The State always reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy lands into other non-agricultural lands
under Section 56 (d). Lands falling under Section 56 (d) were the only lands for non-agricultural purposes the government could sell to private
parties. Thus, under Act No. 2874, the government could not sell government reclaimed, foreshore and marshy lands to private parties, unless
the legislature passed a law allowing their sale.[49]
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the Spanish Law of Waters of
1866. Lands reclaimed from the sea by private parties with government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935 Constitution, in adopting the
Regalian doctrine, declared in Section 1, Article XIII, that

Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces
of potential energy and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or
utilization shall be limited to citizens of the Philippines or to corporations or associations at least sixty per centum of the capital of which is
owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government
established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no
license, concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, renewable for another twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which cases beneficial use may be the measure and limit of the
grant. (Emphasis supplied)

The 1935 Constitution barred the alienation of all natural resources except public agricultural lands, which were the only natural resources
the State could alienate. Thus, foreshore lands, considered part of the States natural resources, became inalienable by constitutional fiat,
available only for lease for 25 years, renewable for another 25 years. The government could alienate foreshore lands only after these lands
were reclaimed and classified as alienable agricultural lands of the public domain. Government reclaimed and marshy lands of the public
domain, being neither timber nor mineral lands, fell under the classification of public agricultural lands.[50] However, government reclaimed and
marshy lands, although subject to classification as disposable public agricultural lands, could only be leased and not sold to private parties
because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands of the public domain was only a
statutory prohibition and the legislature could therefore remove such prohibition. The 1935 Constitution did not prohibit individuals and
corporations from acquiring government reclaimed and marshy lands of the public domain that were classified as agricultural lands under
existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:

Section 2. No private corporation or association may acquire, lease, or hold public agricultural lands in excess of one thousand and
twenty four hectares, nor may any individual acquire such lands by purchase in excess of one hundred and forty hectares, or by
lease in excess of one thousand and twenty-four hectares, or by homestead in excess of twenty-four hectares. Lands adapted to grazing, not
exceeding two thousand hectares, may be leased to an individual, private corporation, or association. (Emphasis supplied)

Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to open for sale to private parties
government reclaimed and marshy lands of the public domain. On the contrary, the legislature continued the long established State policy of
retaining for the government title and ownership of government reclaimed and marshy lands of the public domain.

Property 102
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as the Public Land Act, which compiled
the then existing laws on lands of the public domain. CA No. 141, as amended, remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands. [51]
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into alienable or disposable[52] lands of the public
domain, which prior to such classification are inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the President
to declare what lands are open to disposition or concession. Section 8 of CA No. 141 states that the government can declare open for disposition
or concession only lands that are officially delimited and classified. Sections 6, 7 and 8 of CA No. 141 read as follows:

Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and Commerce, shall from time to time classify the
lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to another, [53] for the purpose of their administration and
disposition.

Sec. 7. For the purposes of the administration and disposition of alienable or disposable public lands, the President, upon
recommendation by the Secretary of Agriculture and Commerce, shall from time to time declare what lands are open to disposition
or concession under this Act.

Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited and
classified and, when practicable, surveyed, and which have not been reserved for public or quasi-public uses, nor appropriated by the
Government, nor in any manner become private property, nor those on which a private right authorized and recognized by this Act or any
other valid law may be claimed, or which, having been reserved or appropriated, have ceased to be so. x x x.

Thus, before the government could alienate or dispose of lands of the public domain, the President must first officially classify these lands as
alienable or disposable, and then declare them open to disposition or concession. There must be no law reserving these lands for public or
quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the public domain, are as follows:

Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral land, is intended to be used for residential
purposes or for commercial, industrial, or other productive purposes other than agricultural, and is open to disposition or
concession, shall be disposed of under the provisions of this chapter and not otherwise.

Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.

Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any person, corporation, or association
authorized to purchase or lease public lands for agricultural purposes. x x x.

Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to private parties by lease only
and not otherwise, as soon as the President, upon recommendation by the Secretary of Agriculture, shall declare that the same are not
necessary for the public service and are open to disposition under this chapter. The lands included in class (d) may be disposed of by
sale or lease under the provisions of this Act. (Emphasis supplied)

Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874 prohibiting the sale of
government reclaimed, foreshore and marshy disposable lands of the public domain. All these lands are intended for residential, commercial,
industrial or other non-agricultural purposes. As before, Section 61 allowed only the lease of such lands to private parties. The government
could sell to private parties only lands falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural purposes not classified as
government reclaimed, foreshore and marshy disposable lands of the public domain. Foreshore lands, however, became inalienable under the
1935 Constitution which only allowed the lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for residential, commercial, industrial or
other productive purposes other than agricultural shall be disposed of under the provisions of this chapter and not otherwise. Under
Section 10 of CA No. 141, the term disposition includes lease of the land. Any disposition of government reclaimed, foreshore and marshy

Property 103
disposable lands for non-agricultural purposes must comply with Chapter IX, Title III of CA No. 141,[54] unless a subsequent law amended or
repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of Appeals,[55] Justice Reynato S. Puno
summarized succinctly the law on this matter, as follows:

Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by the government by dredging, filling, or
other means. Act 1654 mandated that the control and disposition of the foreshore and lands under water remained in the national
government. Said law allowed only the leasing of reclaimed land. The Public Land Acts of 1919 and 1936 also declared that the foreshore
and lands reclaimed by the government were to be disposed of to private parties by lease only and not otherwise. Before leasing, however,
the Governor-General, upon recommendation of the Secretary of Agriculture and Natural Resources, had first to determine that the land
reclaimed was not necessary for the public service. This requisite must have been met before the land could be disposed of. But even then,
the foreshore and lands under water were not to be alienated and sold to private parties. The disposition of the reclaimed land was
only by lease. The land remained property of the State. (Emphasis supplied)

As observed by Justice Puno in his concurring opinion, Commonwealth Act No. 141 has remained in effect at present.
The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy alienable lands of the public
domain, first implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect. The prohibition on the sale of
foreshore lands, however, became a constitutional edict under the 1935 Constitution. Foreshore lands became inalienable as natural resources
of the State, unless reclaimed by the government and classified as agricultural lands of the public domain, in which case they would fall under
the classification of government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the public domain continued to be
only leased and not sold to private parties.[56]These lands remained sui generis, as the only alienable or disposable lands of the public domain
the government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties government reclaimed and marshy disposable lands of
the public domain is for the legislature to pass a law authorizing such sale. CA No. 141 does not authorize the President to reclassify government
reclaimed and marshy lands into other non-agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the only alienable
or disposable lands for non-agricultural purposes that the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section 59 that the government
previously transferred to government units or entities could be sold to private parties. Section 60 of CA No. 141 declares that

Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of Agriculture and Natural Resources, be
reasonably necessary for the purposes for which such sale or lease is requested, and shall not exceed one hundred and forty-four hectares:
Provided, however, That this limitation shall not apply to grants, donations, or transfers made to a province, municipality or branch or
subdivision of the Government for the purposes deemed by said entities conducive to the public interest; but the land so granted, donated,
or transferred to a province, municipality or branch or subdivision of the Government shall not be alienated, encumbered, or
otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x x. (Emphasis supplied)

The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and entities from the maximum
area of public lands that could be acquired from the State. These government units and entities should not just turn around and sell these lands
to private parties in violation of constitutional or statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to
government units and entities could be used to circumvent constitutional limitations on ownership of alienable or disposable lands of the public
domain. In the same manner, such transfers could also be used to evade the statutory prohibition in CA No. 141 on the sale of government
reclaimed and marshy lands of the public domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on these
lands.[57]
In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No. 141, Sections 63 and 67 require
a public bidding. Sections 63 and 67 of CA No. 141 provide as follows:

Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the Director of Lands shall ask the
Secretary of Agriculture and Commerce (now the Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of such
authority, the Director of Lands shall give notice by public advertisement in the same manner as in the case of leases or sales of agricultural
public land, x x x.

Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to the highest bidder. x x x. (Emphasis
supplied)

Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or disposable lands of the public domain.[58]

Property 104
 Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish Law of Waters of 1866. Private parties
could still reclaim portions of the sea with government permission. However, the reclaimed land could become private land only if classified
as alienable agricultural land of the public domain open to disposition under CA No. 141. The 1935 Constitution prohibited the alienation
of all natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the Civil Code of 1889. Articles 420
and 422 of the Civil Code of 1950 state that

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.

x x x.

Art. 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.

Again, the government must formally declare that the property of public dominion is no longer needed for public use or public service,
before the same could be classified as patrimonial property of the State. [59] In the case of government reclaimed and marshy lands of the public
domain, the declaration of their being disposable, as well as the manner of their disposition, is governed by the applicable provisions of CA No.
141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those properties of the State which, without
being for public use, are intended for public service or the development of the national wealth. Thus, government reclaimed and marshy
lands of the State, even if not employed for public use or public service, if developed to enhance the national wealth, are classified as property
of public dominion.

Dispositions under the 1973 Constitution

The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine. Section 8, Article XIV of the 1973
Constitution stated that

Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries,
wildlife, and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial,
residential, and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or
lease for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding
twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which cases, beneficial use may be the measure and the limit of the grant. (Emphasis
supplied)

The 1973 Constitution prohibited the alienation of all natural resources with the exception of agricultural, industrial or commercial,
residential, and resettlement lands of the public domain. In contrast, the 1935 Constitution barred the alienation of all natural resources except
public agricultural lands. However, the term public agricultural lands in the 1935 Constitution encompassed industrial, commercial, residential
and resettlement lands of the public domain. [60] If the land of public domain were neither timber nor mineral land, it would fall under the
classification of agricultural land of the public domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the alienation of all
natural resources except agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who were citizens of the
Philippines. Private corporations, even if wholly owned by Philippine citizens, were no longer allowed to acquire alienable lands of the public
domain unlike in the 1935 Constitution. Section 11, Article XIV of the 1973 Constitution declared that

Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development requirements of the natural resources,
shall determine by law the size of land of the public domain which may be developed, held or acquired by, or leased to, any qualified
individual, corporation, or association, and the conditions therefor. No private corporation or association may hold alienable lands of the
public domain except by lease not to exceed one thousand hectares in area nor may any citizen hold such lands by lease in excess of five
hundred hectares or acquire by purchase, homestead or grant, in excess of twenty-four hectares. No private corporation or association may
Property 105
hold by lease, concession, license or permit, timber or forest lands and other timber or forest resources in excess of one hundred thousand
hectares. However, such area may be increased by the Batasang Pambansa upon recommendation of the National Economic and
Development Authority. (Emphasis supplied)

Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain only through lease. Only
individuals could now acquire alienable lands of the public domain, and private corporations became absolutely barred from acquiring
any kind of alienable land of the public domain. The constitutional ban extended to all kinds of alienable lands of the public domain, while
the statutory ban under CA No. 141 applied only to government reclaimed, foreshore and marshy alienable lands of the public domain.

PD No. 1084 Creating the Public Estates Authority

On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating PEA, a wholly government owned
and controlled corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes and powers:

Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other means, or to acquire
reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands, buildings,
estates and other forms of real property, owned, managed, controlled and/or operated by the government;
(c) To provide for, operate or administer such service as may be necessary for the efficient, economical and beneficial utilization of the above
properties.

Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it is created, have the following
powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to private corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the attainment of the purposes and objectives herein
specified. (Emphasis supplied)

PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain. Foreshore areas are those covered
and uncovered by the ebb and flow of the tide. [61] Submerged areas are those permanently under water regardless of the ebb and flow of the
tide.[62] Foreshore and submerged areas indisputably belong to the public domain [63] and are inalienable unless reclaimed, classified as
alienable lands open to disposition, and further declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public domain did not apply to PEA since
it was then, and until today, a fully owned government corporation. The constitutional ban applied then, as it still applies now, only to private
corporations and associations. PD No. 1084 expressly empowers PEA to hold lands of the public domain even in excess of the area
permitted to private corporations by statute. Thus, PEA can hold title to private lands, as well as title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain, there must be legislative authority
empowering PEA to sell these lands. This legislative authority is necessary in view of Section 60 of CA No.141, which states

Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch or subdivision of the Government shall
not be alienated, encumbered or otherwise disposed of in a manner affecting its title, except when authorized by Congress; x x x.
(Emphasis supplied)

Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and submerged alienable lands of the public
domain. Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable lands of the public domain would be subject to
the constitutional ban on private corporations from acquiring alienable lands of the public domain. Hence, such legislative authority could only
benefit private individuals.

Dispositions under the 1987 Constitution

Property 106
 The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian doctrine. The 1987 Constitution declares
that all natural resources are owned by the State, and except for alienable agricultural lands of the public domain, natural resources cannot
be alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that

Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands,
all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. x x x.

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of
the public domain may be further classified by law according to the uses which they may be devoted. Alienable lands of the public domain
shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain
except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one
thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve
hectares thereof by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the
conditions therefor. (Emphasis supplied)

The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from acquiring any kind of
alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold alienable lands of
the public domain only through lease. As in the 1935 and 1973 Constitutions, the general law governing the lease to private corporations of
reclaimed, foreshore and marshy alienable lands of the public domain is still CA No. 141.

The Rationale behind the Constitutional Ban

The rationale behind the constitutional ban on corporations from acquiring, except through lease, alienable lands of the public domain is
not well understood. During the deliberations of the 1986 Constitutional Commission, the commissioners probed the rationale behind this ban,
thus:

FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:

`No private corporation or association may hold alienable lands of the public domain except by lease, not to exceed one thousand
hectares in area.

If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the 1973 Constitution. In effect, it prohibits
private corporations from acquiring alienable public lands. But it has not been very clear in jurisprudence what the reason for this is. In
some of the cases decided in 1982 and 1983, it was indicated that the purpose of this is to prevent large landholdings. Is that the intent
of this provision?

MR. VILLEGAS: I think that is the spirit of the provision.

FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the Iglesia ni Cristo was not allowed to acquire
a mere 313-square meter land where a chapel stood because the Supreme Court said it would be in violation of this. (Emphasis supplied)

In Ayog v. Cusi,[64] the Court explained the rationale behind this constitutional ban in this way:

Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands by private corporations is to equitably
diffuse land ownership or to encourage owner-cultivatorship and the economic family-size farm and to prevent a recurrence of cases like the
instant case. Huge landholdings by corporations or private persons had spawned social unrest.

However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited the size of alienable lands of
the public domain that corporations could acquire. The Constitution could have followed the limitations on individuals, who could acquire not
more than 24 hectares of alienable lands of the public domain under the 1973 Constitution, and not more than 12 hectares under the 1987
Constitution.

Property 107
 If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a corporation would be more
effective in preventing the break-up of farmlands. If the farmland is registered in the name of a corporation, upon the death of the owner, his
heirs would inherit shares in the corporation instead of subdivided parcels of the farmland. This would prevent the continuing break-up of
farmlands into smaller and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring more than the allowed area
of alienable lands of the public domain.Without the constitutional ban, individuals who already acquired the maximum area of alienable lands
of the public domain could easily set up corporations to acquire more alienable public lands. An individual could own as many corporations as
his means would allow him. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of the
corporation. The corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands
of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited area of alienable land of the
public domain to a qualified individual. This constitutional intent is safeguarded by the provision prohibiting corporations from acquiring alienable
lands of the public domain, since the vehicle to circumvent the constitutional intent is removed. The available alienable public lands are gradually
decreasing in the face of an ever-growing population. The most effective way to insure faithful adherence to this constitutional intent is to grant
or sell alienable lands of the public domain only to individuals. This, it would seem, is the practical benefit arising from the constitutional ban.

The Amended Joint Venture Agreement

The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in Paranaque and Las Pinas, Metro
Manila, with a combined titled area of 1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three islands; and
3. [A]t AMARIs option as approved by PEA, an additional 350 hectares more or less to regularize the configuration of the reclaimed
area.[65]
PEA confirms that the Amended JVA involves the development of the Freedom Islands and further reclamation of about 250 hectares x x x,
plus an option granted to AMARI to subsequently reclaim another 350 hectares x x x. [66]
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750-hectare reclamation project
have been reclaimed, and the rest of the 592.15 hectares are still submerged areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEAs actual cost in partially reclaiming the
Freedom Islands. AMARI will also complete, at its own expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the
reclamation costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70
percent and 30 percent, respectively, the total net usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent
earmarked for common areas. Title to AMARIs share in the net usable area, totaling 367.5 hectares, will be issued in the name of
AMARI. Section 5.2 (c) of the Amended JVA provides that

x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of the title pertaining to AMARIs Land
share based on the Land Allocation Plan. PEA, when requested in writing by AMARI, shall then cause the issuance and delivery of the
proper certificates of title covering AMARIs Land Share in the name of AMARI, x x x; provided, that if more than seventy percent (70%)
of the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the titles pertaining to
AMARI, until such time when a corresponding proportionate area of additional land pertaining to PEA has been titled. (Emphasis supplied)

Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5 hectares of reclaimed land which will be
titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEAs statutory authority, rights and
privileges to reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that

PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation and Horizontal Development as well as
own the Reclamation Area, thereby granting the Joint Venture the full and exclusive right, authority and privilege to undertake the Project in
accordance with the Master Development Plan.

The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its supplemental agreement dated August 9,
1995.

The Threshold Issue

Property 108
 The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended JVA 367.5 hectares of reclaimed
foreshore and submerged areas in Manila Bay in view of Sections 2 and 3, Article XII of the 1987 Constitution which state that:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. x x x.
xxx

Section 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not
hold such alienable lands of the public domain except by lease, x x x.(Emphasis supplied)

Classification of Reclaimed Foreshore and Submerged Areas

PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are alienable or disposable lands of the
public domain. In its Memorandum,[67] PEA admits that

Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and disposable lands of the public
domain:

Sec. 59. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the government by dredging, filling, or other means;

x x x. (Emphasis supplied)
Likewise, the Legal Task Force[68] constituted under Presidential Administrative Order No. 365 admitted in its Report and
Recommendation to then President Fidel V. Ramos, [R]eclaimed lands are classified as alienable and disposable lands of the public
domain.[69] The Legal Task Force concluded that

D. Conclusion

Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of ownership and disposition over reclaimed lands
have been transferred to PEA, by virtue of which PEA, as owner, may validly convey the same to any qualified person without violating the
Constitution or any statute.

The constitutional provision prohibiting private corporations from holding public land, except by lease (Sec. 3, Art. XVII, [70] 1987 Constitution),
does not apply to reclaimed lands whose ownership has passed on to PEA by statutory grant.

Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are part of the lands of the public
domain, waters x x x and other natural resources and consequently owned by the State. As such, foreshore and submerged areas shall not be
alienated, unless they are classified as agricultural lands of the public domain. The mere reclamation of these areas by PEA does not convert
these inalienable natural resources of the State into alienable or disposable lands of the public domain. There must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable or disposable and open to disposition or concession. Moreover, these
reclaimed lands cannot be classified as alienable or disposable if the law has reserved them for some public or quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be declared open to disposition or concession which have been officially
delimited and classified.[72] The President has the authority to classify inalienable lands of the public domain into alienable or disposable
lands of the public domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,[73] the Executive Department attempted to sell the
Roppongi property in Tokyo, Japan, which was acquired by the Philippine Government for use as the Chancery of the Philippine
Embassy.Although the Chancery had transferred to another location thirteen years earlier, the Court still ruled that, under Article 422 [74] of the
Civil Code, a property of public dominion retains such character until formally declared otherwise. The Court ruled that

The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial
property. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481 [1975]. A property continues to be part of the public domain, not available for private appropriation or ownership until
there is a formal declaration on the part of the government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335
[1960]. (Emphasis supplied)

PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands reclaimed by PEA from the foreshore
or submerged areas of Manila Bay. On January 19, 1988 then President Corazon C. Aquino issued Special Patent No. 3517 in the name of
Property 109
PEA for the 157.84 hectares comprising the partially reclaimed Freedom Islands.Subsequently, on April 9, 1999 the Register of Deeds of the
Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529 authorizing the
issuance of certificates of title corresponding to land patents. To this day, these certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquinos actual issuance of a special patent covering the Freedom Islands, is equivalent to an
official proclamation classifying the Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085 and President Aquinos
issuance of a land patent also constitute a declaration that the Freedom Islands are no longer needed for public service. The Freedom Islands
are thus alienable or disposable lands of the public domain, open to disposition or concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the Freedom Islands although
subsequently there were partial erosions on some areas. The government had also completed the necessary surveys on these islands. Thus,
the Freedom Islands were no longer part of Manila Bay but part of the land mass. Section 3, Article XII of the 1987 Constitution classifies lands
of the public domain into agricultural, forest or timber, mineral lands, and national parks. Being neither timber, mineral, nor national park lands,
the reclaimed Freedom Islands necessarily fall under the classification of agricultural lands of the public domain. Under the 1987 Constitution,
agricultural lands of the public domain are the only natural resources that the State may alienate to qualified private parties. All other natural
resources, such as the seas or bays, are waters x x x owned by the State forming part of the public domain, and are inalienable pursuant to
Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation, reclaimed the islands under a
contract dated November 20, 1973 with the Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of 1866,
argues that if the ownership of reclaimed lands may be given to the party constructing the works, then it cannot be said that reclaimed lands
are lands of the public domain which the State may not alienate. [75] Article 5 of the Spanish Law of Waters reads as follows:

Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private
persons, with proper permission, shall become the property of the party constructing such works, unless otherwise provided by the
terms of the grant of authority. (Emphasis supplied)

Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only with proper permission from the
State. Private parties could own the reclaimed land only if not otherwise provided by the terms of the grant of authority. This clearly meant that
no one could reclaim from the sea without permission from the State because the sea is property of public dominion. It also meant that the
State could grant or withhold ownership of the reclaimed land because any reclaimed land, like the sea from which it emerged, belonged to the
State. Thus, a private person reclaiming from the sea without permission from the State could not acquire ownership of the reclaimed land
which would remain property of public dominion like the sea it replaced. [76] Article 5 of the Spanish Law of Waters of 1866 adopted the time-
honored principle of land ownership that all lands that were not acquired from the government, either by purchase or by grant, belong to the
public domain.[77]
Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the disposition of public lands. In
particular, CA No. 141 requires that lands of the public domain must first be classified as alienable or disposable before the government can
alienate them. These lands must not be reserved for public or quasi-public purposes.[78]Moreover, the contract between CDCP and the
government was executed after the effectivity of the 1973 Constitution which barred private corporations from acquiring any kind of alienable
land of the public domain. This contract could not have converted the Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation of areas under water and revested
solely in the National Government the power to reclaim lands. Section 1 of PD No. 3-A declared that

The provisions of any law to the contrary notwithstanding, the reclamation of areas under water, whether foreshore or inland, shall
be limited to the National Government or any person authorized by it under a proper contract. (Emphasis supplied)

x x x.

PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under water could now be undertaken only
by the National Government or by a person contracted by the National Government. Private parties may reclaim from the sea only under a
contract with the National Government, and no longer by grant or permission as provided in Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Governments implementing arm to undertake all
reclamation projects of the government, which shall be undertaken by the PEA or through a proper contract executed by it with any
person or entity. Under such contract, a private party receives compensation for reclamation services rendered to PEA. Payment to the
contractor may be in cash, or in kind consisting of portions of the reclaimed land, subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. The reclaimed land can be used as payment in kind only if the reclaimed land is first classified
as alienable or disposable land open to disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which are still submerged and forming
part of Manila Bay. There is no legislative or Presidential act classifying these submerged areas as alienable or disposable lands of
the public domain open to disposition. These submerged areas are not covered by any patent or certificate of title. There can be no dispute
that these submerged areas form part of the public domain, and in their present state are inalienable and outside the commerce of man. Until

Property 110
reclaimed from the sea, these submerged areas are, under the Constitution, waters x x x owned by the State, forming part of the public domain
and consequently inalienable.Only when actually reclaimed from the sea can these submerged areas be classified as public agricultural lands,
which under the Constitution are the only natural resources that the State may alienate. Once reclaimed and transformed into public agricultural
lands, the government may then officially classify these lands as alienable or disposable lands open to disposition.Thereafter, the government
may declare these lands no longer needed for public service. Only then can these reclaimed lands be considered alienable or disposable lands
of the public domain and within the commerce of man.
The classification of PEAs reclaimed foreshore and submerged lands into alienable or disposable lands open to disposition is necessary
because PEA is tasked under its charter to undertake public services that require the use of lands of the public domain. Under Section 5 of PD
No. 1084, the functions of PEA include the following: [T]o own or operate railroads, tramways and other kinds of land transportation, x x x; [T]o
construct, maintain and operate such systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm drains
as may be necessary. PEA is empowered to issue rules and regulations as may be necessary for the proper use by private parties of any or
all of the highways, roads, utilities, buildings and/or any of its properties and to impose or collect fees or tolls for their use. Thus, part of
the reclaimed foreshore and submerged lands held by the PEA would actually be needed for public use or service since many of the functions
imposed on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be primarily responsible for integrating, directing, and
coordinating all reclamation projects for and on behalf of the National Government. The same section also states that [A]ll reclamation projects
shall be approved by the President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract
executed by it with any person or entity; x x x. Thus, under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary
implementing agency of the National Government to reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized
PEA as the government entity to undertake the reclamation of lands and ensure their maximum utilization in promoting public welfare and
interests.[79] Since large portions of these reclaimed lands would obviously be needed for public service, there must be a formal declaration
segregating reclaimed lands no longer needed for public service from those still needed for public service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall belong to or be owned by the PEA, could not automatically
operate to classify inalienable lands into alienable or disposable lands of the public domain. Otherwise, reclaimed foreshore and submerged
lands of the public domain would automatically become alienable once reclaimed by PEA, whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in the Department of Environment
and Natural Resources (DENR for brevity) the following powers and functions:

Sec. 4. Powers and Functions. The Department shall:

(1) x x x
xxx

(4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral resources and, in the process of
exercising such control, impose appropriate taxes, fees, charges, rentals and any such form of levy and collect such revenues for the
exploration, development, utilization or gathering of such resources;
xxx

(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits, concessions, lease agreements and such
other privileges concerning the development, exploration and utilization of the countrys marine, freshwater, and brackish water
and over all aquatic resources of the country and shall continue to oversee, supervise and police our natural resources; cancel or
cause to cancel such privileges upon failure, non-compliance or violations of any regulation, order, and for all other causes which are in
furtherance of the conservation of natural resources and supportive of the national interest;

(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the public domain and serve as the sole
agency responsible for classification, sub-classification, surveying and titling of lands in consultation with appropriate
agencies.[80] (Emphasis supplied)

As manager, conservator and overseer of the natural resources of the State, DENR exercises supervision and control over alienable and
disposable public lands. DENR also exercises exclusive jurisdiction on the management and disposition of all lands of the public domain. Thus,
DENR decides whether areas under water, like foreshore or submerged areas of Manila Bay, should be reclaimed or not. This means that PEA
needs authorization from DENR before PEA can undertake reclamation projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR decides whether reclaimed
lands of PEA should be classified as alienable under Sections 6 [81] and 7[82] of CA No. 141. Once DENR decides that the reclaimed lands
should be so classified, it then recommends to the President the issuance of a proclamation classifying the lands as alienable or disposable
lands of the public domain open to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent
No. 3517 in compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with the power to undertake
the physical reclamation of areas under water, whether directly or through private contractors. DENR is also empowered to classify lands of

Property 111
the public domain into alienable or disposable lands subject to the approval of the President. On the other hand, PEA is tasked to develop, sell
or lease the reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the reclaimed lands alienable or
disposable lands of the public domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the National Government of lands
of the public domain to PEA does not make the lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA.
Absent two official acts a classification that these lands are alienable or disposable and open to disposition and a declaration that these
lands are not needed for public service, lands reclaimed by PEA remain inalienable lands of the public domain. Only such an official
classification and formal declaration can convert reclaimed lands into alienable or disposable lands of the public domain, open to disposition
under the Constitution, Title I and Title III[83] of CA No. 141 and other applicable laws.[84]

PEAs Authority to Sell Reclaimed Lands

PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the reclaimed lands shall be disposed
of in accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a
branch or subdivision of the government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except
when authorized by Congress: x x x.[85] (Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised Administrative Code of 1987, which states that

Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the
deed of conveyance shall be executed in behalf of the government by the following: x x x.

Thus, the Court concluded that a law is needed to convey any real property belonging to the Government. The Court declared that -

It is not for the President to convey real property of the government on his or her own sole will. Any such conveyance must be authorized
and approved by a law enacted by the Congress. It requires executive and legislative concurrence. (Emphasis supplied)

PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell its reclaimed lands. PD No.
1085, issued on February 4, 1977, provides that

The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the reclamation and construction of the
Manila-Cavite Coastal Road Project between the Republic of the Philippines and the Construction and Development Corporation of the
Philippines dated November 20, 1973 and/or any other contract or reclamation covering the same area is hereby transferred, conveyed
and assigned to the ownership and administration of the Public Estates Authority established pursuant to PD No. 1084; Provided,
however, That the rights and interests of the Construction and Development Corporation of the Philippines pursuant to the aforesaid contract
shall be recognized and respected.

Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the Republic of the Philippines (Department
of Public Highways) arising from, or incident to, the aforesaid contract between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines.

In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in favor of the Republic of the Philippines
the corresponding shares of stock in said entity with an issued value of said shares of stock (which) shall be deemed fully paid and non-
assessable.

The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute such contracts or agreements,
including appropriate agreements with the Construction and Development Corporation of the Philippines, as may be necessary to implement
the above.

Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the Public Estates Authority without
prejudice to the subsequent transfer to the contractor or his assignees of such portion or portions of the land reclaimed or to be
reclaimed as provided for in the above-mentioned contract. On the basis of such patents, the Land Registration Commission shall
issue the corresponding certificate of title. (Emphasis supplied)

On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -

Property 112
Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible for its administration,
development, utilization or disposition in accordance with the provisions of Presidential Decree No. 1084. Any and all income that the PEA
may derive from the sale, lease or use of reclaimed lands shall be used in accordance with the provisions of Presidential Decree No. 1084.

There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No. 1085 merely transferred
ownership and administration of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA shall belong
to or be owned by PEA. EO No. 525 expressly states that PEA should dispose of its reclaimed lands in accordance with the provisions of
Presidential Decree No. 1084, the charter of PEA.
PEAs charter, however, expressly tasks PEA to develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any
and all kinds of lands x x x owned, managed, controlled and/or operated by the government. [87] (Emphasis supplied) There is, therefore,
legislative authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public domain. PEA may sell to
private parties its patrimonial properties in accordance with the PEA charter free from constitutional limitations. The constitutional ban on
private corporations from acquiring alienable lands of the public domain does not apply to the sale of PEAs patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private individuals since, with the legislative authority,
there is no longer any statutory prohibition against such sales and the constitutional ban does not apply to individuals. PEA, however, cannot
sell any of its alienable or disposable lands of the public domain to private corporations since Section 3, Article XII of the 1987 Constitution
expressly prohibits such sales. The legislative authority benefits only individuals. Private corporations remain barred from acquiring any kind of
alienable land of the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA to the contractor or his assignees
(Emphasis supplied) would not apply to private corporations but only to individuals because of the constitutional ban. Otherwise, the provisions
of PD No. 1085 would violate both the 1973 and 1987 Constitutions.

The requirement of public auction in the sale of reclaimed lands

Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition, and further declared no longer
needed for public service, PEA would have to conduct a public bidding in selling or leasing these lands. PEA must observe the provisions of
Sections 63 and 67 of CA No. 141 requiring public auction, in the absence of a law exempting PEA from holding a public auction. [88] Special
Patent No. 3517 expressly states that the patent is issued by authority of the Constitution and PD No. 1084, supplemented by Commonwealth
Act No. 141, as amended. This is an acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands
of the public domain unless otherwise provided by law. Executive Order No. 654,[89] which authorizes PEA to determine the kind and manner
of payment for the transfer of its assets and properties, does not exempt PEA from the requirement of public auction. EO No. 654 merely
authorizes PEA to decide the mode of payment, whether in kind and in installment, but does not authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the government is required to sell
valuable government property through public bidding. Section 79 of PD No. 1445 mandates that

Section 79. When government property has become unserviceable for any cause, or is no longer needed, it shall, upon application of the
officer accountable therefor, be inspected by the head of the agency or his duly authorized representative in the presence of the auditor
concerned and, if found to be valueless or unsaleable, it may be destroyed in their presence. If found to be valuable, it may be sold at
public auction to the highest bidder under the supervision of the proper committee on award or similar body in the presence of the auditor
concerned or other authorized representative of the Commission, after advertising by printed notice in the Official Gazette, or for not
less than three consecutive days in any newspaper of general circulation, or where the value of the property does not warrant the
expense of publication, by notices posted for a like period in at least three public places in the locality where the property is to be sold. In the
event that the public auction fails, the property may be sold at a private sale at such price as may be fixed by the same committee
or body concerned and approved by the Commission.

It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on Audit must approve the selling
price.[90] The Commission on Audit implements Section 79 of the Government Auditing Code through Circular No. 89-296[91] dated January 27,
1989. This circular emphasizes that government assets must be disposed of only through public auction, and a negotiated sale can be resorted
to only in case of failure of public auction.
At the public auction sale, only Philippine citizens are qualified to bid for PEAs reclaimed foreshore and submerged alienable lands of the
public domain. Private corporations are barred from bidding at the auction sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA imposed a condition that the winning
bidder should reclaim another 250 hectares of submerged areas to regularize the shape of the Freedom Islands, under a 60-40 sharing of the
additional reclaimed areas in favor of the winning bidder.[92] No one, however, submitted a bid. On December 23, 1994, the Government
Corporate Counsel advised PEA it could sell the Freedom Islands through negotiation, without need of another public bidding, because of the
failure of the public bidding on December 10, 1991.[93]

Property 113
 However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250 hectares still to be reclaimed,
it also granted an option to AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract, enlarged the reclamation area
to 750 hectares.[94] The failure of public bidding on December 10, 1991, involving only 407.84 hectares, [95] is not a valid justification for a
negotiated sale of 750 hectares, almost double the area publicly auctioned. Besides, the failure of public bidding happened on December 10,
1991, more than three years before the signing of the original JVA on April 25, 1995. The economic situation in the country had greatly improved
during the intervening period.

Reclamation under the BOT Law and the Local Government Code

The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: Private corporations or associations
may not hold such alienable lands of the public domain except by lease, x x x. Even Republic Act No. 6957 (BOT Law, for brevity), cited by
PEA and AMARI as legislative authority to sell reclaimed lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957
states

Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any infrastructure projects undertaken through
the build-operate-and-transfer arrangement or any of its variations pursuant to the provisions of this Act, the project proponent x x x may
likewise be repaid in the form of a share in the revenue of the project or other non-monetary payments, such as, but not limited to, the grant
of a portion or percentage of the reclaimed land, subject to the constitutional requirements with respect to the ownership of the land: x
x x. (Emphasis supplied)

A private corporation, even one that undertakes the physical reclamation of a government BOT project, cannot acquire reclaimed alienable
lands of the public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local governments in land reclamation
projects to pay the contractor or developer in kind consisting of a percentage of the reclaimed land, to wit:

Section 302. Financing, Construction, Maintenance, Operation, and Management of Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan may consist of the grant of a portion or percentage of the
reclaimed land or the industrial estate constructed.

Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT Law, the constitutional restrictions
on land ownership automatically apply even though not expressly mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate entity, can only be paid with
leaseholds on portions of the reclaimed land. If the contractor or developer is an individual, portions of the reclaimed land, not exceeding 12
hectares[96] of non-agricultural lands, may be conveyed to him in ownership in view of the legislative authority allowing such conveyance. This
is the only way these provisions of the BOT Law and the Local Government Code can avoid a direct collision with Section 3, Article XII of the
1987 Constitution.

Registration of lands of the public domain

Finally, PEA theorizes that the act of conveying the ownership of the reclaimed lands to public respondent PEA transformed such lands
of the public domain to private lands. This theory is echoed by AMARI which maintains that the issuance of the special patent leading to the
eventual issuance of title takes the subject land away from the land of public domain and converts the property into patrimonial or private
property. In short, PEA and AMARI contend that with the issuance of Special Patent No. 3517 and the corresponding certificates of titles, the
157.84 hectares comprising the Freedom Islands have become private lands of PEA. In support of their theory, PEA and AMARI cite the
following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title was issued, the land ceased to be part of the public domain
and became private property over which the Director of Lands has neither control nor jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -
After the registration and issuance of the certificate and duplicate certificate of title based on a public land patent, the land
covered thereby automatically comes under the operation of Republic Act 496 subject to all the safeguards provided therein.
3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court ruled -
Property 114
 While the Director of Lands has the power to review homestead patents, he may do so only so long as the land remains part of
the public domain and continues to be under his exclusive control; but once the patent is registered and a certificate of title is
issued, the land ceases to be part of the public domain and becomes private property over which the Director of Lands has
neither control nor jurisdiction.
4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971, and free patents were issued covering the same in favor
of the private respondents, the said lots ceased to be part of the public domain and, therefore, the Director of Lands lost
jurisdiction over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a land grant to the Mindanao Medical
Center, Bureau of Medical Services, Department of Health, of the whole lot, validly sufficient for initial registration under the Land
Registration Act. Such land grant is constitutive of a fee simple title or absolute title in favor of petitioner Mindanao Medical
Center.Thus, Section 122 of the Act, which governs the registration of grants or patents involving public lands, provides that
Whenever public lands in the Philippine Islands belonging to the Government of the United States or to the Government of the
Philippines are alienated, granted or conveyed to persons or to public or private corporations, the same shall be brought forthwith
under the operation of this Act (Land Registration Act, Act 496) and shall become registered lands.
The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of titles issued to private parties.
These four cases uniformly hold that the Director of Lands has no jurisdiction over private lands or that upon issuance of the certificate of title
the land automatically comes under the Torrens System. The fifth case cited involves the registration under the Torrens System of a 12.8-
hectare public land granted by the National Government to Mindanao Medical Center, a government unit under the Department of Health. The
National Government transferred the 12.8-hectare public land to serve as the site for the hospital buildings and other facilities of Mindanao
Medical Center, which performed a public service. The Court affirmed the registration of the 12.8-hectare public land in the name of Mindanao
Medical Center under Section 122 of Act No. 496. This fifth case is an example of a public land being registered under Act No. 496 without the
land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly government owned corporation
performing public as well as proprietary functions. No patent or certificate of title has been issued to any private party. No one is asking the
Director of Lands to cancel PEAs patent or certificates of title. In fact, the thrust of the instant petition is that PEAs certificates of title should
remain with PEA, and the land covered by these certificates, being alienable lands of the public domain, should not be sold to a private
corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public ownership of the land. Registration
is not a mode of acquiring ownership but is merely evidence of ownership previously conferred by any of the recognized modes of acquiring
ownership. Registration does not give the registrant a better right than what the registrant had prior to the registration. [102] The registration of
lands of the public domain under the Torrens system, by itself, cannot convert public lands into private lands. [103]
Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of the public domain
automatically becomes private land cannot apply to government units and entities like PEA. The transfer of the Freedom Islands to PEA was
made subject to the provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued by then President Aquino, to wit:

NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in conformity with the provisions of Presidential
Decree No. 1084, supplemented by Commonwealth Act No. 141, as amended, there are hereby granted and conveyed unto the Public
Estates Authority the aforesaid tracts of land containing a total area of one million nine hundred fifteen thousand eight hundred ninety four
(1,915,894) square meters; the technical description of which are hereto attached and made an integral part hereof. (Emphasis supplied)

Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084. Section 60 of CA No. 141
prohibits, except when authorized by Congress, the sale of alienable lands of the public domain that are transferred to government units or
entities. Section 60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a statutory lien affecting title of the registered land even if not
annotated on the certificate of title.[104] Alienable lands of the public domain held by government entities under Section 60 of CA No. 141 remain
public lands because they cannot be alienated or encumbered unless Congress passes a law authorizing their disposition. Congress, however,
cannot authorize the sale to private corporations of reclaimed alienable lands of the public domain because of the constitutional ban. Only
individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not automatically convert alienable
lands of the public domain into private or patrimonial lands. The alienable lands of the public domain must be transferred to qualified private
parties, or to government entities not tasked to dispose of public lands, before these lands can become private or patrimonial lands. Otherwise,
the constitutional ban will become illusory if Congress can declare lands of the public domain as private or patrimonial lands in the hands of a
government agency tasked to dispose of public lands. This will allow private corporations to acquire directly from government agencies limitless
areas of lands which, prior to such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim foreshore and submerged
areas of the public domain. Thus, EO No. 525 declares that

Property 115
 EXECUTIVE ORDER NO. 525

Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation Projects

Whereas, there are several reclamation projects which are ongoing or being proposed to be undertaken in various parts of the country which
need to be evaluated for consistency with national programs;

Whereas, there is a need to give further institutional support to the Governments declared policy to provide for a coordinated, economical
and efficient reclamation of lands;

Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the National Government or any person
authorized by it under proper contract;

Whereas, a central authority is needed to act on behalf of the National Government which shall ensure a coordinated and
integrated approach in the reclamation of lands;

Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government corporation to undertake reclamation
of lands and ensure their maximum utilization in promoting public welfare and interests; and

Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize the national government including the
transfer, abolition, or merger of functions and offices.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution and
pursuant to Presidential Decree No. 1416, do hereby order and direct the following:

Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government. All reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract executed by it with any person or entity;
Provided, that, reclamation projects of any national government agency or entity authorized under its charter shall be undertaken in
consultation with the PEA upon approval of the President.

xxx.

As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell reclaimed lands, PEA took
the place of DENR as the government agency charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being
leased or sold by PEA are not private lands, in the same manner that DENR, when it disposes of other alienable lands, does not dispose of
private lands but alienable lands of the public domain. Only when qualified private parties acquire these lands will the lands become private
lands. In the hands of the government agency tasked and authorized to dispose of alienable of disposable lands of the public domain,
these lands are still public, not private lands.
Furthermore, PEAs charter expressly states that PEA shall hold lands of the public domain as well as any and all kinds of lands. PEA
can hold both lands of the public domain and private lands. Thus, the mere fact that alienable lands of the public domain like the Freedom
Islands are transferred to PEA and issued land patents or certificates of title in PEAs name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will sanction a gross violation of the
constitutional ban on private corporations from acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA
has now done under the Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands to a
single private corporation in only one transaction. This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987
Constitution which was intended to diffuse equitably the ownership of alienable lands of the public domain among Filipinos, now numbering
over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA can acquire x x x any and all
kinds of lands. This will open the floodgates to corporations and even individuals acquiring hundreds of hectares of alienable lands of the public
domain under the guise that in the hands of PEA these lands are private lands. This will result in corporations amassing huge landholdings
never before seen in this country - creating the very evil that the constitutional ban was designed to prevent. This will completely reverse the
clear direction of constitutional development in this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024
hectares of public lands.[105] The 1973 Constitution prohibited private corporations from acquiring any kind of public land, and the 1987
Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No. 1529, automatically become private
lands is contrary to existing laws. Several laws authorize lands of the public domain to be registered under the Torrens System or Act No. 496,

Property 116
now PD No. 1529, without losing their character as public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively,
provide as follows:

Act No. 496

Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the Philippine Islands are alienated, granted,
or conveyed to persons or the public or private corporations, the same shall be brought forthwith under the operation of this Act and shall
become registered lands.

PD No. 1529

Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated, granted or conveyed to any person, the same
shall be brought forthwith under the operation of this Decree. (Emphasis supplied)

Based on its legislative history, the phrase conveyed to any person in Section 103 of PD No. 1529 includes conveyances of public lands to
public corporations.
Alienable lands of the public domain granted, donated, or transferred to a province, municipality, or branch or subdivision of the
Government, as provided in Section 60 of CA No. 141, may be registered under the Torrens System pursuant to Section 103 of PD No.
1529. Such registration, however, is expressly subject to the condition in Section 60 of CA No. 141 that the land shall not be alienated,
encumbered or otherwise disposed of in a manner affecting its title, except when authorized by Congress. This provision refers to
government reclaimed, foreshore and marshy lands of the public domain that have been titled but still cannot be alienated or encumbered
unless expressly authorized by Congress. The need for legislative authority prevents the registered land of the public domain from becoming
private land that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered under the Torrens
System. Section 48, Chapter 12, Book I of the Code states

Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the
deed of conveyance shall be executed in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of any political subdivision or of any corporate
agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

Thus, private property purchased by the National Government for expansion of a public wharf may be titled in the name of a government
corporation regulating port operations in the country. Private property purchased by the National Government for expansion of an airport may
also be titled in the name of the government agency tasked to administer the airport.Private property donated to a municipality for use as a
town plaza or public school site may likewise be titled in the name of the municipality. [106] All these properties become properties of the public
domain, and if already registered under Act No. 496 or PD No. 1529, remain registered land. There is no requirement or provision in any
existing law for the de-registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain become unquestionably part of the public
domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the National Government new
certificates of title covering such expropriated lands. Section 85 of PD No. 1529 states

Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is expropriated or taken by eminent domain, the
National Government, province, city or municipality, or any other agency or instrumentality exercising such right shall file for registration in the
proper Registry a certified copy of the judgment which shall state definitely by an adequate description, the particular property or interest
expropriated, the number of the certificate of title, and the nature of the public use. A memorandum of the right or interest taken shall be
made on each certificate of title by the Register of Deeds, and where the fee simple is taken, a new certificate shall be issued in favor of
the National Government, province, city, municipality, or any other agency or instrumentality exercising such right for the land so taken.
The legal expenses incident to the memorandum of registration or issuance of a new certificate of title shall be for the account of the authority
taking the land or interest therein. (Emphasis supplied)

Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial lands. Lands of the public domain
may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of the lands to be reclaimed from
submerged areas of Manila Bay. In the words of AMARI, the Amended JVA is not a sale but a joint venture with a stipulation for reimbursement
of the original cost incurred by PEA for the earlier reclamation and construction works performed by the CDCP under its 1973 contract with the
Republic. Whether the Amended JVA is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to cause the issuance
and delivery of the certificates of title conveying AMARIs Land Share in the name of AMARI. [107]

Property 117
 This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that private corporations shall not hold such
alienable lands of the public domain except by lease. The transfer of title and ownership to AMARI clearly means that AMARI will hold the
reclaimed lands other than by lease. The transfer of title and ownership is a disposition of the reclaimed lands, a transaction considered a sale
or alienation under CA No. 141,[108] the Government Auditing Code,[109] and Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form part of the public domain and are
inalienable. Lands reclaimed from foreshore and submerged areas also form part of the public domain and are also inalienable, unless
converted pursuant to law into alienable or disposable lands of the public domain. Historically, lands reclaimed by the government are sui
generis, not available for sale to private parties unlike other alienable public lands. Reclaimed lands retain their inherent potential as areas for
public use or public service. Alienable lands of the public domain, increasingly becoming scarce natural resources, are to be distributed
equitably among our ever-growing population. To insure such equitable distribution, the 1973 and 1987 Constitutions have barred private
corporations from acquiring any kind of alienable land of the public domain. Those who attempt to dispose of inalienable natural resources of
the State, or seek to circumvent the constitutional ban on alienation of lands of the public domain to private corporations, do so at their own
risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the name of PEA,
are alienable lands of the public domain. PEA may lease these lands to private corporations but may not sell or transfer
ownership of these lands to private corporations. PEA may only sell these lands to Philippine citizens, subject to the ownership
limitations in the 1987 Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain until classified
as alienable or disposable lands open to disposition and declared no longer needed for public service. The government can
make such classification and declaration only after PEA has reclaimed these submerged areas. Only then can these lands qualify
as agricultural lands of the public domain, which are the only natural resources the government can alienate. In their present
state, the 592.15 hectares of submerged areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares [110] of the Freedom
Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares [111] of still submerged areas of Manila
Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of
natural resources other than agricultural lands of the public domain. PEA may reclaim these submerged areas. Thereafter, the
government can classify the reclaimed lands as alienable or disposable, and further declare them no longer needed for public
service. Still, the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public
domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article 1409[112] of the Civil Code,
contracts whose object or purpose is contrary to law, or whose object is outside the commerce of men, are inexistent and void from the
beginning. The Court must perform its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab
initio.

Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended JVA is grossly disadvantageous
to the government.

Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue. Besides, the Court is not a
trier of facts, and this last issue involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development Corporation are
PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is hereby declared NULL and VOID ab initio.
SO ORDERED.

Property 118
27. G.R. No. L-50466 May 31, 1982

CALTEX (PHILIPPINES) INC., petitioner, vs.

CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF PASAY, respondents. AQUINO, J.:

This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. in its gas stations located on leased land.

The machines and equipment consists of underground tanks, elevated tank, elevated water tanks, water tanks, gasoline pumps, computing
pumps, water pumps, car washer, car hoists, truck hoists, air compressors and tireflators. The city assessor described the said equipment
and machinery in this manner:

A gasoline service station is a piece of lot where a building or shed is erected, a water tank if there is any is placed in one
corner of the lot, car hoists are placed in an adjacent shed, an air compressor is attached in the wall of the shed or at the
concrete wall fence.

The controversial underground tank, depository of gasoline or crude oil, is dug deep about six feet more or less, a few
meters away from the shed. This is done to prevent conflagration because gasoline and other combustible oil are very
inflammable.

This underground tank is connected with a steel pipe to the gasoline pump and the gasoline pump is commonly placed or
constructed under the shed. The footing of the pump is a cement pad and this cement pad is imbedded in the pavement
under the shed, and evidence that the gasoline underground tank is attached and connected to the shed or building
through the pipe to the pump and the pump is attached and affixed to the cement pad and pavement covered by the roof of
the building or shed.

The building or shed, the elevated water tank, the car hoist under a separate shed, the air compressor, the underground
gasoline tank, neon lights signboard, concrete fence and pavement and the lot where they are all placed or erected, all of
them used in the pursuance of the gasoline service station business formed the entire gasoline service-station.

As to whether the subject properties are attached and affixed to the tenement, it is clear they are, for the tenement we
consider in this particular case are (is) the pavement covering the entire lot which was constructed by the owner of the
gasoline station and the improvement which holds all the properties under question, they are attached and affixed to the
pavement and to the improvement.

The pavement covering the entire lot of the gasoline service station, as well as all the improvements, machines,
equipments and apparatus are allowed by Caltex (Philippines) Inc. ...

The underground gasoline tank is attached to the shed by the steel pipe to the pump, so with the water tank it is connected
also by a steel pipe to the pavement, then to the electric motor which electric motor is placed under the shed. So to say
that the gasoline pumps, water pumps and underground tanks are outside of the service station, and to consider only the
building as the service station is grossly erroneous. (pp. 58-60, Rollo).

The said machines and equipment are loaned by Caltex to gas station operators under an appropriate lease agreement or receipt. It is
stipulated in the lease contract that the operators, upon demand, shall return to Caltex the machines and equipment in good condition as
when received, ordinary wear and tear excepted.

The lessor of the land, where the gas station is located, does not become the owner of the machines and equipment installed therein. Caltex
retains the ownership thereof during the term of the lease.

Property 119
The city assessor of Pasay City characterized the said items of gas station equipment and machinery as taxable realty. The realty tax on said
equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals ruled that they are personalty. The assessor appealed
to the Central Board of Assessment Appeals.

The Board, which was composed of Secretary of Finance Cesar Virata as chairman, Acting Secretary of Justice Catalino Macaraig, Jr. and
Secretary of Local Government and Community Development Jose Roño, held in its decision of June 3, 1977 that the said machines and
equipment are real property within the meaning of sections 3(k) & (m) and 38 of the Real Property Tax Code, Presidential Decree No. 464,
which took effect on June 1, 1974, 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.

The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's place) in its resolution of January 12, 1978, denying
Caltex's motion for reconsideration, a copy of which was received by its lawyer on April 2, 1979.

On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the Board's decision and for a declaration that t he
said machines and equipment are personal property not subject to realty tax (p. 16, Rollo).

The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction over this case is not correct. When
Republic act No. 1125 created the Tax Court in 1954, there was as yet no Central Board of Assessment Appeals. Section 7(3) of that law in
providing that the Tax Court had jurisdiction to review by appeal decisions of provincial or city boards of assessment appeals had in mind the
local boards of assessment appeals but not the Central Board of Assessment Appeals which under the Real Property Tax Code has
appellate jurisdiction over decisions of the said local boards of assessment appeals and is, therefore, in the same category as the Tax Court.

Section 36 of the Real Property Tax Code provides that the decision of the Central Board of Assessment Appeals shall become final and
executory after the lapse of fifteen days from the receipt of its decision by the appellant. Within that fifteen-day period, a petition for
reconsideration may be filed. The Code does not provide for the review of the Board's decision by this Court.

Consequently, the only remedy available for seeking a review by this Court of the decision of the Central Board of Assessment Appeals is the
special civil action of certiorari, the recourse resorted to herein by Caltex (Philippines), Inc.

The issue is whether the pieces of gas station equipment and machinery already enumerated are subject to realty tax. This issue has to be
resolved primarily under the provisions of the Assessment Law and the Real Property Tax Code.

Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land, buildings, machinery, and other
improvements" not specifically exempted in section 3 thereof. This provision is reproduced with some modification in the Real Property Tax
Code which provides:

SEC. 38. Incidence of Real Property Tax.— There shall be levied, assessed and collected in all provinces, cities and
municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements
affixed or attached to real property not hereinafter specifically exempted.

The Code contains the following definitions in its section 3:

k) Improvements — is a valuable addition made to property or an amelioration in its condition, amounting to more than
mere repairs or replacement of waste, costing labor or capital and intended to enhance its value, beauty or utility or to
adapt it for new or further purposes.

m) Machinery — shall embrace machines, mechanical contrivances, instruments, appliances and apparatus attached to
the real estate. It includes the physical facilities available for production, as well as the installations and appurtenant
service facilities, together with all other equipment designed for or essential to its manufacturing, industrial or agricultural
purposes (See sec. 3[f], Assessment Law).

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

Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the
property or plant but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person acted
as the agent of the owner (Davao Saw Mill Co. vs. Castillo, 61 Phil 709).

Property 120
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that becomes real property by destination.
In the Davao Saw Mills case the question was whether the machinery mounted on foundations of cement and installed by the lessee on
leased land should be regarded as real property for purposes of execution of a judgment against the lessee. The sheriff treated the
machinery as personal property. This Court sustained the sheriff's action. (Compare with Machinery & Engineering Supplies, Inc. vs. Court of
Appeals, 96 Phil. 70, where in a replevin case machinery was treated as realty).

Here, the question is whether the gas station equipment and machinery permanently affixed by Caltex to its gas station and pavement (which
are indubitably taxable realty) should be subject to the realty tax. This question is different from the issue raised in the Davao Saw Mill case.

Improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty (84 C.J.S. 181-2,
Notes 40 and 41). "It is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle
might be considered personal property" (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).

This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., 119 Phil. 328, where Meralco's steel
towers were considered poles within the meaning of paragraph 9 of its franchise which exempts its poles from taxation. The steel towers
were considered personalty because they were attached to square metal frames by means of bolts and could be moved from place to place
when unscrewed and dismantled.

Nor are Caltex's gas station equipment and machinery the same as tools and equipment in the repair shop of a bus company which were
held to be personal property not subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).

The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the city assessor's is imposition of the
realty tax on Caltex's gas station and equipment.

WHEREFORE, the questioned decision and resolution of the Central Board of Assessment Appeals are affirmed. The petition for certiorari is
dismissed for lack of merit. No costs.

SO ORDERED.

Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.

G.R. No. L-43938 April 15, 1988

REPUBLIC OF THE PHILIPPINES (DIRECTOR OF FOREST DEVELOPMENT), petitioner, vs.HON. COURT OF APPEALS (THIRD
DIVISION) and JOSE Y. DE LA ROSA, respondents.

G.R. No. L-44081 April 15, 1988

BENGUET CONSOLIDATED, INC., petitioner, vs. HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORIA, BENJAMIN and
EDUARDO, all surnamed DE LA ROSA, represented by their father JOSE Y. DE LA ROSA, respondents.

G.R. No. L-44092 April 15, 1988

ATOK-BIG WEDGE MINING COMPANY, petitioner, vs. HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORlA, BENJAMIN and
EDUARDO, all surnamed DE LA ROSA, represented by their father, JOSE Y. DE LA ROSA, respondents. CRUZ, J.:

The Regalian doctrine reserves to the State all natural wealth that may be found in the bowels of the earth even if the land where the
discovery is made be private. 1 In the cases at bar, which have been consolidated because they pose a common issue, this doctrine was not
correctly applied.

These cases arose from the application for registration of a parcel of land filed on February 11, 1965, by Jose de la Rosa on his own behalf
and on behalf of his three children, Victoria, Benjamin and Eduardo. The land, situated in Tuding, Itogon, Benguet Province, was divided into
9 lots and covered by plan Psu-225009. According to the application, Lots 1-5 were sold to Jose de la Rosa and Lots 6-9 to his children by
Mamaya Balbalio and Jaime Alberto, respectively, in 1964. 2

The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big Wedge Corporation, as to Portions of Lots 1-
5 and all of Lots 6-9, and by the Republic of the Philippines, through the Bureau of Forestry Development, as to lots 1-9. 3

Property 121
In support of the application, both Balbalio and Alberto testified that they had acquired the subject land by virtue of prescription Balbalio
claimed to have received Lots 1-5 from her father shortly after the Liberation. She testified she was born in the land, which was possessed by
her parents under claim of ownership. 4 Alberto said he received Lots 6-9 in 1961 from his mother, Bella Alberto, who declared that the land
was planted by Jaime and his predecessors-in-interest to bananas, avocado, nangka and camote, and was enclosed with a barbed-wire
fence. She was corroborated by Felix Marcos, 67 years old at the time, who recalled the earlier possession of the land by Alberto's father. 5
Balbalio presented her tax declaration in 1956 and the realty tax receipts from that year to 1964, 6 Alberto his tax declaration in 1961 and the
realty tax receipts from that year to 1964. 7

Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to it on September 22, 1934, by the successors-
in-interest of James Kelly, who located the claim in September 1909 and recorded it on October 14, 1909. From the date of its purchase,
Benguet had been in actual, continuous and exclusive possession of the land in concept of owner, as evidenced by its construction of adits,
its affidavits of annual assessment, its geological mappings, geological samplings and trench side cuts, and its payment of taxes on the land.
8

For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the Emma and Fredia mineral claims located by
Harrison and Reynolds on December 25, 1930, and recorded on January 2, 1931, in the office of the mining recorder of Baguio. These
claims were purchased from these locators on November 2, 1931, by Atok, which has since then been in open, continuous and exclusive
possession of the said lots as evidenced by its annual assessment work on the claims, such as the boring of tunnels, and its payment of
annual taxes thereon. 9

The location of the mineral claims was made in accordance with Section 21 of the Philippine Bill of 1902 which provided that:

SEC. 21. All valuable mineral deposits in public lands in the philippine Islands both surveyed and unsurveyed are hereby declared to be free
and open to exploration, occupation and purchase and the land in which they are found to occupation and purchase by the citizens of the
United States, or of said islands.

The Bureau of Forestry Development also interposed its objection, arguing that the land sought to be registered was covered by the Central
Cordillera Forest Reserve under Proclamation No. 217 dated February 16, 1929. Moreover, by reason of its nature, it was not subject to
alienation under the Constitutions of 1935 and 1973. 10

The trial court * denied the application, holding that the applicants had failed to prove their claim of possession and ownership of the land
sought to be registered. 11 The applicants appealed to the respondent court, * which reversed the trial court and recognized the claims of the
applicant, but subject to the rights of Benguet and Atok respecting their mining claims. 12 In other words, the Court of Appeals affirmed the
surface rights of the de la Rosas over the land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of their
mining claims.

Both Benguet and Atok have appealed to this Court, invoking their superior right of ownership. The Republic has filed its own petition for
review and reiterates its argument that neither the private respondents nor the two mining companies have any valid claim to the land
because it is not alienable and registerable.

It is true that the subject property was considered forest land and included in the Central Cordillera Forest Reserve, but this did not impair the
rights already vested in Benguet and Atok at that time. The Court of Appeals correctly declared that:

There is no question that the 9 lots applied for are within the June Bug mineral claims of Benguet and the "Fredia and Emma" mineral claims
of Atok. The June Bug mineral claim of plaintiff Benguet was one of the 16 mining claims of James E. Kelly, American and mining locator. He
filed his declaration of the location of the June Bug mineral and the same was recorded in the Mining Recorder's Office on October 14, 1909.
All of the Kelly claims ha subsequently been acquired by Benguet Consolidated, Inc. Benguet's evidence is that it had made improvements
on the June Bug mineral claim consisting of mine tunnels prior to 1935. It had submitted the required affidavit of annual assessment. After
World War II, Benguet introduced improvements on mineral claim June Bug, and also conducted geological mappings, geological sampling
and trench side cuts. In 1948, Benguet redeclared the "June Bug" for taxation and had religiously paid the taxes.

The Emma and Fredia claims were two of the several claims of Harrison registered in 1931, and which Atok representatives acquired.
Portions of Lots 1 to 5 and all of Lots 6 to 9 are within the Emma and Fredia mineral claims of Atok Big Wedge Mining Company.

The June Bug mineral claim of Benguet and the Fredia and Emma mineral claims of Atok having been perfected prior to the approval of the
Constitution of the Philippines of 1935, they were removed from the public domain and had become private properties of Benguet and Atok.

It is not disputed that the location of the mining claim under consideration was perfected prior to November 15, 1935, when the Government
of the Commonwealth was inaugurated; and according to the laws existing at that time, as construed and applied by this court in McDaniel v.
Apacible and Cuisia (42 Phil. 749), a valid location of a mining claim segregated the area from the public domain. Said the court in that case:
The moment the locator discovered a valuable mineral deposit on the lands located, and perfected his location in accordance with law, the
power of the United States Government to deprive him of the exclusive right to the possession and enjoyment of the located claim was gone,
the lands had become mineral lands and they were exempted from lands that could be granted to any other person. The reservations of
public lands cannot be made so as to include prior mineral perfected locations; and, of course, if a valid mining location is made upon public
lands afterwards included in a reservation, such inclusion or reservation does not affect the validity of the former location. By such location
Property 122
and perfection, the land located is segregated from the public domain even as against the Government. (Union Oil Co. v. Smith, 249 U.S.
337; Van Mess v. Roonet, 160 Cal. 131; 27 Cyc. 546).

"The legal effect of a valid location of a mining claim is not only to segregate the area from the public domain, but to grant to the locator the
beneficial ownership of the claim and the right to a patent therefor upon compliance with the terms and conditions prescribed by law. Where
there is a valid location of a mining claim, the area becomes segregated from the public domain and the property of the locator." (St. Louis
Mining & Milling Co. v. Montana Mining Co., 171 U.S. 650; 655; 43 Law ed., 320, 322.) "When a location of a mining claim is perfected it has
the effect of a grant by the United States of the right of present and exclusive possession, with the right to the exclusive enjoyment of all the
surface ground as well as of all the minerals within the lines of the claim, except as limited by the extralateral right of adjoining locators; and
this is the locator's right before as well as after the issuance of the patent. While a lode locator acquires a vested property right by virtue of
his location made in compliance with the mining laws, the fee remains in the government until patent issues."(18 R.C.L. 1152) (Gold Creek
Mining Corporation v. Hon. Eulogio Rodriguez, Sec. of Agriculture and Commerce, and Quirico Abadilla, Director of the Bureau of Mines, 66
Phil. 259, 265-266)

It is of no importance whether Benguet and Atok had secured a patent for as held in the Gold Creek Mining Corp. Case, for all physical
purposes of ownership, the owner is not required to secure a patent as long as he complies with the provisions of the mining laws; his
possessory right, for all practical purposes of ownership, is as good as though secured by patent.

We agree likewise with the oppositors that having complied with all the requirements of the mining laws, the claims were removed from the
public domain, and not even the government of the Philippines can take away this right from them. The reason is obvious. Having become
the private properties of the oppositors, they cannot be deprived thereof without due process of law. 13

Such rights were not affected either by the stricture in the Commonwealth Constitution against the alienation of all lands of the public domain
except those agricultural in nature for this was made subject to existing rights. Thus, in its Article XIII, Section 1, it was categorically provided
that:

SEC. 1. All agricultural, timber and mineral lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy and other natural resources of the Philipppines belong to the State, and their disposition, exploitation, development, or
utilization shall be limited to citizens of the Philippines or to corporations or associations at least 60% of the capital of which is owned by such
citizens, subject to any existing right, grant, lease or concession at the time of the inauguration of the government established under this
Constitution. Natural resources with the exception of public agricultural lands, shall not be alienated, and no license, concession, or lease for
the exploitation, development or utilization of any of the natural resources shall be granted for a period exceeding 25 years, except as to
water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which case beneficial use
may be the measure and the limit of the grant.

Implementing this provision, Act No. 4268, approved on November 8, 1935, declared:

Any provision of existing laws, executive order, proclamation to the contrary notwithstanding, all locations of mining claim made prior to
February 8, 1935 within lands set apart as forest reserve under Sec. 1826 of the Revised Administrative Code which would be valid and
subsisting location except to the existence of said reserve are hereby declared to be valid and subsisting locations as of the date of their
respective locations.

The perfection of the mining claim converted the property to mineral land and under the laws then in force removed it from the public domain.
14 By such act, the locators acquired exclusive rights over the land, against even the government, without need of any further act such as the
purchase of the land or the obtention of a patent over it. 15 As the land had become the private property of the locators, they had the right to
transfer the same, as they did, to Benguet and Atok.

It is true, as the Court of Appeals observed, that such private property was subject to the "vicissitudes of ownership," or even to forfeiture by
non-user or abandonment or, as the private respondents aver, by acquisitive prescription. However, the method invoked by the de la Rosas
is not available in the case at bar, for two reasons.

First, the trial court found that the evidence of open, continuous, adverse and exclusive possession submitted by the applicants was
insufficient to support their claim of ownership. They themselves had acquired the land only in 1964 and applied for its registration in 1965,
relying on the earlier alleged possession of their predecessors-in-interest. 16 The trial judge, who had the opportunity to consider the
evidence first-hand and observe the demeanor of the witnesses and test their credibility was not convinced. We defer to his judgment in the
absence of a showing that it was reached with grave abuse of discretion or without sufficient basis. 17

Second, even if it be assumed that the predecessors-in-interest of the de la Rosas had really been in possession of the subject property, their
possession was not in the concept of owner of the mining claim but of the property as agricultural land, which it was not. The property was
mineral land, and they were claiming it as agricultural land. They were not disputing the lights of the mining locators nor were they seeking to
oust them as such and to replace them in the mining of the land. In fact, Balbalio testified that she was aware of the diggings being
undertaken "down below" 18 but she did not mind, much less protest, the same although she claimed to be the owner of the said land.

The Court of Appeals justified this by saying there is "no conflict of interest" between the owners of the surface rights and the owners of the
sub-surface rights. This is rather doctrine, for it is a well-known principle that the owner of piece of land has rights not only to its surface but
Property 123
also to everything underneath and the airspace above it up to a reasonable height. 19 Under the aforesaid ruling, the land is classified as
mineral underneath and agricultural on the surface, subject to separate claims of title. This is also difficult to understand, especially in its
practical application.

Under the theory of the respondent court, the surface owner will be planting on the land while the mining locator will be boring tunnels
underneath. The farmer cannot dig a well because he may interfere with the operations below and the miner cannot blast a tunnel lest he
destroy the crops above. How deep can the farmer, and how high can the miner, go without encroaching on each other's rights? Where is the
dividing line between the surface and the sub-surface rights?

The Court feels that the rights over the land are indivisible and that the land itself cannot be half agricultural and half mineral. The
classification must be categorical; the land must be either completely mineral or completely agricultural. In the instant case, as already
observed, the land which was originally classified as forest land ceased to be so and became mineral — and completely mineral — once the
mining claims were perfected. 20 As long as mining operations were being undertaken thereon, or underneath, it did not cease to be so and
become agricultural, even if only partly so, because it was enclosed with a fence and was cultivated by those who were unlawfully occupying
the surface.

What must have misled the respondent court is Commonwealth Act No. 137, providing as follows:

Sec. 3. All mineral lands of the public domain and minerals belong to the State, and their disposition, exploitation, development or utilization,
shall be limited to citizens of the Philippines, or to corporations, or associations, at least 60% of the capital of which is owned by such
citizens, subject to any existing right, grant, lease or concession at the time of the inauguration of government established under the
Constitution.

SEC. 4. The ownership of, and the right to the use of land for agricultural, industrial, commercial, residential, or for any purpose other than
mining does not include the ownership of, nor the right to extract or utilize, the minerals which may be found on or under the surface.

SEC. 5. The ownership of, and the right to extract and utilize, the minerals included within all areas for which public agricultural land patents
are granted are excluded and excepted from all such patents.

SEC. 6. The ownership of, and the right to extract and utilize, the minerals included within all areas for which Torrens titles are granted are
excluded and excepted from all such titles.

This is an application of the Regalian doctrine which, as its name implies, is intended for the benefit of the State, not of private persons. The
rule simply reserves to the State all minerals that may be found in public and even private land devoted to "agricultural, industrial,
commercial, residential or (for) any purpose other than mining." Thus, if a person is the owner of agricultural land in which minerals are
discovered, his ownership of such land does not give him the right to extract or utilize the said minerals without the permission of the State to
which such minerals belong.

The flaw in the reasoning of the respondent court is in supposing that the rights over the land could be used for both mining and non-mining
purposes simultaneously. The correct interpretation is that once minerals are discovered in the land, whatever the use to which it is being
devoted at the time, such use may be discontinued by the State to enable it to extract the minerals therein in the exercise of its sovereign
prerogative. The land is thus converted to mineral land and may not be used by any private party, including the registered owner thereof, for
any other purpose that will impede the mining operations to be undertaken therein, For the loss sustained by such owner, he is of course
entitled to just compensation under the Mining Laws or in appropriate expropriation proceedings. 21

Our holding is that Benguet and Atok have exclusive rights to the property in question by virtue of their respective mining claims which they
validly acquired before the Constitution of 1935 prohibited the alienation of all lands of the public domain except agricultural lands, subject to
vested rights existing at the time of its adoption. The land was not and could not have been transferred to the private respondents by virtue of
acquisitive prescription, nor could its use be shared simultaneously by them and the mining companies for agricultural and mineral purposes.

WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET ASIDE and that of the trial court dated March 11, 1969, is
REINSTATED, without any pronouncement as to costs.

SO ORDERED.

G.R. No. L-11028 April 17, 1959

LAO CHIT, plaintiff-appellee,
vs.
SECURITY BANK and TRUST CO. and CONSOLIDATED INVESTMENT, INC., defendants-appellants.
Nicetas A. Suanes for appellee.
Augusto S. Francisco for appellant Security Bank and Trust Co.
Property 124
Jesus S. Nava for appellant Consolidated Investments, Inc.
CONCEPCION, J.:
In May, 1949, the consolidated Investments, Inc., hereafter referred to as the lessor, leased to Domingo T. Dikit part of the lobby, on the
ground floor of the Consolidated Building, at Plaza Goiti, Manila, to be used as offices of the proposed Bank of Manila, then being organized
by said Dikit and Jose Silva. Pursuant to the lease contract between the parties (Exhibits 2, 2-A and 2-B), the lessee undertook to construct,
at the expense thereof, such walls, partitions and other improvements as may be necessary to make the leased premises suitable for
banking purposes, and such partitions and improvements "shall become the property" of the lessor "upon the termination and/or rescission"
of said contract. It appears that, pursuant to another contract. It appears that, pursuant to another entered into June, 1949, between Dikit and
Silva on the one hand, and plaintiff Lao Chit, on the other (Exhibit A-1, and A-2 and A-3), the latter furnished the materials and the work for
said walls, partitions and improvements, at a total cost of P59,365, payable "as soon as the Bank of Manila opens for business, and is given
a permit by the Central Bank." This permit however, was never issued. The proposed Bank of Manila did not open for business, and rentals
due under said lease contract, at the rate of P5,000 a month, beginning from October, 1949, were not paid. On December 3, 1949, the lessor
instituted Civil Case No. 9708 of the Municipal Court of Manila against Dikit, for unlawful detainer. After appropriate proceedings, said court
rendered judgement on March 27, 1950, sentencing Dikit.
. . . to vacate the premises described in the complaint, and to pay the plaintiff the sum of P10,000.00, under the first cause of action,
corresponding rentals due from October to November, 1949, plus the sum of P227.80, under the second cause of action, for electric
consumption up to November 30, 1949; plus the rents that will become due from December 1, 1949, at the rate P5,000.00 per month until the
date said defendant finally vacates and surrenders possession to the plaintiff and costs of this suit. (Exhibit 3.)
Dikit appealed from this decision to the Court of First Instance of Manila, where the case was docketed as Civil Case No. 11214 of said court.
He likewise, applied, in the Supreme Court — in Case G.R. No. L-3621, entitled "Domingo Dikit vs. Hon Ramon Icasiano" — for a writ of
certiorari against the municipal judge who had rendered the aforementioned decision in the ejectment case. Said cases No. 11214 and L-
3621 were soon dismissed, however, upon agreement of the parties, dated May 22, 1951, whereby Dikit, among other things, relinquished
whatever rights have to the possession of the leased premises and disclaimed all rights to and over any and all improvements introduced
therein while he was in possession thereof.
Prior to said decision, but after the commencement of the said Case No. 9708 Lao Chit had filed Civil Case No. 10178 of the Court of First
Instance of Manila, against Dikit and Silva, for the recovery of what was due from them by reason of the aforementioned improvements
introduced by Lao Chit. On June 30, 1953, judgement was rendered in said Case No. 10178 the dispositive part of which reads as follows:
WHEREFORE, judgement is hereby rendered in favor of the plaintiff and against the defendants, sentencing the latter to pay the former,
jointly and severally, the sum of P59,365.00, which is the total of the claim under the second, third and fourth causes of action, the same to
be paid within 15 days from notice, with legal interest from the date of the filing of the complaint until its full payment; and in the event the
defendants fail to pay within the period of grace herein fixed, the fixtures herein referred to (which by express agreement of the parties shall
remain the plaintiff's property until they are fully paid for) shall be returned to the plaintiff. The defendants shall also pay jointly and severally
the plaintiff by way of damages an amount equivalent to 12% of the aforementioned sum of P59,365.00. The defendants shall likewise pay
the plaintiff, jointly and severally, another sum equivalent to 25% of the amounts claimed in the first and sixth causes of action, besides
amount claimed in the first and sixth causes of action, besides an amount equivalent to six (6%) of the sums due and payable under the
second and third causes of action as attorney's fees, with costs against them. (Exhibit A.)
In due course, the corresponding writ of execution (Exhibits D-1 and D-3) of this judgment was subsequently issued. Later on it was returned
by the sheriff unsatisfied, with the statement that neither Dikit nor Silva had any property registered in their respective names, and that the
whereabouts of Silva was unknown (Exhibits D-2 and D-4). Meanwhile, or on September 10, 1953, Lao Chit brought the present action
against the Security Bank and Trust Company (Hereafter referred to as the Bank), to which the lessor had, since July 1, 1951, leased the
premises in question (after it had been vacated by Silva), together with the fixtures and improvements introduced therein by Lao Chit. In its
complaint, Lao Chit demanded payment of P1,000 a month, by way of rental for the use of said fixtures and improvements by the Bank, in
addition to expenses of litigation, attorney's fees and costs. In its answer, the Bank alleged that it held and used said improvements pursuant
to its contract of lease with the lessor and that it had paid the rentals due and complied with its other obligations under said contract, and set
up a counterclaim for damages. Soon thereafter, or on November 5, 1953, Lao Chit demanded payment of the aforementioned sum of
P59,365, plus P1,000 a month from June, 1951, from the lessor, which did not heed the demand, whereupon the complaint herein was, on
December 18, 1953, amended to include said lessor as one of the defendants. The latter alleged, in its answer, that the improvements in
question were introduced at the initiative and expense of Dikit and Silva, as lessees of the premises above referred to, and that, as
permanent fixtures, said improvements form an integral part of the Consolidated Investments Building, and belong to the lessor and owner
thereof, not to plaintiff herein, who has no contractual or juridical relation with the lessor. The lessor, likewise, sought to recover, by way of
counterclaim, the sum of P50,000, as damages for its inclusion as defendant herein, aside from attorney's fees and costs. In due course, the
Court of First Instance of Manila rendered judgment on December 28, 1955, the dispositive part of which reads:
WHEREFORE, judgment is hereby rendered, sentencing the defendant, Consolidated Investments, Inc., to pay to the plaintiff the value of the
permanent improvements in the sum of P59,365.00, and, together with the defendant, Security Bank and Trust Company, to pay, jointly and
severally, for the use of the permanent improvements, at the rate of P1,000.00 monthly from June, 1951 to July 31, 1954, and thereafter, until
January, 1955, by the defendant, Consolidated Investments, Inc., alone, at the same rate, and in both instances, plus legal interest until full
payment thereof; in addition, the defendant, Consolidated Investments, Inc., is further ordered to pay to the plaintiff the amount equivalent to
80% of whatever amount is due from it, as reimbursement for plaintiff's litigation expenses, including attorney's contingent fees, aside from
moral, nominal, moderate and exemplary damages in the amount of P2,000.00, and the costs of suit.
Defendants' counterclaim are hereby both dismissed for lack of merits and in view of the above conclusion of the Court.
Their respective motions for reconsideration and new trial having been denied, the defendants have appealed from this decision.
It is apparent to us that the lower court erred in rendering judgment against the Bank. This defendant had occupied and used the premises in
question, including the partitions, fixtures and other improvements made therein by Lao Chit, pursuant to a contract of lease entered into with
lessor, the right of which to enter into said contract is not disputed. Moreover, the Bank had paid the rentals and fulfilled its other obligations
under said contract. Again, it cannot be denied that the improvements introduced by Lao Chit became property of the lessor, not only
Property 125
because such improvements are permanent in nature and cannot be removed without impairing the building to which they were attached,
but, also, because the contract of lease between Dikit and Silva on the hand, and the lessor, on the other hand, provided explicitly that the
latter shall own those improvements "upon the expiration and/or rescission" of said contract, and the same has already been resolved.
Although Lao Chit was not a party to said contract, this stipulation is binding upon him, he having introduced said improvements pursuant to
his contract with Dikit, from whom he derived, therefore, his right to enter the building and make the improvements. In short, insofar as the
construction thereof, Lao Chit was, vis-a-vis the lessor, a mere agent or representative of Dikit and, as such, was privy to the undertakings of
Dikit under his contract of lease with the lessor.
The lower court held the latter liable to Lao Chit upon the ground that Lao Chit was a builder in good faith, under the provisions of the Old
Civil Code, and under the theory of undue enrichment.
As regards the first ground, Article 361 of the Civil Code of Spain, on which the lower court relied, provides:
The owner of land on which anything has been built, sown, or planted, in good faith, shall be entitled to appropriate the thing so built, sown,
or planted, upon paying the compensation mentioned in Articles 453 and 454, or to compel the person who has built or planted to pay him the
value of the land, and the person who sowed thereon to pay the proper rent thereof.
It is well settled, however, that this provisions refers to one who builds upon a land which he believes to be his property (Alburo vs.
Villanueva, 7 Phil., 277; Cortes vs. Ramon, 46 Phil., 184; Rivera vs. Trinidad, 48 Phil., 396; Fojas vs. Velasco, 51 Phil., 520; Montinola vs.
Bantug, 71 Phil., 449-450; Lopez Inc. vs. Philippines & Eastern Trading Co., Inc., 98 Phil., 348; 52 Off. Gaz., 1452). Neither Lao Chit, nor
Dikit, claimed the Consolidated Investments Building as his own. Dikit was a mere lessee and Lao Chit was his agent, as such, in the
construction of the improvements under consideration. In any event, the Spanish text of said Article 361, which is the original, reads:
El dueño del terreno en que se edificare, sembrare o plantare de buena fe, tendra derecho a hacer suya la obra, siembra o plantacion, previa
la indemnizacion establecida en los articulos 453 y 454, o a obligar al que edifico o planto a pagar el precio del terreno, y al que sembro, la
renta correspondiente. (Emphasis supplied.)
Clearly this provision is limited in its application to "buildings" constructed on another's land or "terreno", not to partitions, railings, counters,
shelves and other fixtures made in a building belonging to the owner of the land. Although the verb "edificar" in Spanish is roughly
synonymous with "build" in English, the latter is broader in its connotation than the former. Literally, "edificar" is to undertake the construction
of an edifice, such as a fort, castle, house, church, market, tower, stadium, barrack, stable or other similar structure. Upon the other hand,
one may build a house, as well as a fence, partition, window, door, or even a desk or chair. It is apparent, therefore, that Lao Chit is not
entitled to the benefit of said Article 361.
The lower court, moreover, said:
. . . convincing evidence abounds, to wit: that the improvements were made in the presence of, and with the knowledge and consent, and
even under the personal supervision, on the part of the duly authorized representative of the defendant, Consolidated Investments, Inc.,
which owns the building. Thus, it may even be said that it was the defendant, Consolidated Investments Inc., which had acted in bad faith.
(Record on Appeal of Consolidated Investments, Inc., p. 56.)
and quoted, in support thereof, the second paragraph of Article 364 of the Spanish Civil Code, reading:
Bad faith on the part of the owner is deemed to exist whenever the act has been done in his presence, with his knowledge and tolerance, and
without opposition on his part.
The foregoing view is, likewise, untenable. To begin with, this Article 364, involves a person who builds, plants or sows upon a land not
knowing that it belongs to another. Inasmuch as, there is no contractual relation between them, their rights are governed by law, not by
contract.
Secondly, under his contract of lease with the lessor, Dikit had a legal right to make the improvements in question and the lessor was legally
bound to permit Dikit and his agent Lao Chit to enter the leased premises and construct said improvements. Surely, compliance with this
valid contractual obligation does not, and cannot, constitute bad faith on the part of the lessor. Upon the other hand, the lessor could not
legally object to, or obstruct, the work done by Lao Chit, without being chargeable with bad faith in the performance of said contractual
obligation with Dikit.
In order to justify the application of the principle that no one should be permitted to unjustly enrich himself at the expense of another, His
Honor the Trial Judge cited Article 356 of the Civil Code of Spain, which provides:
He who receives fruits is obliged to pay any expenses which may have been incurred by another in the production, gathering, and
preservation thereof.
We agree with the lessor that this Article is not in point, for:
(a) Said provision is part of Section I, Chapter II, Title II, Book II, of the Spanish Civil Code, which section regulates the "right of accession
with respect to the products of property," and the work done and the improvements introduced by Lao Chit are not "products" of the lessor's
property.
(b) Said Article 356 refers to "expenses" of production, gathering and preservation" of fruits received by the owner of the property, not to
improvements, whereas the claim of Lao Chit is based upon "improvements" introduced, not "expenses" incurred by him for the "production,
gathering and preservation" of fruits. In the language of Manresa:
. . . el Codigo exige el propietario pague al tercer poseedor que fue de la cosa los gastos de produccion, y en su caso los de recoleccion y
conservacion. El propietario no puede excusarse alegando la mala fe del tercero, porque sea de buena o de mala fe, lo cierto es que este ha
hecho un gasto, no solo util para el propietario, sino necesario, y sin el cual el propietario no hubiera obtenido frutos de su fundo, resultando
ademas que, de no mediar indemnizacion, se consagraria el injusto principio de que uno puede enriquecerse a costa y con daño de otro.
Para afirmarse por completo en esta opinion debe concordarse el articulo que comentamos con los 452 a 456, relativos a los efectos de la
posesion de buena y mala fe, y que no examinamos ahora porque el asunto se trata luego con mas detalles.
Los gastos de produccion y demas, para que puedan conceptuarse reembolsables por el propietario en el caso que suponemos, deben
tener dos caracteres: primero, que esten dedicados a la produccion anual; es decir, que no se trata en este supuesto de las bonificaciones
generales del fundo. Semejantes bonificaciones entran en la categoria de las mejoras, que se regulan en otro lugar del Codigo (al tratar de
la posesion), y segundo, que no sean superfluos, excesivos o de puro lujo, sino que deben ser hechos en aquella medida natural que la
condicion del cultivo o trabajo de que se trata exige. (3 Manresa [6th ed.], 196; Emphasis supplied.)
Property 126
(c) The right to recover under the principle of undue enrichment is justifiable under Article 1887 of the Spanish Civil Code, reading:
Quasi contracts are licit and purely voluntary acts which create an obligation on the part of the actor in favor of a third person, and, at times, a
reciprocal obligation between the parties concerned.
Its counterpart in the Civil Code of the Philippines is Article 2142, which we quote:
Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched
or benefited at the expense of another.
The former is part of Title XVI, Book IV of the Spanish Civil Code, entitled "obligations incurred without contract", whereas the latter is
included in Title XVII, Book IV of the Civil Code of the Philippines, regulating "extra-contractual obligations" or obligations beyond, outside of,
or outside the scope of, a contract. The construction of the improvements in question was not a "purely voluntary act" or "unilateral act" of
Lao Chit. He introduced them in a compliance with a bilateral "obligation" he undertook under his contract with Dikit. The right of Dikit to enter
into such contract, in turn, sprang from his lease contract with the lessor. As a privy to Dikit's rights under this contract, insofar as said
improvements are concerned, Lao Chit's title thereto, as against the lessor, is governed, therefore, by such contract of lease, not by any
quasi-contract, or by the principles of equity, as distinguished from law, contracts or quasi-contracts.
(d) For the principle of undue enrichment to apply, there must be "enrichment" and the same must be "undue" or "unjust".
In the case at bar, Dikit failed to pay the agreed monthly rental of P5,000 from October, 1949. Up to July 1, 1951, when the premises in
question were leased to the Bank, the rentals due from Dikit aggregated, therefore, P105,000. Thus, despite the fact that the lessor had
become the owner of the improvements in question, worth P59,365.00, is still suffered a loss of over P45,000.00. Such "loss" negates the
idea of "enrichment". Neither may the latter be deemed to have taken place in the sense that said improvements had increased the
productive capacity of the leased premises, for, despite said improvements, the Bank agreed to pay, beginning from July 1, 1951, only
P4,000 a month, or P1,000 a month less than the rental stipulated with Dikit.
Regardless of the foregoing, Lao Chit had no reason to believe — and he does not claim to have acted under the belief — that Dikit owned
the leased premises. In fact, the circumstances surrounding the case are such as to leave the room for doubt that Lao Chit knew that Dikit
was not the owner of said property and that the same belonged to the lessor. Besides, Lao Chit should have known that, as Dikit's agent, in
the construction of the improvements, he (Lao Chit) was subject to the limitations imposed upon Dikit by his contract with the lessor and that
the improvements in question became property of the owner of the building, not only by operation of law, as accessions to said building, but,
also, for specific stipulation in the contract of lease between Dikit and the lessor. Inasmuch as the acquisition of said improvements by the
owner of the building and lessor is ordained by law and provided for by said contract, which is admittedly valid, the resulting enrichment — if
any — by said owner and lessor, is neither "undue" nor "unjustly".
Upon the other hand, he had been reasonably vigilant, Lao Chit could have demanded from Dikit a mortgage, or a bond, or some other
security, for the protection of his rights, yet he (Lao Chit) did not do so. Should the lessor be required to pay Lao Chit what he is entitled to
recover from Dikit, but which he (Lao Chit) cannot — due to his oversight, carelessness or negligence — collect from Dikit, the effect would
be to relieve Lao Chit of the consequences of his own inadvertence or negligence, and hold the lessor responsible therefor. This would be
neither fair, nor just, nor equitable.
Lastly, the lower court declared that the improvements in question belong to Lao Chit, because it had been so held in Case No. 10718
instituted by him against Dikit and Silva. Obviously, however, the proceedings in that case and the decision therein rendered are not binding
upon the lessor, the same being neither a party in said case, nor a successor to the interest of the defendants therein. Besides, the
aforementioned finding is not borne out by Lao Chit's contract with Dikit and Silva (Exhibits A-1, A-2, A-2-a and A-3). Indeed, even if Dikit and
Silva had agreed with Lao Chit — and they had no such agreement — that he would own the improvements until payment of the price
thereof, the stipulation would be, neither valid, nor binding upon the lessor, for Dikit and Silva had no authority whatsoever to waive the
statutory right of accession of the lessor to and over said improvements (Arts. 353 and 358, Civil Code of Spain; Arts. 440 and 445, Civil
Code of the Philippines).
Wherefore, the decision appealed from is hereby reversed and another one shall be entered dismissing the complaint, with costs against
plaintiff-appellee Lao Chit. It is so ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador and Endencia, JJ., concur.

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

FRANCISCO DEPRA, plaintiff-appellee,
vs.
AGUSTIN DUMLAO, defendant-appellant.
Roberto D. Dineros for plaintiff-appellee.
Veil D. Hechanova for defendant-appellant.

MELENCIO-HERRERA, J.:
This is an appeal from the Order of the former Court of First Instance of Iloilo to the then Court of Appeals, which the latter certified to this
instance as involving pure questions of law
Plaintiff-appellee, Francisco Depra, is the owner of a parcel of land registered under Transfer Certificate of Title No. T3087, 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 Depra after writing a demand letter asking DUMLAO to move back from his encroachment, filed an action for Unlawful

Property 127
Detainer on February 6,1973 against DUMLAO in the Municipal Court of of Dumangas, docketed as Civil Case No 1, Said complaint was
later amended to include DEPRA as a party plain. plaintiff.
After trial, the Municipal Court found that DUMLAO was a builder in good faith, and applying Article 448 of the Civil Code, rendered judgment
on September 29, 1973, the dispositive portion of which reads:
Ordering that a forced lease is created between the parties with the plaintiffs, as lessors, and the defendants as lessees, over the disputed
portion with an area of thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month, payable by the lessee to the lessors
within the first five (5) days of the month the rent is due; and the lease shall commence on the day that this decision shall have become final.
From the foregoing judgment, neither party appeal so that, ff it were a valid judgment, it would have ordinarily lapsed into finality, but even
then, DEPRA did not accept payment of rentals so that DUMLAO deposited such rentals with the Municipal Court.
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 executory.
After the case had been set for pre-trial, the parties submitted a Joint Motion for Judgment based on the Stipulation of Facts attached thereto.
Premised thereon, the Trial Court on October 31, 1974, issued the assailed Order, decreeing:
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.
Without pronouncement as to costs.
SO ORDERED.
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.
Addressing out selves to the issue of validity of the Decision of the Municipal Court, we hold the same to be null and void. The judgment in a
detainer case is effective in respect of possession only (Sec. 7, Rule 70, Rules of Court). 1 The Municipal Court over-stepped its bounds
when it imposed upon the parties a situation of "forced lease", which like "forced co-ownership" is not favored in law. Furthermore, a lease is
an interest in real property, jurisdiction over which belongs to Courts of First Instance (now Regional Trial Courts) (Sec. 44(b), Judiciary Act of
1948; 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. " 4
Conceded in the Stipulation of Facts between the parties is that DUMLAO was a builder in good faith. Thus,
8. That the subject matter in the unlawful detainer case, Civil Case No. 1, before the Municipal Court of Dumangas, Iloilo involves the same
subject matter in the present case, the Thirty-four (34) square meters portion of land and built thereon in good faith is a portion of defendant's
kitchen and has been in the possession of the defendant since 1952 continuously up to the present; ... (Emphasis ours)
Consistent with the principle that our Court system, like any other, must be a dispute resolving mechanism, we accord legal effect to the
agreement of the parties, within the context of their mutual concession and stipulation. They have, thereby, chosen a legal formula to resolve
their dispute to appeal ply to DUMLAO the rights of a "builder in good faith" and to DEPRA those of a "landowner in good faith" as prescribed
in Article 448. Hence, we shall refrain from further examining whether the factual situations of DUMLAO and DEPRA conform to the juridical
positions respectively defined by law, for a "builder in good faith" under Article 448, a "possessor in good faith" under Article 526 and a
"landowner in good faith' under Article 448.
In regards to builders in good faith, Article 448 of the Civil 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 (Paragraphing supplied)
Pursuant to the foregoing provision, DEPRA has the option either to pay for the encroaching part of DUMLAO's kitchen, or to sell the
encroached 34 square meters of his lot to DUMLAO. He cannot refuse to pay for the encroaching part of the building, and to sell the
encroached part of his land, 5 as he had manifested before the Municipal Court. But that manifestation is not binding because it was made in
a void proceeding.
However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of First Instance. It was thus error for the Trial Court to
have ruled that DEPRA is "entitled to possession," without more, of the disputed portion implying thereby that he is entitled to have the
kitchen removed. He is entitled to such removal only when, after having chosen to sell his encroached land, DUMLAO fails to pay for the
same. 6 In this case, DUMLAO had expressed his willingness to pay for the land, but DEPRA refused to sell.
The owner of the building erected in good faith on a land owned by another, is entitled to retain the possession of the land until he is paid the
value of his building, under article 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 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 (italics ours).
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
Property 128
substantially the judgment sought to be executed and is. furthermore, offensive to articles 361 (now Article 448) and 453 (now Article 546) of
the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608[1946]).
A word anent the philosophy behind Article 448 of the Civil rode.
The original provision was found in Article 361 of the Spanish Civil Code; which provided:
ART. 361. The owner of land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own
the work, sowing or planting, after the payment of the indemnity stated in Articles 453 and 454, or to oblige the one who built or planted to
pay the price of the land, and the one who sowed, the proper rent.
As will be seen, the Article favors the owner of the land, by giving him one of the two options mentioned in the Article. Some commentators
have questioned the preference in favor of the owner of the land, but Manresa's opinion is that the Article is just and fair.
. . . es justa la facultad que el codigo da al dueno del suelo en el articulo 361, en el caso de edificacion o plantacion? Algunos comentaristas
la conceptuan injusta, y como un extraordinario privilegio en favor de la propiedad territorial. Entienden que impone el Codigo una pena al
poseedor de buena fe y como advierte uno de los comentaristas aludidos 'no se ve claro el por que de tal pena . . . al obligar al que obro de
buena fe a quedarse con el edificio o plantacion, previo el pago del terreno que ocupa, porque si bien es verdad que cuando edifico o planto
demostro con este hecho, que queria para si el edificio o plantio tambien lo es que el que edifico o planto de buena fe lo hizo en la erronea
inteligencia de creerse dueno del terreno Posible es que, de saber lo contrario, y de tener noticia de que habia que comprar y pagar el
terreno, no se hubiera decidido a plantar ni a edificar. La ley obligandole a hacerlo fuerza su voluntad, y la fuerza por un hecho inocente de
que no debe ser responsable'. Asi podra suceder pero la realidad es que con ese hecho voluntario, aunque sea inocente, se ha enriquecido
torticeramente con perjuicio de otro a quien es justo indemnizarle,
En nuestra opinion, el Codigo ha resuelto el conflicto de la manera mas justa y equitativa y respetando en lo possible el principio que para la
accesion se establece en el art. 358. 7
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 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.
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. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050). 8
WHEREFORE, the judgment of the trial Court is hereby set aside, and this case is hereby ordered remanded to the Regional Trial Court of
Iloilo for further proceedings consistent with Articles 448 and 546 of the Civil Code, as follows:
1. The trial Court shall determine
a) the present fair price of DEPRA's 34 square meter area of land;
b) the amount of the expenses spent by DUMLAO for the building of the kitchen;
c) the increase in value ("plus value") which the said area of 34 square meters may have acquired by reason thereof, and
d) whether the value of said area of land is considerably more than that of the kitchen built thereon.
2. After said amounts shall have been determined by competent evidence, the Regional, Trial Court shall render judgment, as follows:
a) The trial Court shall grant DEPRA a period of fifteen (15) days within which to exercise his option under the law (Article 448, Civil Code),
whether to appropriate the kitchen as his own by paying to DUMLAO either the amount of tile expenses spent by DUMLAO f or the building of
the kitchen, or the increase in value ("plus value") which the said area of 34 square meters may have acquired by reason thereof, or to oblige
DUMLAO to pay the price of said area. The amounts to be respectively paid by DUMLAO and DEPRA, in accordance with the option thus
exercised by written notice of the other party and to the Court, shall be paid by the obligor within fifteen (15) days from such notice of the
option by tendering the amount to the Court in favor of the party entitled to receive it;
b) The trial Court shall further order that if DEPRA exercises the option to oblige DUMLAO to pay the price of the land but the latter rejects
such purchase because, as found by the trial Court, the value of the land is considerably more than that of the kitchen, DUMLAO shall give
written notice of such rejection to DEPRA and to the Court within fifteen (15) days from notice of DEPRA's option to sell the land. In that
event, the parties shall be given a period of fifteen (15) days from such notice of rejection within which to agree upon the terms of the lease,
and give the Court formal written notice of such agreement and its provisos. If no agreement is reached by the parties, the trial Court, within
fifteen (15) days from and after the termination of the said period fixed for negotiation, shall then fix the terms of the lease, provided that the
monthly rental to be fixed by the Court shall not be less than Ten Pesos (P10.00) per month, payable within the first five (5) days of each
calendar month. The period for the forced lease shall not be more than two (2) years, counted from the finality of the judgment, considering
the long period of time since 1952 that DUMLAO has occupied the subject area. The rental thus fixed shall be increased by ten percent
(10%) for the second year of the forced lease. DUMLAO shall not make any further constructions or improvements on the kitchen. Upon
expiration of the two-year period, or upon default by DUMLAO in the payment of rentals for two (2) consecutive months, DEPRA shall be
entitled to terminate the forced lease, to recover his land, and to have the kitchen removed by DUMLAO or at the latter's expense. The
rentals herein provided shall be tendered by DUMLAO to the Court for payment to DEPRA, and such tender shall constitute evidence of
whether or not compliance was made within the period fixed by the Court.
Property 129
c) In any event, DUMLAO shall pay DEPRA an amount computed at Ten Pesos (P10.00) per month as reasonable compensation for the
occupancy of DEPRA's land for the period counted from 1952, the year DUMLAO occupied the subject area, up to the commencement date
of the forced lease referred to in the preceding paragraph;
d) The periods to be fixed by the trial Court in its Precision shall be inextendible, and upon failure of the party obliged to tender to the trial
Court the amount due to the obligee, the party entitled to such payment shall be entitled to an order of execution for the enforcement of
payment of the amount due and for compliance with such other acts as may be required by the prestation due the obligee.
No costs,
SO ORDERED.
Teehankee, Actg. C.J., Plana, Relova, De la Fuente and Alampay, JJ., concur.
Gutierrez, Jr., * J., took no part.

Footnotes
1 "Rule 70
Forcible Entry and Detainer
"Sec. 7. Judgment conclusive only on possession; not conclusive in actions involving title or ownership. The judgment rendered in an action
for forcible entry or detainer shall be effective with respect to the possession only and in no wise bind the title or affect the ownership of the
land or building. Such judgment shall not bar an action between the same parties respecting title to the land or building, nor shall it be held
conclusive of the facts therein found in a case between the same parties upon a different cause of action not involving possession."
2 "Sec. 44. Original jurisdiction. ...
(b) In all civil actions which involve the title to, or possession of real property, or any interest therein, or the legality of any tax, impose or
assessment, except actions of forcible entry into and detainer on lands or buildings, original jurisdiction of which is conferred by this Act upon
city and municipal courts; "
3 "Sec. 19. Jurisdiction in civil ease ...
(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts;
4 Supra.
5 Ignacio vs. Hilario, 76 Phil. 605 (1946).
6 Ibid.
7 3 Manresa, 7th Ed., pp. 300-301.
8 II Tolentino, Civil Code of the Philippines, 1963 ed., p. 97.
* Mr. Justice Hugo E. Gutierrez, Jr. took no part, having been one of the two members of a Court of Appeals' Division of Five Justices who
dissented from the majority opinion certifying this case to this Court.
G.R. No. L-57288 April 30, 1984
LEONILA SARMINETO, petitioner,
vs.
HON. ENRIQUE A. AGANA, District Judge, Court of First Instance of Rizal, Seventh Judicial District, Branch XXVIII, Pasay City, and
SPOUSES ERNESTO VALENTINO and REBECCA LORENZO-VALENTINO, respondents.
Mercedes M. Respicio for petitioner.
Romulo R. Bobadilla for private respondents.

MELENCIO-HERRERA, J.:ñé+.£ªwph!1
This Petition for certiorari questions a March 29, 1979 Decision rendered by the then Court of First Instance of Pasay City. The Decision was
one made on memoranda, pursuant to the provisions of RA 6031, and it modified, on October 17, 1977, a judgment of the then Municipal
Court of Paranaque, Rizal, in an Ejectment suit instituted by herein petitioner Leonila SARMIENTO against private respondents, the spouses
ERNESTO Valentino and Rebecca Lorenzo. For the facts, therefore, we have to look to the evidence presented by the parties at the original
level.
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 Paranaque (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. Santo, 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 40,000.00 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

Property 130
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.
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:têñ.£îhqwâ£
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith,
shall have the right
to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or
to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The
parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (Paragraphing supplied)
The value of the LAND, purchased for P15,000.00 on September 7, 1974, could not have been very much more than that amount during the
following January when ERNESTO and wife were asked to vacate. However, ERNESTO and wife have not questioned the P25,000.00
valuation determined by the Court of First Instance.
In regards to the valuation of the RESIDENTIAL HOUSE, the only evidence presented was the testimony of ERNESTO that its worth at the
time of the trial should be from P30,000.00 to P40,000.00. The Municipal Court chose to assess its value at P20,000.00, or below the
minimum testified by ERNESTO, while the Court of First Instance chose the maximum of P40,000.00. In the latter case, it cannot be said that
the Court of First Instance had abused its discretion.
The challenged decision of respondent Court, based on valuations of P25,000.00 for the LAND and P40,000.00 for the RESIDENTIAL
HOUSE, cannot be viewed as not supported by the evidence. The provision for the exercise by petitioner SARMIENTO of either the option to
indemnify private respondents in the amount of P40,000.00, or the option to allow private respondents to purchase the LAND at P25,000.00,
in our opinion, was a correct decision.têñ.£îhqwâ£
The owner of the building erected in good faith on a land owned by another, is entitled to retain the possession of the land until he is paid the
value of his building, under article 453 (now Article 546). The owner, of the land. upon, the other hand, has the option, under article 361 (now
Article 448), either to pay for the building or to sell his land to the owner of the building. But he cannot, as respondents here did, refuse both
to pay for the building and to sell the land and compel the owner of the building to remove it from the land where it is erected. He is entitled to
such remotion only when, after having chosen to sell his land, the other party fails to pay for the same. (Emphasis ours)
We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to remove their buildings from the land belonging to
plaintiffs-respondents only because the latter chose neither to pay for such buildings nor to sell the land, is null and void, for it amends
substantially the judgment sought to be executed and is, furthermore, offensive to articles 361 (now Article 448) and 453 (now Article 546) of
the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608 [1946]).
WHEREFORE, the Petition for Certiorari is hereby ordered dismissed, without pronouncement as to costs.
SO ORDERED.1äwphï1.ñët
Teehankee (Chairman), Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-49219 April 15, 1988

SPOUSES CONCEPCION FERNANDEZ DEL CAMPO and ESTANISLAO DEL CANTO, plaintiffs-appellees, vs. BERNARDA
FERNANDEZ ABESIA, defendant-appellant.
Geronimo Creer, Jr. for plaintiffs-appellees.
Benedicto G. Cobarde for defendant, defendant-appellant

GANCAYCO, J.:
In this appeal from the decision of the Court of First Instance (CFI) of Cebu, certified to this Court by the Court of Appeals on account of the
question of law involved, the sole issue is the applicability of the provisions of Article 448 of the Civil Code relating to a builder in good faith
when the property involved is owned in common.
This case involves a parcel of land, Lot No. 1161 of the Cadastral Survey of Cebu, with an area of only about 45 square meters, situated at
the corner of F. Flores and Cavan Streets, Cebu City covered by TCT No. 61850. An action for partition was filed by plaintiffs in the CFI of
Cebu. Plaintiffs and defendants are co-owners pro indiviso of this lot in the proportion of and 1/3 share each, respectively. The trial court
appointed a commissioner in accordance with the agreement of the parties. ,the Id commissioner conducted a survey, prepared a sketch plan
and submitted a report to the trial court on May 29, 1976, recommending that the property be divided into two lots: Lot 1161-A with an area of
30 square meters for plaintiffs and Lot No. 1161-B with an area of 15 square meters for the defendants. The houses of plaintiffs and
defendants were surveyed and shown on the sketch plan. The house of defendants occupied the portion with an area of 5 square meters of
Lot 1161-A of plaintiffs. The parties manifested their conformity to the report and asked the trial court to finally settle and adjudicate who
among the parties should take possession of the 5 square meters of the land in question.
In solving the issue the trial court held as follows:
The Court believed that the plaintiffs cannot be obliged to pay for the value of the portion of the defendants' house which has encroached an
area of five (5) sq. meters of the land alloted to them. The defendants cannot also be obliged to pay for the price of the said five (5) square
meters. The rights of a builder in good faith under Article 448 of the New Civil Code does (sic) not apply to a case where one co-owner has
Property 131
built, planted or sown on the land owned in common. "Manresa agreeing with Sanchez Roman, says that as a general rule this article is not
applicable because the matter should be governed more by the provisions on co-ownership than on accession. Planiol and Ripert are also of
the opinion that this article is not applicable to a co-owner who constructs, plants or sows on the community property, even if the land where
the construction, planting or sowing is made is a third person under the circumstances, and the situation is governed by the rules of co-
ownership. Our Court of Appeals has held that this article cannot be invoked by one co-owner against another who builds, plants or sows
upon their land, since the latter does not do so on land not belonging to him. (C.A.), O.G. Supp., Aug. 30, 194, p. 126). In the light of the
foregoing authorities and considering that the defendants have expressed their conformity to the partition that was made by the
commissioner as shown in the sketch plan attached to the commissioner's report, said defendants have no other alternative except to
remove and demolish part of their house that has encroached an area of five (5) sq. meters of the land allotted to the plaintiffs.
WHEREFORE, judgment is hereby rendered assigning Lot 1161-A with an area of thirty (30) sq. meters to the plaintiffs spouses Concepcion
Fernandez Abesia, Lourdes Fernandez Rodil, Genaro Fernandez and Dominga A. Fernandez, in the respective metes and bounds as shown
in the subdivision sketch plan attached to the Commissioner's Report dated may 29, 1976 prepared by the Commissioner, Geodetic Engineer
Espiritu Bunagan. Further, the defendants are hereby ordered at their expense to remove and demolish part of their house which has
encroached an area of five (5) square meters from Lot 1161-A of the plaintiffs; within sixty (60) days from date hereof and to deliver the
possession of the same to the plaintiffs. For the Commissioner's fee of P400.00, the defendants are ordered to pay, jointly and severally, the
sum of P133.33 and the balance thereof to be paid by the plaintiffs. The costs of suit shall be paid by the plaintiffs and the defendants in the
proportion of two-thirds (2/3) and one-third (1/3) shares respectively. A certified copy of this judgment shall be recorded in the office of the
Register of Deeds of the City of Cebu and the expense of such recording shall be taxed as a part of the costs of the action.
Hence, this appeal interposed by the defendants with the following assignments of errors:
I
THE TRIAL COURT ERRED IN NOT APPLYING THE RIGHTS OF A BUILDER IN GOOD FAITH UNDER ART. 448 OF THE NEW CIVIL
CODE TO DEFENDANTS-APPELLANTS WITH RESPECT TO THAT PART OF THEIR HOUSE OCCUPYING A PROTION OF THE LOT
ASSIGNED TO PLAINTIFFS-APPELLEES.
II
THE TRIAL COURT ERRED IN ORDERING DEFENDANTS-APPELLANTS TO REMOVE AND DEMOLISH AT THEIR EXPENSE, THAT
PART OF THEIR HOUSE WHICH HAS ENCROACHED ON AN AREA OF FIVE SQUARE METERS OF LOT 1161-A OF PLAINTIFFS-
APPELLEES.
Article 448 of the New Civil Code provides as follows:
Art. 448. The owner of the land on which anything has been built, sown, or planted in good faith, shall have the right to appropriate as his
own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in
common for then he did not build, plant or sow upon land that exclusively belongs to another but of which he is a co-owner. The co-owner is
not a third person under the circumstances, and the situation is governed by the rules of co-ownership. 1
However, when, as in this case, the co-ownership is terminated by the partition and it appears that the house of defendants overlaps or
occupies a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions
of Article 448 of the new Civil Code should apply. Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply
even when there was co-ownership if good faith has been established. 2
Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate said portion of the house of defendants upon
payment of indemnity to defendants as provided for in Article 546 of the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay
the price of the land occupied by their house. However, if the price asked for is considerably much more than the value of the portion of the
house of defendants built thereon, then the latter cannot be obliged to buy the land. The defendants shall then pay the reasonable rent to the
plaintiff upon such terms and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course,
defendants may demolish or remove the said portion of their house, at their own expense, if they so decide.
WHEREFORE, the decision appealed from is hereby MODIFIED by ordering plaintiff to indemnify defendants for the value of the Id portion of
the house of defendants in accordance with Article 546 of the Civil Code, if plaintiffs elect to appropriate the same. Otherwise, the defendants
shall pay the value of the 5 square meters of land occupied by their house at such price as may be agreed upon with plaintiffs and if its value
exceeds the portion of the house that defendants built thereon, the defendants may choose not to buy the land but defendants must pay a
reasonable rental for the use of the portion of the land of plaintiffs As may be agreed upon between the parties. In case of disagreement, the
rate of rental shall be determined by the trial court. Otherwise, defendants may remove or demolish at their own expense the said portion of
their house. No costs.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Griño-Aquino, JJ., concur.

Footnotes
1 3 Planiol & Ripert 245; page 108, Civil Code by Tolentino, Vol. II; See also Viuda de Arias vs. Aguilar, (C.A.) O.G. Supp., Aug. 30, 1941,
Page 126, 40 O.G. 15th series, Page 126.
2 Page 108, Civil Code, Tolentino, 3 Manresa 215.

G.R. No. 72876 January 18, 1991

FLORENCIO IGNAO, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT, JUAN IGNAO, substituted by his Legal Heirs, and
ISIDRO IGNAO, respondents.
Property 132
Dolorfino and Dominguez Law Offices for petitioner.
Ambrosio Padilla, Mempin & Reyes Law Offices for private respondents.
FERNAN, C.J.:
In this petition for review by certiorari, petitioner seeks the reversal of the decision of the Intermediate Appellate Court (now Court of Appeals)
affirming in toto the decision of the Court of First Instance of Cavite, ordering petitioner Florencio Ignao to sell to private respondents Juan
and Isidro Ignao, that part of his property where private respondents had built a portion of their houses.
The antecedent facts are as follows:
Petitioner Florencio Ignao and his uncles private respondents Juan Ignao and Isidro Ignao were co-owners of a parcel of land with an area of
534 square meters situated in Barrio Tabon, Municipality of Kawit, Cavite. Pursuant to an action for partition filed by petitioner docketed as
Civil Case No. N-1681, the then Court of First Instance of Cavite in a decision dated February 6, 1975 directed the partition of the aforesaid
land, alloting 133.5 square meters or 2/8 thereof to private respondents Juan and Isidro, and giving the remaining portion with a total area of
266.5 square meters to petitioner Florencio. However, no actual partition was ever effected.1
On July 17, 1978, petitioner instituted a complaint for recovery of possession of real property against private respondents Juan and Isidro
before the Court of First Instance of Cavite, docketed as Civil Case No. 2662. In his complaint petitioner alleged that the area occupied by the
two (2) houses built by private respondents exceeded the 133.5 square meters previously alloted to them by the trial court in Civil Case No.
N-1681.
Consequently, the lower court conducted an ocular inspection. It was found that the houses of Juan and Isidro actually encroached upon a
portion of the land belonging to Florencio. Upon agreement of the parties, the trial court ordered a licensed geodetic engineer to conduct a
survey to determine the exact area occupied by the houses of private respondents. The survey subsequently disclosed that the house of
Juan occupied 42 square meters while that of Isidro occupied 59 square meters of Florencio's land or a total of 101 square meters.
In its decision, the trial court (thru Judge Luis L. Victor) ruled that although private respondents occupied a portion of Florencio's property,
they should be considered builders in good faith. The trial court took into account the decision of the Court of First Instance of Cavite in the
action for partition2 and quoted:
. . . . Hence, it is the well-considered opinion of the Court that although it turned out that the defendants had, before partition, been in
possession of more than what rightfully belongs to them, their possession of what is in excess of their rightful share can at worst be
possession in good faith which exempts them from being condemned to pay damages by reason thereof.3
Furthermore, the trial court stated that pursuant to Article 448 of the Civil Code, the owner of the land (Florencio) should have the choice to
either appropriate that part of the house standing on his land after payment of indemnity or oblige the builders in good faith (Juan and Isidro)
to pay the price of the land. However, the trial court observed that based on the facts of the case, it would be useless and unsuitable for
Florencio to exercise the first option since this would render the entire houses of Juan and Isidro worthless. The trial court then applied the
ruling in the similar case of Grana vs. Court of Appeals,4 where the Supreme Court had advanced a more "workable solution". Thus, it
ordered Florencio to sell to Juan and Isidro those portions of his land respectively occupied by the latter. The dispositive portion of said
decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the defendants and—
(a) Ordering the plaintiff Florencio Ignao to sell to the defendants Juan and Isidro Ignao that portion of his property with an area of 101 square
meters at P40.00 per square meter, on which part the defendants had built their houses; and
(b) Ordering the said plaintiff to execute the necessary deed of conveyance to the defendants in accordance with paragraph (a) hereof.
Without pronouncement as to costs.5
Petitioner Florencio Ignao appealed to the Intermediate Appellate Court. On August 27, 1985, the Appellate Court, Second Civil Cases
Division, promulgated a decision,6 affirming the decision of the trial court.
Hence the instant petition for review which attributes to the Appellate Court the following errors:
1. That the respondent Court has considered private respondents builders in good faith on the land on question, thus applying Art. 448 of the
Civil Code, although the land in question is still owned by the parties in co-ownership, hence, the applicable provision is Art. 486 of the Civil
Code, which was not applied.
2. That, granting for the sake of argument that Art. 448 . . . is applicable, the respondent Court has adjudged the working solution suggested
in Grana and Torralba vs. CA. (109 Phil. 260), which is just an opinion by way of passing, and not the judgment rendered therein, which is in
accordance with the said provision of the Civil Code, wherein the owner of the land to buy (sic) the portion of the building within 30 days from
the judgment or sell the land occupied by the building.
3. That, granting that private respondents could buy the portion of the land occupied by their houses, the price fixed by the court is unrealistic
and pre-war price.7
The records of the case reveal that the disputed land with an area of 534 square meters was originally owned by Baltazar Ignao who married
twice. In his first marriage, he had four children, namely Justo (the father of petitioner Florencio), Leon and private respondents Juan and
Isidro. In his second marriage, Baltazar had also four children but the latter waived their rights over the controverted land in favor of Justo.
Thus, Justo owned 4/8 of the land which was waived by his half-brothers and sisters plus his 1/8 share or a total of 5/8. Thereafter, Justo
acquired the 1/8 share of Leon for P500.00 which he later sold to his son Florencio for the same amount. When Justo died, Florencio
inherited the 5/8 share of his father Justo plus his 1/8 share of the land which he bought or a total of 6/8 (representing 400.5 square meters).
Private respondents, Juan and Isidro, on the other hand, had 1/8 share (66.75 square meters) each of the land or a total of 133.5 square
meters.
Before the decision in the partition case was promulgated, Florencio sold 134 square meters of his share to a certain Victa for P5,000.00 on
January 27, 1975. When the decision was handed down on February 6,1975, the lower court alloted 2/8 of the land to private respondents
Juan and Isidro, or a total of 133.5 square meters.
It should be noted that prior to partition, all the co-owners hold the property in common dominion but at the same time each is an owner of a
share which is abstract and undetermined until partition is effected. As cited in Eusebio vs. Intermediate Appellate Court,8 "an undivided
estate is co-ownership by the heirs."

Property 133
As co-owners, the parties may have unequal shares in the common property, quantitatively speaking. But in a qualitative sense, each co-
owner has the same right as any one of the other co-owners. Every co-owner is therefore the owner of the whole, and over the whole he
exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract, because until division is effected
such portion is not concretely determined.9
Petitioner Florencio, in his first assignment of error, asseverates that the court a quo erred in applying Article 448 of the Civil Code, since this
article contemplates a situation wherein the land belongs to one person and the thing built, sown or planted belongs to another. In the instant
case, the land in dispute used to be owned in common by the contending parties.
Article 448 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.
Whether or not the provisions of Article 448 should apply to a builder in good faith on a property held in common has been resolved in the
affirmative in the case of Spouses del Campo vs. Abesia,10 wherein the Court ruled that:
The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in
common for then he did not build, plant or sow upon land that exclusively belongs to another but of which he is a co-owner. The co-owner is
not a third person under the circumstances, and the situation is governed by the rules of co-ownership.
However, when, as in this case, the ownership is terminated by the partition and it appears that the home of defendants overlaps or occupies
a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of Article
448 of the new Civil Code should apply. Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply even when
there is a co-ownership if good faith has been established.11
In other words, when the co-ownership is terminated by a partition and it appears that the house of an erstwhile co-owner has encroached
upon a portion pertaining to another co-owner which was however made in good faith, then the provisions of Article 448 should apply to
determine the respective rights of the parties.
Petitioner's second assigned error is however well taken. Both the trial court and the Appellate Court erred when they peremptorily adopted
the "workable solution" in the case of Grana vs. Court of appeals,12 and ordered the owner of the land, petitioner Florencio, to sell to private
respondents, Juan and Isidro, the part of the land they intruded upon, thereby depriving petitioner of his right to choose. Such ruling
contravened the explicit provisions of Article 448 to the effect that "(t)he owner of the land . . . shall have the right to appropriate . . .or to
oblige the one who built . . . to pay the price of the land . . . ." The law is clear and unambiguous when it confers the right of choice upon the
landowner and not upon the builder and the courts.
Thus, in Quemuel vs. Olaes,13 the Court categorically ruled that the right to appropriate the works or improvements or to oblige the builder to
pay the price of the land belongs to the landowner.
As to the third assignment of error, the question on the price to be paid on the land need not be discussed as this would be premature
inasmuch as petitioner Florencio has yet to exercise his option as the owner of the land.
WHEREFORE, the decision appealed from is hereby MODIFIED as follows: Petitioner Florencio Ignao is directed within thirty (30) days from
entry of judgment to exercise his option to either appropriate as his own the portions of the houses of Juan and Isidro Ignao occupying his
land upon payment of indemnity in accordance with Articles 546 and 548 of the Civil Code, or sell to private respondents the 101 square
meters occupied by them at such price as may be agreed upon. Should the value of the land exceed the value of the portions of the houses
that private respondents have erected thereon, private respondents may choose not to buy the land but they must pay reasonable rent for the
use of the portion of petitioner's land as may be agreed upon by the parties. In case of disagreement, the rate of rental and other terms of the
lease shall be determined by the trial court. Otherwise, private respondents may remove or demolish at their own expense the said portions
of their houses encroaching upon petitioner's land.14 No costs.
SO ORDERED.
Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

G.R. No. 73418 September 20, 1988

PELICULA SABIDO and MAXIMO RANCES, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT and
DOMINADOR STA. ANA, respondents. GUTIERREZ, JR., J.:
This petition for review on certiorari seeks to set aside the decision of the then Intermediate Appellate Court which nullified the orders of the
trial court for the issuance of the writs of execution and demolition in favor of the petitioners and which ordered the trial court to assess the
value of the demolished properties of the private respondent for the purposes of set-off against respondent's liability to the petitioners.
This case originated from an action for quieting of title which was filed by the spouses Victor Dasal and Maria Pecunio against herein
petitioners, Maximo Rances and Pelicula Sabido on the question of ownership over two parcels of land otherwise known as Lots "B" and "D".
On October 7, 1969, the trial court presided by Judge Delfin Sunga declared the petitioners as owners of Lots "B" and "D". The decision
became final. However, when the decision was being carried out to put the petitioners in possession of Lot "B", the Provincial Sheriff found
three (3) persons occupying portions of Lot "B". One of them was private respondent Dominador Sta. Ana.
The petitioners filed a motion to require the private respondent to show cause why he should not be ejected from the portion of Lot "B". In his
answer, Sta. Ana claimed ownership by purchase from one Prudencio Lagarto, of a bigger area of which Lot "B" is a part. He stated that the
two other persons occupying the disputed portion are his tenants.

Property 134
Subsequently, an order of demolition was issued by the trial court against the private respondent. This order was challenged by the private
respondent and upon his filing of certiorari proceedings, this Court on November 26, 1973, set aside the order of the trial court and remanded
the case to the latter for further reception of evidence to determine: 1) Whether or not the private respondent is privy to the spouses Victor
Dasal and Maria Pecunio as the losing parties in the action below; and 2) Whether or not the petitioners and the private respondent are
litigating over the same parcel of land or whether there is overlapping of boundaries of their respective lands.
On December 12, 1974, after conducting an ocular inspection and hearing, Judge Sunga issued an order for the private respondent to vacate
Lot "B" upon finding that there is no proof that what the respondent allegedly purchased from Lagarto covers a portion of Lot "B" but on the
contrary, the deed of sale and tax declaration show that what was sold to the respondent was bounded on the south by Tigman river and
therefore, the respondent's ownership could not have extended to Lot "B" which was separated by the Tigman river and mangrove swamps
from the portion he purchased.
Before the order of December 12, 1974, could be executed, however, Judge Sunga inhibited himself from the case so the same was
transferred to the then Court of First Instance (now Branch M, Regional Trial Court) of Naga City presided by Judge Mericia B. Palma.
The execution of the order met with some further delay when the records were reconstituted. Judge Palma, feeling the need for a clearer
understanding of the facts and issues involved in the case, proceeded to hear and received evidence.
On May 16, 1983, Judge Palma issued a resolution finding that there was privity between the private respondent and the spouses Victor
Dasal and Maria Pecunio as to the ownership of Lot "C" and as to the possession over the western portion of the private road and the
disputed Lot "B"; and that Lot "B" and the private road are not included in the land purchased by the respondent from Lagarto.
According to the trial court, the private respondent was in the company of Dasal (from whom he was renting Lot "C' and who was also the
brother-in-law of Lagarto) and was present when Commissioner Tubianosa inspected the land in question in 1953 supporting the claim that
the respondent knew that the land was already in dispute between Dasal and the petitioners; and if the respondent really believed that he
owns the entire Lot "B" and the private road, he should have raised his claim of ownership when Tubianosa inspected the land. The
respondent also failed to include the land in dispute in the survey of his purchased lot with the flimsy excuse that the surveyor failed to return
to finish the survey and include the disputed land.
Before arriving at the above findings, however, the trial court clarified the issues involved in the case. It said:
WE NOW come to the RESOLUTION OF THE TWO ISSUES: (1) Was there privity between Petitioner Sta. Ana and Plaintiffs Dasal? and (2)
Is the disputed area Identified in paragraph 1 of the foregoing enumeration, part of the land purchased by Petitioner from Prudencio Lagarto?
If there is a privity between the Petitioner and Dasal, then the Petitioner is bound by the final decision in this CC No. R-396 (2040) against
Dasal and therefore Petitioner is subject to the order of execution and is bound to vacate the land in question or subject a portion of his
house and the surrounding walls to demolition. If there is no privity then he is not bound by said final decision. (Rollo, pp. 48-49).
In the dispositive portion, however, the trial court held:
WHEREFORE, premises considered, the Court finds:
1.) That there is privity between the petitioner and the plaintiffs spouses Victor Dasal and Maria Pecunio as to ownership of Lot C and as to
the possession over the western portion of the private road and the disputed Lot B as so Identified in Exhibit 5;
2.) That the private road Identified as within points 1, 2, 3, 4, 5, 6 and 1 in Exh. 5 is owned by the respondents as already decided in CC No.
1103, and the same private road and the Lot B in Exhibit 5 are both owned by the respondents as already decided in this CC No. R-396
(2040);
3.) That the balcony of the present house of the petitioner is located in the disputed Lot B and its southern (or southeastern) part of the
western portion of the 'private road';
xxx xxx xxx
6.) That therefore, this Court recommends to the Honorable Supreme Court, that the petitioner be ordered to remove the entire balcony and
the northern portion of the main house to the extent of about one meter found to be standing on the private road, as well as the northern
extension of the hollow block walls on the eastern boundary of Lot C that stand on the private road and to the northern end of Lot B which
wall measures to a total length of about 15 meters from the northern boundary of Lot B to the southern edge of the private road; or in the
alternative to require the petitioner to pay the respondents the value of the western portion of the disputed area which is now enclosed in the
wall constructed by the petitioner;
7.) And to hold the petitioner liable to the respondents for reasonable attorney's fees and damages. (Rollo, p. 52)
On June 7, 1983, the private respondent filed with this Court a pleading captioned "Notice of Appeal for Review." Said petition was denied in
this Court's resolution on October 26,1983, to wit:
L-32642 (Dominador Sta. Ana v. Hon. Delfin Vir, Sunga, etc., et al.). Considering the petition of petitioner for review of trial court resolution
dated May 16, 1983, the Court Resolved to DENY the petition, said resolution of May 16, 1983, being in accord with the decision of
November 26, 1973 (Rec., p. 438) and the resolution of May 16, 1975 (idem, p. 595) as well as the order of December 12,1974 (idem, p.
500) which ordered the petitioner to vacate the premises (which is presumably final). As stated in the aforesaid resolution of May 16, 1975,
any review has to be sought by timely appeal to the appellate court and cannot be sought in this case. (Rollo, p. 65).
A series of resolutions were subsequently issued by this Court denying the private respondent's motion to reconsider the above-quoted
resolution. Finally, on February 27, 1984, this Court issued a resolution ordering "the Chief of the Judgment Division of this Court to RETURN
the records thereof to the respondent court for execution of judgment."
On August 9, 1984, the petitioners filed motion for execution of judgment, accompanied by a bill of costs, as follows: 1) Attorney's fees — P
25,000.00; 2) Cost of litigation — P7,000.00; 3) Expenses for transcript of record — P600.00; 4) Expenses for xeroxing of important papers
and documents-P 500.00; 5) Accrued rentals for the lot in question P11,800.00 and 6) Legal interest of accrued rentals at 12% a year —
P1,436.00 for a total of P46,336.00.
On October 5, 1984, the trial court issued an order granting the petitioners' motion for execution and application for a writ of attachment and
approving the bill of costs. In said order, the trial court ordered the demolition of any part of the private respondent's building and all other
construction within Lot "B" and the private road. The demolition was effected.
The private respondent appealed to the then Intermediate Appellate Court, contending that the order of the trial court departed from the
intention of the Supreme Court's resolution ordering execution of the judgment, for it thereby deprived him of the alternative choice of paying
Property 135
the value of the disputed area which was allowed in the trial court's resolution of May 16, 1983, which the Supreme Court found to be in
accord with, among others, its decision in G.R. No. L-32642 (Sta. Ana v. Sunga, 54 SCRA 36).
On September 20, 1985, the appellate court rendered the assailed decision, the dispositive portion of which provided;
WHEREFORE, the writs of certiorari and prohibition applied for are granted. The Order of October 5, 1984 approving the bill of courts and
granting execution of 'previous orders', as well as the order/writ of demolition are hereby set aside, Respondent Court is ordered to forthwith
determine the value of the demolished portion of petition of petitioner's residential building and other structures affected by the demolition and
also, to assess the value of the disputed area for purposes of set off and whatever is the excess in value should be paid to the party entitled
thereto. (Rollo, pp. 40-41)
In its decision, the appellate court explained the rationale behind the dispositive portion. It said:
xxx xxx xxx
The unqualified affirmance of said resolution of May 16, 1983, to Our Mind, carried with it the approval of the above recommendation. The
fact that the Supreme Court was silent on the recommended alternative choice of demolition and payment of the disputed area and merely
returned the records for execution of judgment, did not indicate that the recommended demolition was preferred. The sufficiency and efficacy
of the resolution of May 16, 1983, as the judgment to be enforced or executed, cannot be doubted considering its substance rather than its
form. The aforequoted recommendation, itself the dispositive portion, can be ascertained as to its meaning and operation. Thereby, the
petitioner is given the option to pay the value of the western portion of the disputed area which is enclosed in the wall constructed by said
petitioner. It is petitioner who is given the alternative choice since if he does not pay, then he can be ordered to remove whatever structure he
had introduced in the questioned premises. Notably, petitioner indicated his willingness to pay the price of the disputed area or otherwise
exercised that option.
Respondent Court therefore acted with grave abuse of discretion tantamount to lack or excess of jurisdiction in abandoning the alternative
choice of payment of the value of the area in dispute, which it authorized in its final resolution of May 16, 1983, when it ordered execution of
its 'previous orders' for the petitioner to vacate the land in question and for demolition, which was set aside when the case was remanded for
hearing pursuant to the Supreme Court decision of November 26, 1973. The previous orders referred to have not been specified by the
respondent Court in its Order of October 6, 1984. If it is the Order of December 12, 1974 which is being referred to by respondent Court, it
should have so specified; however, it did not presumably because it was reconsidered as can be deduced from the fact that thereafter,
respondent Court further heard the parties and received their respective evidence in compliance with the decision of November 26, 1973, or
which proceedings, the respondent Court issued its resolution of May 16, 1983. (Rollo, p. 38)
In the petition before us, the petitioners maintain that the appellate court committed grave abuse of discretion when it granted the private
respondent the option of exercising the alternative choice of staying in the disputed land when it has been established that the private
respondent was in privy with the spouses Victor Dasal and Maria Pecunio and, therefore, he could not be considered a builder in good faith
as to entitle him to the alternative choice of retention; and that the demolition of the private respondent's construction on Lot "B" and on the
private road is a logical consequence of the finding that he was privy to the losing parties who were also the adversaries of the petitioners in
the original case.
We agree.
When this Court ordered the remand of the case between the petitioners and the private respondent in our decision of November 26, 1973
(see Sta. Ana v. Sunga, supra), it was precisely to determine whether herein respondent was privy to the spouses Dasals as to make the
decision against the latter and in favor of the petitioners over Lot "B" binding upon him. And this fact was clearly pointed out by Judge Palma
in her resolution of May 16, 1983 stating that if there is privity between the private respondent and the spouses Dasals, then the former is
bound by the final decision in CC No. R-396 (2040) which is the case between the Dasals and the petitioners. However, an apparent
confusion was brought about by the dispositive portion of the aforementioned resolution when it recommended to this Court either to order
the respondent to remove all his constructions over Lot "B" or to require said respondent to pay the petitioners the value of the disputed area
which was already enclosed by a wall constructed by the respondent. This, nevertheless, was rectified when we issued the series of
resolutions denying the respondent's petition and motions for reconsideration before this Court wherein we stated that the resolution of May
16, 1983 was in accord, among others, with the order of December 12, 1974 "which ordered the petitioner (private respondent) to vacate the
premises (which is presumably final)."
Hence, it is clear that the private respondent has to remove all his constructions over Lot "B" and vacate the premises. This is his only option.
Being adjudged in privy with the spouses Dasals, he cannot avail himself of the rights granted to a builder in good faith. He, therefore, must
remove all his useful improvements over Lot "B" at his own expense and if the same have already been removed, he cannot be entitled to the
right of retention or to any reimbursement. Thus, in the case of Metropolitan Waterworks and Sewarage System v. Court of Appeals, (143
SCRA 623, 629), we ruled:
Article 449 of the Civil Code of the Philippines provides that "he who builds, plants or sows in bad faith on the land of another, loses what is
built, planted or sown without right to indemnity." As a builder in bad faith, NAWASA lost whatever useful improvements it had made without
right to indemnity (Santos v. Mojica, Jan. 31, 1969, 26 SCRA 703)
Moreover, under Article 546 of said code, only a possessor in good faith shall be refunded for useful expenses with the right of retention until
reimbursed; and under Article 547 thereof, only a possessor in good faith may remove useful improvements if this can be done without
damage to the principal thing and if the person who recovers the possession does not exercise the option of reimbursing the useful
expenses. The right given a possessor in bad faith to remove improvements applies only to improvements for pure luxury or mere pleasure,
provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they have at the time
he enters into possession (Article 549, Id.).
We, therefore, find that the appellate court committed reversible error in holding that the private respondent is entitled to exercise the option
to pay the value of the disputed area of Lot "B" and to reimbursement for the value of the demolished portion of his building. We, however,
affirm its ruling that the petitioner's bill of costs must be set aside and that while the resolution of May 16, 1983 included attorney's fees and
damages, the necessity of proof cannot be dispensed with. Since no proof was presented before the trial regarding any of these claims, they
cannot be awarded.

Property 136
WHEREFORE, the petition is GRANTED and the decision of the court of Appeals dated September 20, 1985 is ANNULED and SET ASIDE.
The writ of attachment issued by the trial court for the purpose of satisfying the award for damages and the bill of costs is, however,
permanently SET ASIDE.
SO ORDERED.
Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur.
SECOND DIVISION

[G.R. No. 117642. April 24, 1998]

EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners, vs. HONORABLE COURT OF APPEALS, FLORENCIA BULING VDA DE
TINAGAN, DEMOSTHENES TINAGAN, JESUS TINAGAN, ZENAIDA T. JOSEP AND JOSEPHINE TINAGAN, respondents.
DECISION
MARTINEZ, J.:
In this petition for review on certiorari, petitioners assail the decision[1] of the Court of Appeals dated April 8, 1994 which affirmed the
decision of the lower court ordering petitioners to peacefully vacate and surrender the possession of the disputed properties to the private
respondents.
Culled from the record are the following antecedent facts of this case to wit:
On April 1, 1950, Victoria Sonjaconda Tinagan purchased from Mauro Tinagan two (2) parcels of land situated at Barangay Bongbong,
Valencia, Negros Oriental.[2] One parcel of land contains an area of 5,704 square meters, more or less;[3] while the other contains 10,860
square meters.[4] Thereafter, Victoria and her son Agustin Tinagan, took possession of said parcels of land.
Sometime in 1960, petitioners occupied portions thereof whereat they built a copra dryer and put up a store wherein they engaged in the
business of buying and selling copra.
On June 23, 1975, Victoria died. On October 26, 1975, Agustin died, survived by herein private respondents, namely his wife, Florencia
Buling Vda. de Tinagan and their children Demosthenes, Jesus, Zenaida and Josephine, all surnamed Tinagan.
On December 24, 1976, petitioner Editha assisted by her husband filed a complaint for partition and damages before the then Court of First
Instance of Negros Oriental, Branch 1, Dumaguete City, docketed as Civil Case No. 6634, claiming to be an acknowledged natural child of
deceased Agustin Tinagan and demanding the delivery of her shares in the properties left by the deceased.[5]
On October 4, 1979, the aforesaid case was dismissed by the trial court on the ground that recognition of natural children may be brought
only during the lifetime of the presumed parent and petitioner Editha did not fall in any of the exceptions enumerated in Article 285 of the Civil
Code.[6]
Petitioners assailed the order of dismissal by filing a petition for certiorari and mandamus before this Court.[7] On August 9, 1982, this Court
dismissed the petition for lack of merit.[8]Petitioners filed a motion for reconsideration but the same was denied on October 19, 1982.[9]
On March 29, 1988, private respondents filed a complaint for recovery of possession against Editha and her husband Porferio Alviola before
the Regional Trial Court of Negros Oriental, Branch 35, Dumaguete City, docketed as Civil Case No. 9148, praying, among others, that they
be declared absolute owners of the said parcels of land, and that petitioners be ordered to vacate the same, to remove their copra dryer and
store, to pay actual damages (in the form of rentals), moral and punitive damages, litigation expenses and attorneys fees.[10]
In their answer, petitioners contend that they own the improvements in the disputed properties which are still public land; that they are
qualified to be beneficiaries of the comprehensive agrarian reform program and that they are rightful possessors by occupation of the said
properties for more than twenty years.[11]
After trial, the lower court rendered judgment in favor of the private respondents, the dispositive portion of which reads:
WHEREFORE, premises considered, in Civil Case No. 9148, for Recovery of Property, the court hereby renders judgment:
a) Declaring plaintiffs as the absolute owners of the land in question including the portion claimed and occupied by defendants;
b) Ordering defendants Editha Alviola and her husband Porfirio Alviola to peacefully vacate and to surrender the possession of the premises
in question to plaintiffs; Defendants may remove their store and dryer on the premises without injury and prejudice to the plaintiffs;
c) Ordering defendants to pay the following amounts to the plaintiffs:
1. P150.00 monthly rentals from April 1988 up to the time the improvements in the questioned portions are removed;
2. P5,000.00 for attorneys fees;
3. P3,000.00 for litigation expenses and to pay the costs.
SO ORDERED.[12]
Petitioners appealed to the Court of Appeals. On April 8, 1994, the respondent court rendered its decision,[13] affirming the judgment of the
lower court. Petitioners filed a motion for reconsideration[14] but the same was denied by the respondent court in an order dated October 6,
1994.[15]
Hence, this petition.
Petitioners aver that respondent court erred in declaring private respondents the owners of the disputed properties. They contend that
ownership of a public land cannot be declared by the courts but by the Executive Department of the Government, citing the case of Busante
vs. Hon. Court of Appeals, Oct. 20, 1992, 214 SCRA 774; and that the respondent court erred in not considering that private respondents
predecessor-in-interest, Victoria Sonjaco Tinagan, during her lifetime, ceded her right to the disputed properties in favor of petitioners.
Moreover, petitioners maintain that the respondent court erred in holding that they were in bad faith in possessing the disputed properties and
in ruling that the improvements thereon are transferable. They claim that the copra dryer and the store are permanent structures, the walls
thereof being made of hollow-blocks and the floors made of cement.
Private respondents counter that the question of whether or not the disputed properties are public land has been resolved by overwhelming
evidence showing ownership and possession by the Tinagans and their predecessors-in-interest prior to 1949. They further aver that they

Property 137
merely tolerated petitioners possession of the disputed properties for a period which was less than that required for extraordinary
prescription.
The petition must fail.
Petitioners claim that the disputed properties are public lands. This is a factual issue. The private respondents adduced overwhelming
evidence to prove their ownership and possession of the two (2) parcels of land on portions of which petitioners built the copra dryer and a
store. Private respondents tax declarations and receipts of payment of real estate taxes, as well as other related documents, prove their
ownership of the disputed properties. As stated previously in the narration of facts, these two (2) parcels of land were originally owned by
Mauro Tinagan, who sold the same to Victoria S. Tinagan on April 1, 1950, as evidenced by a Deed of Sale,[16] wherein the two (2) lots,
Parcels 1 and 2, are described.[17] Anent Parcel 1, tax declarations indicate that the property has always been declared in the name of the
Tinagans. The first, Tax Declaration No. 3335[18] is in the name of Mauro Tinagan. It was thereafter cancelled by Tax Declaration No. 19534
effective 1968,[19] still in the name of Mauro. This declaration was cancelled by Tax Declaration No. 016740 now in the name of Agustin
Tinagan,[20] effective 1974, followed by Tax Declaration No. 08-421 in the name of Jesus Tinagan, effective 1980;[21] and finally by Tax
Declaration No. 08-816 in the name of Jesus Tinagan, effective 1985.[22]
With regard to Parcel 2, private respondents presented Tax Declaration No. 20973 in the name of Mauro Tinagan, effective 1959,[23] Tax
Declaration No. 016757, effective 1974;[24] Tax Declaration No. 08-405-C in the name of Agustin Tinagan, effective 1980[25] and Tax
Declaration No. 08-794 in the name of Agustin Tinagan, effective 1985.[26] Moreover, the realty taxes on the two lots have always been paid
by the private respondents.[27] There can be no doubt, therefore, that the two parcels of land are owned by the private respondents.
The record further discloses that Victoria S. Tinagan and her son, Agustin Tinagan, took possession of the said properties in 1950,
introduced improvements thereon, and for more than 40 years, have been in open, continuous, exclusive and notorious occupation thereof in
the concept of owners.
Petitioners own evidence recognized the ownership of the land in favor of Victoria Tinagan. In their tax declarations,[28] petitioners stated
that the house and copra dryer are located on the land of Victoria S. Tinagan/Agustin Tinagan. By acknowledging that the disputed portions
belong to Victoria/Agustin Tinagan in their tax declarations, petitioners claim as owners thereof must fail.
The assailed decision of the respondent court states that Appellants do not dispute that the two parcels of land subject matter of the present
complaint for recovery of possession belonged to Victoria S. Tinagan, the grandmother of herein plaintiffs-appellees; that Agustin Tinagan
inherited the parcels of land from his mother Victoria; and that plaintiffs-appellees, in turn, inherited the same from Agustin.[29]
Taking exception to the aforequoted finding, petitioners contend that while the 2 parcels of land are owned by private respondents, the
portions wherein the copra dryers and store stand were ceded to them by Victoria S. Tinagan in exchange for an alleged indebtedness of
Agustin Tinagan in the sum of P7,602.04.[30]
This claim of the petitioners was brushed aside by the respondent court as merely an afterthought, thus -
Appellants claim that they have acquired ownership over the floor areas of the store and dryer 'in consideration of the account of Agustin
Tinagan in the sum of P7,602.04' is not plausible. It is more of an 'after-thought' defense which was not alleged in their answer. Although the
evidence presented by them in support of this particular claim was not duly objected to by counsel for appellees at the proper time and
therefore deemed admissible in evidence, an examination of the oral and documentary evidence submitted in support thereof, reveals the
weakness of their claim.
Appellant testified that the areas on which their store and dryer were located were exchanged for the amount of P7,602.04 owed to them by
Agustin in 1967 (TSN, Hearing of April 14, 1989, p. 9); that he did not bother to execute a document reflecting such agreement `because they
were our parents and we had used the land for quite sometime already they had also sold their copra to us for a long time. (Id.) Yet, as earlier
discussed, the tax declarations in appellants answer show that even after 1967, they expressly declared that the parcels of land on which
their store and dryer were constructed, belonged to Victoria and Agustin (Exhs. 2-A, 2-B, 2-C, 3-A, 3-B). If appellants really believed that they
were in possession of the said particular areas in the concept of owners, they could have easily declared it in said tax declarations.[31]
Concededly, petitioners have been on the disputed portions since 1961. However, their stay thereon was merely by tolerance on the part of
the private respondents and their predecessor-in-interest. The evidence shows that the petitioners were permitted by Victoria Sanjoco
Tinagan to build a copra dryer on the land when they got married. Subsequently, petitioner Editha Alviola, claiming to be the illegitimate
daughter of Agustin Tinagan, filed a petition for partition demanding her share in the estate of the deceased Agustin Tinagan on December 6,
1976. However, the petition was dismissed since it was brought only after the death of Agustin Tinagan. This Court dismissed the petition for
certiorari and mandamus filed by petitioner Editha Alviola on August 9, 1982. It was on March 29, 1988, when private respondents filed this
complaint for recovery of possession against petitioners. Considering that the petitioners occupation of the properties in dispute was merely
tolerated by private respondents, their posture that they have acquired the property by occupation for 20 years does not have any factual or
legal foundation.
As correctly ruled by the respondent court, there was bad faith on the part of the petitioners when they constructed the copra dryer and store
on the disputed portions since they were fully aware that the parcels of land belonged to Victoria Tinagan. And, there was likewise bad faith
on the part of the private respondents, having knowledge of the arrangement between petitioners and Victoria Tinagan relative to the
construction of the copra dryer and store. Thus, for purposes of indemnity, Article 448 of the New Civil Code should be applied.[32] However,
the copra dryer and the store, as determined by the trial court and respondent court, are transferable in nature. Thus, it would not fall within
the coverage of Article 448. As the noted civil law authority, Senator Arturo Tolentino, aptly explains: To fall within the provision of this Article,
the construction must be of permanent character, attached to the soil with an idea of perpetuity; but if it is of a transitory character or is
transferable, there is no accession, and the builder must remove the construction. The proper remedy of the landowner is an action to eject
the builder from the land.[33]
The private respondents action for recovery of possession was the suitable solution to eject petitioners from the premises.
WHEREFORE, this petition should be, as it is hereby, DISMISSED. The assailed decision is hereby AFFIRMED.
SO ORDERED.
Regalado, (Chairman), Melo, Puno, and Mendoza, JJ., concur.

Property 138
G.R. No. L-33422 May 30, 1983
ROSENDO BALUCANAG, petitioner,
vs.
HON. JUDGE ALBERTO J. FRANCISCO and RICHARD STOHNER, respondents.
Alfredo C. Estrella for petitioner.
Pascual C. Garcia for respondents.

ESCOLIN, J.:
This petition for review of the decision of the Court of First Instance of Manila in Civil Case No. 67503 calls for a determination of the
respective rights of the lessor and the lessee over the improvements introduced by the latter in the leased premises.
Cecilia dela Cruz Charvet was the owner of a 177.50 square meter lot located in Zamora Street, Pandacan, Manila, covered by Transfer
Certificate of Title No. 25664. On August 31, 1952, Mrs. Charvet leased said lot to respondent Richard Stohner for a period of five [5] years at
the monthly rental of 2140.00, payable in advance within the first ten [10] days of each month. The lease contract 1 provided, among others,
that:
IV. The lessee may erect such buildings upon and make such improvements to the leased land as he shag see fit. All such buildings and
improvements shall remain the property of the lessee and he may remove them at any nine, it being agreed, however, that should he not
remove the said buildings and improvements within a period of two months after the expiration of this Agreement, the Lessor may remove the
said buildings and improvements or cause them to be removed at the expense of the Lessee.
During the existence of the lease, Stohner made fillings on the land and constructed a house thereon, said improvements being allegedly
valued at P35,000.00.
On March 8, 1966, Mrs. Charvet sold the said lot to petitioner Rosendo Balucanag.2
For Stohner's failure to pay the rents, Balucanag, thru counsel, wrote Stohner a letter demanding that he vacate the premises. 3 In reply
thereto, Stohner, also thru counsel, claimed that he was a builder in good faith of the residential house erected in the land. He offered the
following proposals for a possible compromise, to wit:
[a] Mr. Stohner will purchase the said lot from your client with the interest of 12% per annum on the value, or
[b] Your client Mr. Rosendo Balucanag will reimburse our client in the total amount of P35,000.00 for the improvements and construction he
has made on the lot in question.
As no agreement was reached, Balucanag instituted in the City Court of Manila an ejectment suit against Stohner and, after due trial, the
court rendered a decision, the decretal portion of which reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby rendered, ordering the defendant to pay the plaintiff the sum of
P360.00 as back rentals from December, 1965 to August 1966 at the rate of P40.00 a month and to vacate the premises. The defendant is
further ordered to pay the sum of P100.00 as Attomey's fees which is considered reasonable within the premises.
On appeal, the Court of First Instance of Manila, Branch IX, presided by respondent Judge Alberto J. Francisco, after conducting a trial de
novo, rendered a decision, setting aside the judgment of the city court and dismissing the petitioner's complaint. Respondent judge held that
Stohner was a builder in good faith because he had constructed the residential house with the consent of the original lessor, Mrs. Charvet,
and also because the latter, after the expiration of the lease contract on August 31, 1957, had neither sought Stohner's ejectment from the
premises, nor the removal of his house therefrom. Invoking Articles 448 and 546 of the Civil Code. 4 respondent judge concluded that
Stohner, being a builder in good faith, cannot be ejected until he is reimbursed of the value of the improvements.
Frustrated in his effort to have the decision reconsidered, Balucanag filed the instant petition for review.
We find the petition impressed with merit. Paragraph IV of the lease contract entered into by Stohner with Mrs. Charvet specifically provides
that "... such buildings and improvements shan remain the property of the lessee and he may remove them at any time, it being agreed,
however, that should he not remove the said buildings and improvements within a period of two months after the expiration of this
Agreement, the Lessor may remove the said buildings and improvements or cause them to be removed at the expense of the Lessee."
Respondent Stohner does not assail the validity of this stipulation, Neither has he advanced any reason why he should not be bound by it.
But even in the absence of said stipulation, respondent Stohner cannot be considered a builder in good faith. Article 448 of the Civil Code,
relied upon by respondent judge, applies only to a case where one builds on land in the belief that he is the owner thereof and it does not
apply where one's only interest in the land is that of a lessee under a rental contract. In the case at bar, there is no dispute that the relation
between Balucanag and Stohner is that of lessor and lessee, the former being the successor in interest of the original owner of the lot. As we
ruled in Lopez, Inc. vs. Phil. and Eastern Trading Co., Inc., 5 "... the principle of possessor in good faith refers only to a party who occupies or
possess property in the belief that he is the owner thereof and said good faith ends only when he discovers a flaw in his title so as to
reasonably advise or inform him that after all he may not be the legal owner of said property. It cannot apply to a lessee because as such
lessee he knows that he is not the owner of he leased premises. Neither can he deny the ownership or title of his lessor. ... A lessee who
introduces improvements in the leased premises, does so at his own risk in the sense that he cannot recover their value from the lessor,
much less retain the premises until such reimbursement. ..."
The law applicable to the case at bar is Article 1678 of the Civil Code, which We quote:
Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without
altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of
the improvements at the time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though
the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is
necessary. ...
This article gives the lessor the option to appropriate the useful improvements by paying one-half of their value, 6And the lessee cannot
compel the lessor to appropriate the improvements and make reimbursement, for the lessee's right under the law is to remove the
improvements even if the leased premises may suffer damage thereby. But he shall not cause any more damage upon the property than is
necessary.

Property 139
One last point. It appears that while the lease contract entered into by Stohner and Mrs. Charvet had expired on August 31, 1957, he
nevertheless continued in possession of the premises with the acquiescence of Mrs. Charvet and later, of Balucanag. An implied new lease
or tacita reconduccion was thus created between the parties, the period of which is established by Article 1687 of the Civil Code thus:
Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month
to month, if it is monthly: from week to week, if the rent is weekly: and from day to day, if the rent is to be paid daily. ...
Under the above article, the duration of the new lease must be deemed from month to month, the agreed rental in the instant case being
payable on a monthly basis. The lessor may thus terminate the lease after each month with due notice upon the lessee. After such notice, the
lessee's right to continue in possession ceases and his possession becomes one of detainer. Furthermore, Stohner's failure to pay the
stipulated rentals entities petitioner to recover possession of the premises.
WHEREFORE, the decision in Civil Case No. 67503 is hereby set aside, with costs against respondent Stohner. The latter is ordered to
vacate the premises in question and to pay Rogelio Balucanag the rentals due from March 1969 up to the time he surrenders the premises,
at the rate of P40.00 a month.
SO ORDERED.
Makasiar (Chairman), Aquino, Concepcion, Jr., and Guerrero, JJ., concur.
De Castro, J., took no part.

Separate Opinions

ABAD SANTOS, J., concurring and dissenting:

I concur in setting aside the decision in Civil Case No. 67503 of the defunct Court of First Instance of Manila; and in ordering the respondent
Stohner to pay the costs, to vacate the premises in question, and to pav the petitioner the rentals due from March 1969 to the time he
surrenders the premises at the rate of P40.00 monthly. However, I cannot give my assent to that portion of the judgment with respect to the
house constructed by Stohner.
Stohner as a lessee is not a builder in good faith. This is elementary in property law.
Article 1678 of the Civil Code concerning improvements made by the lessee on the leased premises applies only in the absence of stipulation
on the matter between the lessor and the lessee. In the instant case theres such a stipulation. A copy of the Lease Agreement which is found
on page 13 of the Rollo reads:
IV. The lessee may erect such buildings upor and make such improvements to the leased land as he shall see fit. AR such buildings and
improvements shall remain the property of the lessee and he may remove them at any nine, it being agreed, however, that should he not
remove the 96d buildings and improvements within a period of two months after the expiration of this Agreement, the Lessor may remove the
said buildings and improvements or cause them to be removed at the expense of the Lessee.
The above-quoted stipulation has the force of law between the parties (Art. 1159, Civil Code) and supersedes Art. 1678 of the Civil Code.
Accordingly, the judgment with respect to the house which was constructed by Stohner should be in line with the contract of lease.

Separate Opinions
ABAD SANTOS, J., concurring and dissenting:
I concur in setting aside the decision in Civil Case No. 67503 of the defunct Court of First Instance of Manila; and in ordering the respondent
Stohner to pay the costs, to vacate the premises in question, and to pav the petitioner the rentals due from March 1969 to the time he
surrenders the premises at the rate of P40.00 monthly. However, I cannot give my assent to that portion of the judgment with respect to the
house constructed by Stohner.
Stohner as a lessee is not a builder in good faith. This is elementary in property law.
Article 1678 of the Civil Code concerning improvements made by the lessee on the leased premises applies only in the absence of stipulation
on the matter between the lessor and the lessee. In the instant case theres such a stipulation. A copy of the Lease Agreement which is found
on page 13 of the Rollo reads:
IV. The lessee may erect such buildings upor and make such improvements to the leased land as he shall see fit. AR such buildings and
improvements shall remain the property of the lessee and he may remove them at any nine, it being agreed, however, that should he not
remove the 96d buildings and improvements within a period of two months after the expiration of this Agreement, the Lessor may remove the
said buildings and improvements or cause them to be removed at the expense of the Lessee.
The above-quoted stipulation has the force of law between the parties (Art. 1159, Civil Code) and supersedes Art. 1678 of the Civil Code.
Accordingly, the judgment with respect to the house which was constructed by Stohner should be in line with the contract of lease.
Footnotes
1 Annex B, p. 13, Rollo.
2 p. 68, Rollo.
3 p. 72, Rollo.
4 "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."
"Art. 546. Necessary expenses shall be refunded to everv pnssessor: but only the possessor in good faith mav retain the thing until he has
been reimbursed thereof. ...
5 98 Phil. 348.
Property 140
6 Lapeña vs. Judge Morfe, et al., 101 Phil. 997.
SECOND DIVISION

[G.R. No. 134329. January 19, 2000]

VERONA PADA-KILARIO and RICARDO KILARIO petitioners, vs. COURT OF APPEALS and SILVERIO PADA,
respondents.
DECISION
DE LEON, JR., J.:
The victory[1] of petitioner spouses Ricardo and Verona Kilario in the Municipal Circuit Trial Court[2] in an ejectment suit[3] filed against them
by private respondent Silverio Pada, was foiled by its reversal[4] by the Regional Trial Court[5] on appeal. They elevated their cause[6] to
respondent Court of Appeals[7] which, however, promulgated a Decision[8] on May 20, 1998, affirming the Decision of the Regional Trial
Court.
The following facts are undisputed:
One Jacinto Pada had six (6) children, namely, Marciano, Ananias, Amador, Higino, Valentina and Ruperta. He died intestate. His estate
included a parcel of land of residential and coconut land located at Poblacion, Matalom, Leyte, denominated as Cadastral Lot No. 5581 with
an area of 1,301.92 square meters. It is the northern portion of Cadastral Lot No. 5581 which is the subject of the instant controversy.
During the lifetime of Jacinto Pada, his half-brother, Feliciano Pada, obtained permission from him to build a house on the northern portion of
Cadastral Lot No. 5581. When Feliciano died, his son, Pastor, continued living in the house together with his eight children. Petitioner Verona
Pada-Kilario, one of Pastor's children, has been living in that house since 1960.
Sometime in May, 1951, the heirs of Jacinto Pada entered into an extra-judicial partition of his estate. For this purpose, they executed a
private document which they, however, never registered in the Office of the Registrar of Deeds of Leyte.
At the execution of the extra-judicial partition, Ananias was himself present while his other brothers were represented by their children. Their
sisters, Valentina and Ruperta, both died without any issue. Marciano was represented by his daughter, Maria; Amador was represented by
his daughter, Concordia; and Higino was represented by his son, Silverio who is the private respondent in this case. It was to both Ananias
and Marciano, represented by his daughter, Maria, that Cadastral Lot No. 5581 was allocated during the said partition. When Ananias died,
his daughter, Juanita, succeeded to his right as co-owner of said property.
On June 14, 1978, Juanita Pada sold to Engr. Ernesto Paderes, the right of his father, Ananias, as co-owner of Cadastral Lot No. 5881.
On November 17, 1993, it was the turn of Maria Pada to sell the co-ownership right of his father, Marciano. Private respondent, who is the
first cousin of Maria, was the buyer.
Thereafter, private respondent demanded that petitioner spouses vacate the northern portion of Cadastral Lot No. 5581 so his family can
utilize the said area. They went through a series of meetings with the barangay officials concerned for the purpose of amicable settlement,
but all earnest efforts toward that end, failed.
On June 26, 1995, private respondent filed in the Municipal Circuit Trial Court of Matalom, Leyte, a complaint for ejectment with prayer for
damages against petitioner spouses.
On July 24, 1995, the heirs of Amador Pada, namely, Esperanza Pada-Pavo, Concordia Pada-Bartolome, and Angelito Pada, executed a
Deed of Donation[9] transferring to petitioner Verona Pada-Kilario, their respective shares as co-owners of Cadastral Lot No. 5581.
On February 12, 1996, petitioner spouses filed their Answer averring that the northern portion of Cadastral Lot No. 5581 had already been
donated to them by the heirs of Amador Pada. They contended that the extra-judicial partition of the estate of Jacinto Pada executed in 1951
was invalid and ineffectual since no special power of attorney was executed by either Marciano, Amador or Higino in favor of their respective
children who represented them in the extra-judicial partition. Moreover, it was effectuated only through a private document that was never
registered in the office of the Registrar of Deeds of Leyte.
The Municipal Circuit Trial Court rendered judgment in favor of petitioner spouses. It made the following findings:
"After a careful study of the evidence submitted by both parties, the court finds that the evidence adduced by plaintiff failed to establish

his ownership over x x x Cadastral Lot No. 5581 x x x while defendants has [sic] successfully proved by preponderance of evidence that said
property is still under a community of ownership among the heirs of the late Jacinto Pada who died intestate. If there was some truth that
Marciano Pada and Ananias Pada has [sic] been adjudicated jointly of [sic] the above-described residential property x x x as their share of
the inheritance on the basis of the alleged extra judicial settlement, how come that since 1951, the date of partition, the share of the late
Marciano Pada was not transferred in the name of his heirs, one of them Maria Pada-Pavo and still remain [sic] in the name of Jacinto Pada
up to the present while the part pertaining to the share of Ananias Pada was easily transferred in the name of his heirs x x x.
"The alleged extra judicial settlement was made in private writing and the genuineness and due execution of said document was assailed as
doubtful and it appears that most of the heirs were not participants and signatories of said settlement, and there was lack of special power of
attorney to [sic] those who claimed to have represented their co-heirs in the participation [sic] and signing of the said extra judicial
statement.
"Defendants were already occupying the northern portion of the above-described property long before the sale of said property on November
17, 1993 was executed between Maria Pada-Pavo, as vendor and the plaintiff, as vendee. They are in possession of said portion of the
above-described property since the year 1960 with the consent of some of the heirs of Jacinto Pada and up to the [sic] present some of the
heirs of Jacinto Pada has [sic] donated x x x their share of [sic] the above-described property to them, virtually converting defendants'
standing as co-owners of the land under controversy. Thus, defendants as co-owners became the undivided owners of the whole estate x x
x. As co-owners of x x x Cadastral Lot No. 5581 x x x their possession in the northern portion is being [sic] lawful."[10]
From the foregoing decision, private respondent appealed to the Regional Trial Court. On November 6, 1997, it rendered a judgment of
reversal. It held:
"x x x [T]he said conveyances executed by Juanita Pada and Maria Pada Pavo were never questioned or assailed by their co-heirs for more
than 40 years, thereby lending credence on [sic] the fact that the two vendors were indeed legal and lawful owners of properties ceded or

Property 141
sold. x x x At any rate, granting that the co-heirs of Juanita Pada and Maria Pada Pavo have some interests on the very lot assigned to
Marciano and Ananias, nevertheless, said interests had long been sadly lost by prescription, if not laches or estoppel.
"It is true that an action for partition does not prescribe, as a general rule, but this doctrine of imprescriptibility cannot be invoked when one of
the heirs possessed the property as an owner and for a period sufficient to acquire it by prescription because from the moment one of the co-
heirs claim [sic] that he is the absolute owner and denies the rest their share of the community property, the question then involved is no
longer one for partition but of ownership. x x x Since [sic] 1951 up to 1993 covers a period of 42 long years. Clearly, whatever right some of
the co-heirs may have, was long extinguished by laches, estoppel or prescription.
"x x x
"x x x [T]he deed of donation executed by the Heirs of Amador Pada, a brother of Marciano Pada, took place only during the inception of the
case or after the lapse of more than 40 years reckoned from the time the extrajudicial partition was made in 1951. Therefore, said donation is
illegal and invalid [sic] the donors, among others, were absolutely bereft of any right in donating the very property in question."[11]
The dispositive portion of the decision of the Regional Trial Court reads as follows:
"WHEREFORE, a judgment is hereby rendered, reversing the judgment earlier promulgated by the Municipal Circuit Trial Court of Matalom,
Leyte, [sic] consequently, defendants-appellees are hereby ordered:
"1. To vacate the premises in issue and return peaceful possession to the appellant, being the lawful possessor in concept of owner;
"2. To remove their house at their expense unless appellant exercises the option of acquiring the same, in which case the pertinent
provisions of the New Civil Code has to be applied;
"3. Ordering the defendants-appellees to pay monthly rental for their occupancy and use of the portion of the land in question in the sum of
P100.00 commencing on June 26, 1995 when the case was filed and until the termination of the present case;
"4. Ordering the defendants to pay to the appellant the sum of P5,000.00 as moral damages and the further sum of P5,000.00 as attorney's
fees;
"5. Taxing defendants to pay the costs of suit."[12]
Petitioners filed in the Court of Appeals a petition for review of the foregoing decision of the Regional Trial Court.
On May 20, 1998, respondent Court of Appeals rendered judgment dismissing said petition. It explained:
"Well-settled is the rule that in an ejectment suit, the only issue is possession de facto or physical or material possession and not de jure.
Hence, even if the question of ownership is raised in the pleadings, the court may pass upon such issue but only to determine the question of
possession, specially if the former is inseparably linked with the latter. It cannot dispose with finality the issue of ownership, such issue being
inutile in an ejectment suit except to throw light on the question of possession x x x.
"Private respondent Silverio Pada anchors his claim to the portion of the land possessed by petitioners on the Deed of Sale executed in his
favor by vendor Maria Pada-Pavo, a daughter of Marciano, son of Jacinto Pada who was the registered owner of the subject lot. The right of
vendee Maria Pada to sell the property was derived from the extra-judicial partition executed in May 1951 among the heirs of Jacinto Pada,
which was written in a Bisayan dialect signed by the heirs, wherein the subject land was adjudicated to Marciano, Maria Pavo's father, and
Ananias Pada. Although the authenticity and genuineness of the extra-judicial partition is now being questioned by the heirs of Amador Pada,
no action was ever previously filed in court to question the validity of such partition.
"Notably, petitioners in their petition admitted among the antecedent facts that Maria Pavo is one of the co-owners of the property originally
owned by Jacinto Pada x x x and that the disputed lot was adjudicated to Marciano (father of Maria Pavo) and Ananias, and upon the death
of Marciano and Ananias, their heirs took possession of said lot, i.e. Maria Pavo the vendor for Marciano's share and Juanita for Ananias'
share x x x. Moreover, petitioners do not dispute the findings of the respondent court that during the cadastral survey of Matalom, Leyte, the
share of Maria Pada Pavo was denominated as Lot No. 5581, while the share of Juanita Pada was denominated as Lot No. 6047, and that
both Maria Pada Pavo and Juanita were in possession of their respective hereditary shares. Further, petitioners in their Answer admitted that
they have been occupying a portion of Lot No. 5581, now in dispute without paying any rental owing to the liberality of the plaintiff x x x.
Petitioners cannot now impugn the aforestated extrajudicial partition executed by the heirs in 1951. As owner and possessor of the disputed
property, Maria Pada, and her vendee, private respondent, is entitled to possession. A voluntary division of the estate of the deceased by the
heirs among themselves is conclusive and confers upon said heirs exclusive ownership of the respective portions assigned to them x x x.
"The equally belated donation of a portion of the property in dispute made by the heirs of Amador Pada, namely, Concordia, Esperanza and
Angelito, in favor of petitioner Verona Pada is a futile attempt to confer upon the latter the status of co-owner, since the donors had no
interest nor right to transfer. x x x This gesture appears to be a mere afterthought to help petitioners to prolong their stay in the premises.
Furthermore, the respondent court correctly pointed out that the equitable principle of laches and estoppel come into play due to the donors'
failure to assert their claims and alleged ownership for more than forty (40) years x x x. Accordingly, private respondent was subrogated to
the rights of the vendor over Lot No. 5581 which include [sic] the portion occupied by petitioners."[13]
Petitioner spouses filed a Motion for Reconsideration of the foregoing decision.
On June 16, 1998, respondent Court of Appeals issued a Resolution denying said motion.
Hence this petition raising the following issues:
"I.
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT PETITIONERS, AS CO-OWNERS, CANNOT BE EJECTED FROM
THE PREMISES CONSIDERING THAT THE HEIRS OF JACINTO PADA DONATED TO THEM THEIR UNDIVIDED INTEREST IN THE
PROPERTY IN DISPUTE.
"II.
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT WHAT MARIA PADA SOLD WAS HER UNDIVIDED SHARE IN
THE PROPERTY IN DISPUTE.
"III.
WHETHER OR NOT THE PETITIONERS ARE BUILDERS IN GOOD FAITH."[14]
There is no merit to the instant petition.
First. We hold that the extrajudicial partition of the estate of Jacinto Pada among his heirs made in 1951 is valid, albeit executed in an
unregistered private document. No law requires partition among heirs to be in writing and be registered in order to be valid.[15] The
Property 142
requirement in Sec. 1, Rule 74 of the Revised Rules of Court that a partition be put in a public document and registered, has for its purpose
the protection of creditors and the heirs themselves against tardy claims.[16] The object of registration is to serve as constructive notice to
others. It follows then that the intrinsic validity of partition not executed with the prescribed formalities is not undermined when no creditors
are involved.[17] Without creditors to take into consideration, it is competent for the heirs of an estate to enter into an agreement for
distribution thereof in a manner and upon a plan different from those provided by the rules from which, in the first place, nothing can be
inferred that a writing or other formality is essential for the partition to be valid.[18] The partition of inherited property need not be embodied in
a public document so as to be effective as regards the heirs that participated therein.[19] The requirement of Article 1358 of the Civil Code
that acts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property, must
appear in a public instrument, is only for convenience, non-compliance with which does not affect the validity or enforceability of the acts of
the parties as among themselves.[20] And neither does the Statute of Frauds under Article 1403 of the New Civil Code apply because
partition among heirs is not legally deemed a conveyance of real property, considering that it involves not a transfer of property from one to
the other but rather, a confirmation or ratification of title or right of property that an heir is renouncing in favor of another heir who accepts and
receives the inheritance.[21] The 1951 extrajudicial partition of Jacinto Pada's estate being legal and effective as among his heirs, Juanita
and Maria Pada validly transferred their ownership rights over Cadastral Lot No. 5581 to Engr. Paderes and private respondent,
respectively.[22]
Second. The extrajudicial partition which the heirs of Jacinto Pada executed voluntarily and spontaneously in 1951 has produced a legal
status.[23] When they discussed and agreed on the division of the estate of Jacinto Pada, it is presumed that they did so in furtherance of
their mutual interests. As such, their division is conclusive, unless and until it is shown that there were debts existing against the estate which
had not been paid.[24] No showing, however, has been made of any unpaid charges against the estate of Jacinto Pada. Thus, there is no
reason why the heirs should not be bound by their voluntary acts.
The belated act of Concordia, Esperanza and Angelito, who are the heirs of Amador Pada, of donating the subject property to petitioners
after forty four (44) years of never having disputed the validity of the 1951 extrajudicial partition that allocated the subject property to
Marciano and Ananias, produced no legal effect. In the said partition, what was allocated to Amador Pada was not the subject property which
was a parcel of residential land in Sto. Nino, Matalom, Leyte, but rather, one-half of a parcel of coconut land in the interior of Sto. Nino St.,
Sabang, Matalom, Leyte and one-half of a parcel of rice land in Itum, Sta. Fe, Matalom, Leyte. The donation made by his heirs to petitioners
of the subject property, thus, is void for they were not the owners thereof. At any rate it is too late in the day for the heirs of Amador Pada to
repudiate the legal effects of the 1951 extrajudicial partition as prescription and laches have equally set in.
Third. Petitioners are estopped from impugning the extrajudicial partition executed by the heirs of Jacinto Pada after explicitly admitting in
their Answer that they had been occupying the subject property since 1960 without ever paying any rental as they only relied on the liberality
and tolerance of the Pada family.[25] Their admissions are evidence of a high order and bind them insofar as the character of their
possession of the subject property is concerned.
Considering that petitioners were in possession of the subject property by sheer tolerance of its owners, they knew that their occupation of
the premises may be terminated any time. Persons who occupy the land of another at the latter's tolerance or permission, without any
contract between them, is necessarily bound by an implied promise that they will vacate the same upon demand, failing in which a summary
action for ejectment is the proper remedy against them.[26] Thus, they cannot be considered possessors nor builders in good faith. It is well-
settled that both Article 448[27] and Article 546[28] of the New Civil Code which allow full reimbursement of useful improvements and
retention of the premises until reimbursement is made, apply only to a possessor in good faith, i.e., one who builds on land with the belief that
he is the owner thereof.[29] Verily, persons whose occupation of a realty is by sheer tolerance of its owners are not possessors in good faith.
Neither did the promise of Concordia, Esperanza and Angelito Pada that they were going to donate the premises to petitioners convert them
into builders in good faith for at the time the improvements were built on the premises, such promise was not yet fulfilled, i.e., it was a mere
expectancy of ownership that may or may not be realized.[30] More importantly, even as that promise was fulfilled, the donation is void for
Concordia, Esperanza and Angelito Pada were not the owners of Cadastral Lot No. 5581. As such, petitioners cannot be said to be entitled to
the value of the improvements that they built on the said lot.
WHEREFORE, the petition for review is HEREBY DENIED.
Costs against petitioners.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.2/17/00 9:53 AM

G.R. No. L-25359 September 28, 1968

ARADA LUMUNGO, JUHURI DAWA, ET AL., petitioners, vs.
ASAAD USMAN, JOSE ANGELES and DOMINGA USMAN, ET AL., respondents.
Dominador Sobreviñas for petitioners.
Marciano Almario for respondents.
CONCEPCION, C.J.:
Review on certiorari of a decision of the Court of Appeals, on appeal from a decision of the Court of First Instance of Sulu in Civil Cases Nos.
155 and 156 of said court, both instituted by plaintiffs herein, Arada Lumungo (deceased), substituted by her heirs, Juhuri Dawa, Kayajuja,
Sadatul, Sarapatul, Jaramatul, Alma, Kalukasa and Vicente, all surnamed Juhuri to recover the possession of lot No. 871 of the Siasi
Cadastre, in the first case, and in the second, of lots Nos. 892, 893, 894 and 1121 of the same cadastre. The defendants in case No. 155 are
Asaad Usman, Akmadul and Hada, whereas those in case No. 156 are Asaad Usman, Fatima Angeles, Hadjaratul Julkanain, Inkiran and Sitti
Haridja, who were subsequently joined by Dominga Usman and Jose Angeles, as defendants-intervenors.
After a joint trial of the two (2) cases, the Court of First Instance of Sulu rendered a decision, the dispositive part of which reads as follows:
WHEREFORE, judgment is hereby rendered declaring plaintiffs to have a better right to the possession of Lots Nos. 892, 893, 894, 1121 and
871, Siasi and Lapak Cadastral Survey, located at Lapak, Siasi, Sulu and described in Transfer Certificates of Title Nos. T-419, T-422, T-420
Property 143
and T-421 and Original Certificate of Title No. 8023. The defendants are ordered to vacate said lots in favor of the plaintiffs if they have not
already done so.
On the other hand, the plaintiffs are ordered to reimburse to the defendant-intervenor, JOSE ANGELES, the sum of P4,500.00 representing
the value of the 3,000 coconut trees introduced by him and his predecessors in interest on Lots 892, 893 and 894. Should plaintiffs fail to do
so within ninety (90) days from the date this decision becomes final, the three lots shall be ordered sold at public auction, the proceeds of
which shall be applied to the P4,500.00 herein adjudged to Jose Angeles, and the balance to be delivered to the plaintiffs.
Both parties appealed from this decision to the Court of Appeals, but, later, the defendants withdrew their appeal, which, accordingly, was
dismissed. Thus the only question left for determination by the Court of Appeals was plaintiffs' appeal from the trial court's decision, insofar
as it sentenced them to pay P4,500.00 to intervenor Jose Angeles. After appropriate proceedings, the Court of Appeals reduced this amount
to P2,500.00 and affirmed the decision of the Court of First Instance in all other respects, with costs against defendants-intervenors. The
case is now before us upon petition for review on certiorari filed by the plaintiffs.
The pertinent facts are set forth in the decision of the trial court, which were adopted in that of the Court of Appeals, from which we quote:
It ... appears that, having allegedly collaborated with the enemy during the Japanese Occupation of Sulu, Datu Idiris Amilhussin was arrested
and detained when the American Liberation Forces came to Sulu in the year 1945. On March 1, 1946, Datu Idiris was prosecuted for Treason
before the People's Court, docketed as Criminal Case No. 1334 in said Court. Justice of the Peace Asaad Usman of Siasi and his wife
Dominga Usman, became interested in Lots Nos. 892, 893, 894, 1121 and 871. Jamasali Usman, brother of Atty. Asaad Usman, also
became interested in Lot No. 1226(?). Datu Idiris was desperately in need of money to pay his attorney's fees and the premium on his
bailbond. He sent his wife to Jamasali for money. Jamasali proposed to buy Lot No. 1227(?). Upon the execution of a Pacto de Retro sale
(Exhibit "DDD"), Jamasali gave Datu Idiris partial payments of the P3,000.00 mentioned in the document. Sometime in the year 1946, Atty.
Usman visited Datu Idiris in the Provincial jail and promised to help him in his case and to secure his bailbond for his temporary liberty. But
Atty. Usman asked Datu Idiris to sell to his wife, Dominga Miranda Usman, the five lots in question. Datu Idiris agreed.
Through the help of Atty. Usman, the bailbond of Datu Idiris was perfected. Consequently, on January 11, 1947, he was released from the
Provincial Jail. True to his word, on March 14, 1947, Datu Idiris executed an agreement with Dominga Usman (Exhibit "33"). He also caused
Datu Amirul Amilhussin, brother of Datu Idiris, to sign a similar document, being one of the co-owners of said lots (Exh. "34"). Upon execution
of the agreement, Dominga Usman paid Datu Idiris P300.00; subsequently, Atty. Usman paid him P500.00 and P10.00. Thus, Datu Idiris
received all in all from the spouses, P810.00 in consideration of the tenor stated in the document, Exhibit "33". In the meantime, Atty. Usman
took possession of the five lots in question and cultivated the same.
As the whole amount of P3,000.00 mentioned in the sale of Pacto de Retro executed by Datu Idiris in favor of Jamasali Usman was not fully
paid, Datu Idiris upon his being released from confinement, demanded from Jamasali to complete payment. He also demanded from Atty.
Usman the payment of the balance of the purchase price of the lots described in Exhibit "33". After Datu Idiris had been repeatedly refused
said payments by both Jamasali and Atty. Usman, he became exasperated. He wrote two complaints, one to the Secretary of Justice, dated
June 15, 1946, and the other, to the President of the Philippines, dated March 8, 1948, complaining against Justice of the Peace Asaad
Usman and Jamasali Usman. After filing these complaints, Justice of the Peace Usman immediately caused the revocation of the bailbond of
Datu Idiris before the People's Court. On March 31, 1948, he was rearrested and committed to the Provincial Jail again. A serious
misunderstanding developed between Datu Idiris on one hand and Atty. Usman and Jamasali Usman on the other. Several complaints for
murder were caused to be filed before the Court of Justice of the Peace Usman against Datu Idiris. In the meantime, Atty. Usman wrote
letters of demand upon Datu Idiris asking him to produce the titles to the above five lots to enable him to have a sufficient deed of sale
conveying the said five lots in favor of his wife. Datu Idiris on the other hand, had been demanding from Atty. Usman to pay the balance of
the purchase price of the land. Despite those mutual demands, no one complied therewith. On December 10, 1951, Datu Idiris proposed, thru
Atty. Flor, to call off the deal, stated in documents, Exhibits "33" and "34", promising to return the P810.00 which he received from the
spouses. Dominga Usman and Atty. Usman agreed to call off the deal. Datu Idiris however, never paid the P810.00. Despite this. Dominga
Usman and Atty. Usman never went to Court to file an action to compel Datu Idiris either to comply with his obligation to execute and deliver
a good and sufficient deed conveying titles to the five lots in question, or to pay back the P810.00. What Dominga Usman did when Datu
Idiris failed to pay her the P810.00 was to sell lots 892, 893 and 894 to Jose Angeles for P1,000.00. Jose Angeles, upon taking possession of
the land, planted same with coconuts, which, together with those already planted by Dominga Usman, numbered about 3,000, most of which
are now fruit-bearing.
On Feb. 2, 1962, Datu Idiris filed a civil complaint against Atty. Asaad Usman for recovery of possession of the five lots in question which was
docketed as Civil Case No. 87 of this Court. Atty. Usman, instead of informing the Court that he and his wife had the legal right to possess
those lots by virtue of the agreement had between Datu Idiris and his wife embodied in Exhibit "33", manifested in open Court on September
26, 1952, that he was not interested in the posession or ownership of the land, and that he did not buy the land from Datu Idiris. So, on said
date, this Court dictated an order as follows:
"In Open Court, when this case was called for hearing, the defendant Attorney Asaad Usman manifested that he does not claim ownership
nor possession to the two parcels of land described in paragraph 2 of the complaint of the plaintiff. Thereupon, the plaintiff (moved) the Court
to enter judgment, to which motion the defendant interposed no objection. Such being the case, the Court has no alternative but to enter
judgment as it is hereby entered in favor of the plaintiff Datu Idiris Amilhussin, and against the defendant — declaring the plaintiff the owner
and possessor of the two parcels of land above mentioned, and inasmuch as the defendant is not in possession of the land, the Court finds it
unnecessary to enter an order ejecting the said defendant from the two parcels of land, without prejudice to any claim of any other third party,
without pronouncement as to costs.
On the other hand, the defendant moved for the dismissal of his counterclaim. The Court orders the dismissal of the same, also without
pronouncement as to cost."1awphîl.nèt
Upon the promulgation of the above-quoted judgment, Datu Idiris, who was badly in need of money, went around, offering to sell the land to
another. Spouses Juhuri Dawa and Arada Lumungo being interested in acquiring those lots, asked Atty. Dominador Sobreviñas to verify if
they could buy the same. Atty. Sobreviñas went to the Office of the Register of Deeds and found no annotation of encumbrances on the
Original Certificates of Title of the five lots. Besides, since the Court had already adjudged in the above-quoted order that Atty. Usman did not
have any claim of possession or ownership over the land, and that he did not buy the land from Datu Idiris, Atty. Sobreviñas advised his
Property 144
clients that they may buy the lots. Accordingly, a deed of sale, Exhibits "L" to "L-2", was executed. Upon presentation of this deed of sale to
the Register of Deeds, Original Certificates of Title Nos. 8986, 8123, 8087 and 8122 were cancelled and in lieu thereof, Transfer Certificates
of Title Nos. T-419, T-420, T-422, and T-421 were issued in the names of the plaintiffs. Plaintiffs took possession of the property, but they
were allegedly driven from the land. About three years ago, the defendants left Lots Nos. 892, 893, 894 and 1121. Plaintiffs took possession
thereof. The defendants are still in possession of Lot No. 871.1
Defendants maintained in the Court of Appeals that the sale made by Datu Idiris Amilhussin to plaintiffs Arada Lumungo and Juhuri Dawa, on
September 30, 1952, is null and void because the lots thus sold had previously been conveyed by Datu Idiris and Datu Amirul Amilhussin to
intervenor Dominga Usman, wife of defendant Asaad Usman, and because the sale to said plaintiffs was not approved by the provincial
governor of Sulu, as required by the Administrative Code of Mindanao and Sulu. The Court of Appeals overruled these objections upon the
ground that the sale to Dominga Usman "did not materialize" and was "called off" by mutual agreement of the vendors and the vendee, and
that said lack of approval by the provincial governor is a defense available to the contracting parties only, not to the defendants herein who
are not parties to said transaction. Then the Court of Appeals went on to say:
Upon the other hand, it is to be noted that when intervenor Dominga Usman who claimed to have purchased the lots in question from one of
the original owners, sold and transferred her alleged ownership over the same to her co-intervenor Jose Angeles, the latter made the
purchase with the knowledge that the property subject matter of the sale was already in dispute by and between herein defendants, one of
whom is the husband of intervener Dominga Usman, on the one hand, and herein plaintiffs on the other. Nevertheless, as well stated by the
court a quo, equity should come in to protect the rights of intervenor Jose Angeles who introduced some improvements on three of the lots
subject-matter of the litigation, namely, lots Nos. 892, 893 and 894.
The Court found for a fact that around 3,000 coconut trees were planted on those lots aforementioned, some of them already fruit-bearing. It
appears from the records that not all, but a portion, of the 3,000 were planted by intervenor Jose Angeles. The value placed by the lower
court of P1.50 per fruit-bearing coconut tree is reasonable enough, inasmuch as the lower court was in a better position to make the
assessment, it being more closely in contact with the conditions and circumstances of the locality. We are not prepared to disturb such
finding for lack of evidence to warrant such an action on our part.
IN VIEW OF THE FOREGOING CONSIDERATIONS, with the only modification that the amount of indemnity should be reduced from
P4,500.00 to P2,500.00, the rest of the judgment appealed from is hereby affirmed with costs against defendants-intervenors.2
The only issue posed by plaintiffs' petition for review is whether or not Jose Angeles is entitled to reimbursement for the coconut trees
planted by him on the property in litigation. In this connection, it should be noted that said trees are improvements, not "necessary expenses
of preservation," which a builder, planter or sower in bad faith may recover under Arts. 452 and 546, first paragraph, of the Civil Code.
Upon the other hand, the Court of Appeals found as a fact that when Dominga Usman sold and transferred her rights in and to the property in
question to Jose Angeles "the latter made the purchase with the knowledge that the property subject matter of the sale was already in
dispute by and between herein defendants, one of whom is the husband of intervenor Dominga Usman, on the one hand, and herein plaintiffs
on the other." Angeles was, therefore, aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the title to the
property in question, which was an easy matter for him to ascertain, said property being registered under the Torrens System. 3
Indeed, Jose Angeles is a nephew of defendant Asaad Usman, and the controversy between the latter and Datu Idiris was a matter of public
knowledge, for Usman was a justice of the peace, and Datu Idiris had filed charges against him, as such, with the Department of Justice and
the Office of the President, to which Usman countered by causing the bail bond of Datu Idiris to be cancelled and his corresponding
reincarceration, as well as the filing of complaints for murder against him. Besides, on February 2, 1952, or several months prior to the sale to
Angeles on September 30, 1952, Datu Idiris had filed Civil Case No. 87 of the Court of First Instance of Sulu against Asaad Usman to
recover the lots in question, and the latter stated in that case, on September 26, 1952, or four (4) days before the aforementioned sale, that
he was not interested in either the possession or the ownership of said lots and that he had not bought the same from the former. It may not
be amiss to note, also, that at the time of the alleged sale in his favor, Jose Angeles was a law student; that, in fact, on August 9, 1957, he
entered his appearance as counsel for the defendants, in collaboration with Asaad Usman; and that the consideration for said sale, involving
a land of 46 hectares, was only P1,000.
In short, the foregoing facts, and the above-quoted findings of both the trial court and the Court of Appeals, leave no room for doubt that Jose
Angeles was a purchaser and a builder in bad faith. 4 The provision applicable to this case is, accordingly, Article 449 of the Civil Code,
which provides that, "(h)e who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to
indemnity."
Obviously, the alleged equity in favor of Jose Angeles, on which the lower courts have relied, cannot prevail over the aforementioned express
statutory provision to the contrary, 5 apart from the fact that he who seeks equity must come with clean hands. 6
WHEREFORE, the decision of the Court of Appeals should be as it is hereby modified by eliminating therefrom the contested award of
P2,500.00 in favor of Jose Angeles, and, thus modified, said decision is hereby affirmed in all other respects, with the costs. It is so ordered.
Reyes, J.B.L., Makalintal, Sanchez, Castro, Angeles, Fernando and Capistrano, JJ., concur.
Dizon and Zaldivar, JJ., took no part.
Footnotes
G.R. No. L-2017 November 24, 1906
THE MUNICIPALITY OF OAS, plaintiff-appellee,
vs.
BARTOLOME ROA, defendant-appellant.
Del-Pan, Ortigas and Fisher, for appellant.
Enrique Llopiz for appellee.
WILLARD, J.:
The plaintiff brought this action for the recovery of a tract of land in the pueblo of Oas, claiming that it was a part of the public square of said
town. The defendant in his answer alleged that he was the owner of the property. Judgment was rendered in favor of the plaintiff and the
defendant has brought the case here by bill of exceptions.

Property 145
As we look at the case, the only question involved is one of fact. Was the property in question a part of the public square of the town of Oas?
The testimony upon this point in favor of the plaintiff consisted of statements made by witnesses to the effect that this land had always been a
part of the public square, and of certain resolutions adopted by the principalia of the pueblo reciting the same fact, the most important of
these being the minutes of the meeting of the 27th of February, 1892. In that document it is expressly stated that this land was bought in
1832 by the then parish priest for the benefit of the pueblo. It recites various proceedings taken thereafter in connection with this ownership,
including among them an order of the corregidor of Nueva Caceres prohibiting the erection of houses upon the land by reason of the fact
above recited — namely, that the land belonged to the pueblo. This resolution terminated with an order to the occupant of the building then
standing upon the property that he should not repair it. The defendant signed this resolution.
It further appears that the same building was almost entirely destroyed by a baguio on the 13th and 14th of May, 1893, and that the
authorities of the puebo ordered the complete demolition thereof. The resolution of the 31st of May, 1893, declared that the then owner of the
building, Jose Castillo, had no right to reconstruct it because it was situated upon land which did not belong to him. This resolution was also
signed by the defendant.
The evidence on the part of the defendant tends to show that in 1876 Juana Ricarte and Juana Riquiza sold the land in question to Juan
Roco, and that on the 17th day of December, 1894, Jose Castillo sold it to the defendant. No deed of conveyance from Juan Roco to Jose
Castillo was presented in evidence, but Castillo, testifying as a witness, said that he had bought the property by verbal contract from Roco,
his father-in-law. The defendant, after his purchase in 1894, procured a possessory of information which was allowed by an order of the
justice of the peace of Oas on the 19th day of January, 1895, and recorded in the Registry of Property on the 28th of March of the same year.
In this state of the evidence, we can not say that the proof is plainly and manifestly against the decision of the court below. Unless it is so, the
finding of fact made by that court can not be reversed. (De la Rama vs. De la Rama, 201 U. S., 303.)
The two statements signed by Roa, one in 1892 and the other in 1893, are competent evidence against him. They are admissions by him to
the effect that at that time the pueblo was the owner of the property in question. They are, of course, not conclusive against him. He was
entitled to, and did present evidence to overcome the effect of these admissions. The evidence does not make out a case of estoppel against
him. (sec. 333, par. 1, Code of Civil Procedure.)
The admissibility of these statements made by Roa do not rest upon section 278 of the Code of Civil Procedure, which relates to declarations
or admissions made by persons not a party to the suit, but it rests upon the principle that when the defendant in a suit has himself made an
admission of any fact pertinent to issue involved, it can be received against him.
This action was commenced on the 17th of December, 1902. There is no evidence of any adverse occupation of this land for thirty years,
consequently the extraordinary period of prescription does not apply. The defendant can not rely upon the ordinary period of prescription of
ten years because he was not a holder in good faith. He knew at that time of his purchase in 1894, and had so stated in writing, that the
pueblo was the owner of the property. So that, even if the statute of limitations ran against a municipality in reference to a public square, it
could not avail the defendant in this case.
It appears that Roa has constructed upon the property, and that there now stands thereon, a substantial building. As early as 1852 this land
had been used by the municipality constructed thereon buildings for the storage of property of the State, quarters for the cuadrilleros, and
others of a like character. It therefore had ceased to be property used by the public and had become a part of the bienes patrimoniales of the
pueblo. (Civil Code, arts. 341, 344.) To the case are applicable those provisions of the Civil Code which relate to the construction by one
person of a building upon land belonging to another. Article 364 of the Civil Code is as follows:
Where there has been bad faith, not only on the part of the person who built, sowed, or planted on another's land, but also on the part of the
owner of the latter, the rights of both shall be the same as if they had acted in good faith.
Bad faith on the part of the owner is understood whenever the act has been executed in his presence with his knowledge and tolerance and
without objection.
The defendant constructed the building in bad faith for, as we have said, he had knowledge of the fact that his grantor was not the owner
thereof. There was a bad faith also on the part of the plaintiff in accordance with the express provisions of article 364 since it allowed Roa to
construct the building without any opposition on its part and to so occupy it for eight years. The rights of the parties must, therefore, be
determined as if they both had acted in good faith. Their rights in such cases are governed by article 361 of the Civil Code, which is as
follows:
The owner of the land on which the building, sowing, or planting is done in good faith shall have a right to appropriate as his own the work,
sowing, or planting after the indemnity mentioned in articles 453 and 454, or, to oblige the person who has built or planted, to pay him the
value of the land and to force the person who sowed to pay the proper rent.
The judgment of the court below is so modified as to declare that the plaintiff is the owner of the land and that it has the option of buying the
building thereon, which is the property of the defendant, or of selling to him the land on which it stands. The plaintiff is entitled to recover the
costs of both instances.1âwphil.net
After the expiration of twenty days let judgment be entered in accordance herewith and at the proper time thereafter let the record be
remanded to the court below for proper action. So ordered.
Johnson, Carson and Tracey, JJ., concur.

G.R. No. L-62943 July 14, 1986

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,
vs.
COURT OF APPEALS (Now INTERMEDIATE APPELLATE COURT) and THE PHILIPPINE NATIONAL BANK, respondents.
Juan J. Diaz and Cesar T. Basa for respondent PNB.
San Juan, Africa, Gonzales & San Agustin Law Offices for respondent PCIB.
GUTIERREZ, JR., J.:

Property 146
This petition for review asks us to set aside the October 29, 1982 decision of the respondent Court of Appeals, now Intermediate Appellate
Court which reversed the decision of the Court of First Instance of Manila, Branch XL, and dismissed the plaintiff's complaint, the third party
complaint, as well as the defendant's counterclaim.
The background facts which led to the filing of the instant petition are summarized in the decision of the respondent Court of Appeals:
Metropolitan Waterworks and Sewerage System (hereinafter referred to as MWSS) is a government owned and controlled corporation
created under Republic Act No. 6234 as the successor-in- interest of the defunct NWSA. The Philippine National Bank (PNB for short), on the
other hand, is the depository bank of MWSS and its predecessor-in-interest NWSA. Among the several accounts of NWSA with PNB is
NWSA Account No. 6, otherwise known as Account No. 381-777 and which is presently allocated No. 010-500281. The authorized signature
for said Account No. 6 were those of MWSS treasurer Jose Sanchez, its auditor Pedro Aguilar, and its acting General Manager Victor L.
Recio. Their respective specimen signatures were submitted by the MWSS to and on file with the PNB. By special arrangement with the
PNB, the MWSS used personalized checks in drawing from this account. These checks were printed for MWSS by its printer, F. Mesina
Enterprises, located at 1775 Rizal Extension, Caloocan City.
During the months of March, April and May 1969, twenty-three (23) checks were prepared, processed, issued and released by NWSA, all of
which were paid and cleared by PNB and debited by PNB against NWSA Account No. 6, to wit:
Check No. Date Payee Amount Date Paid
By PNB
1. 59546 8-21-69 Deogracias P 3,187.79 4-2-69
Estrella
2. 59548 3-31-69 Natividad 2,848.86 4-23 69
Rosario
3. 59547 3-31-69 Pangilinan 195.00 Unreleased
Enterprises
4. 59549 3-31-69 Natividad 3,239.88 4-23-69
Rosario
5. 59552 4-1-69 Villarama 987.59 5-6-69
& Sons
6. 59554 4-1-69 Gascom 6,057.60 4-16 69
Engineering
7. 59558 4-2-69 The Evening 112.00 Unreleased
News
8. 59544 3-27-69 Progressive 18,391.20 4-18 69
Const.
9. 59564 4-2-69 Ind. Insp. 594.06 4-18 69
Int. Inc.
10. 59568 4-7-69 Roberto 800.00 4-22-69
Marsan
11. 59570 4-7-69 Paz Andres 200.00 4-22-69
12. 59574 4-8-69 Florentino 100,000.00 4-11-69
Santos
13. 59578 4-8-69 Mla. Daily 95.00 Unreleased
Bulletin
14. 59580 4-8-69 Phil. Herald 100.00 5-9-69
15. 59582 4-8-69 Galauran 7,729.09 5-6-69
& Pilar
16. 59581 4-8-69 Manila 110.00 5-12 69
Chronicle
17. 59588 4-8-69 Treago 21,583.00 4-11 69
Tunnel
18. 59587 4-8-69 Delfin 120,000.00 4-11-69
Santiago
19. 59589 4-10-69 Deogracias 1,257.49 4-16 69
Estrella
20. 59594 4-14-69 Philam Ac- 33.03 4-29 69
cident Inc.
21. 59577 4-8-69 Esla 9,429.78 4-29 69
22. 59601 4-16-69 Justino 20,000.00 4-18-69
Torres
23. 59595 4-14-69 Neris Phil. 4,274.00 5-20-69
Inc. --------------------
P 320,636.26
During the same months of March, April and May 1969, twenty-three (23) checks bearing the same numbers as the aforementioned NWSA
checks were likewise paid and cleared by PNB and debited against NWSA Account No. 6, to wit:
Check Date Payee Amount Date Paid
No. Issued By PNB
1. 59546 3-6-69 Raul Dizon P 84,401.00 3-16-69
Property 147
2. 59548 3-11-69 Raul Dizon 104,790.00 4-1-69
3. 59547 3-14-69 Arturo Sison 56,903.00 4-11-69
4. 59549 3-20-69 Arturo Sison 48,903.00 4-15-69
5. 59552 3-24-69 Arturo Sison 63,845.00 4-16-69
6. 59544 3-26-69 Arturo Sison 98,450.00 4-17-69
7. 59558 3-28-69 Arturo Sison 114,840.00 4-21-69
8. 59544 3-16-69 Antonio 38,490.00 4-22-69 Mendoza
9. 59564 3-31-69 Arturo Sison 180,900.00 4-23-69
10.59568 4-2-69 Arturo Sison 134,940.00 4- 5-69
11.59570 4-1-69 Arturo Sison 64,550.00 4-28-69
12.59574 4-2-69 Arturo Sison 148,610.00 4-29-69
13.59578 4-10-69 Antonio 93,950.00 4-29-69
Mendoza
14.59580 4-8-69 Arturo Sison 160,000.00 5-2-69
15.59582 4-10-69 Arturo Sison 155,400.00 5-5-69
16.59581 4-8-69 Antonio 176,580.00 5-6-69
Mendoza
17.59588 4-16-69 Arturo Sison 176,000.00 5-8-69
18.59587 4-16-69 Arturo Sison 300,000.00 5-12-69
19.59589 4-18-69 Arturo Sison 122,000.00 5-14-69
20.59594 4-18-69 Arturo Sison 280,000.00 5-15-69
21.59577 4-14-69 Antonio 260,000.00 5-16-69
Mendoza
22.59601 4-18-69 Arturo Sison 400,000.00 5-19-69
23.59595 4-28-69 Arturo Sison 190,800.00 5-21-69
---------------
P3,457,903.00
The foregoing checks were deposited by the payees Raul Dizon, Arturo Sison and Antonio Mendoza in their respective current accounts with
the Philippine Commercial and Industrial Bank (PCIB) and Philippine Bank of Commerce (PBC) in the months of March, April and May 1969.
Thru the Central Bank Clearing, these checks were presented for payment by PBC and PCIB to the defendant PNB, and paid, also in the
months of March, April and May 1969. At the time of their presentation to PNB these checks bear the standard indorsement which reads 'all
prior indorsement and/or lack of endorsement guaranteed.'
Subsequent investigation however, conducted by the NBI showed that Raul Dizon, Arturo Sison and Antonio Mendoza were all fictitious
persons. The respective balances in their current account with the PBC and/or PCIB stood as follows: Raul Dizon P3,455.00 as of April 30,
1969; Antonio Mendoza P18,182.00 as of May 23, 1969; and Arturo Sison Pl,398.92 as of June 30, 1969.
On June 11, 1969, NWSA addressed a letter to PNB requesting the immediate restoration to its Account No. 6, of the total sum of
P3,457,903.00 corresponding to the total amount of these twenty-three (23) checks claimed by NWSA to be forged and/or spurious checks.
"In view of the refusal of PNB to credit back to Account No. 6 the said total sum of P3,457,903.00 MWSS filed the instant complaint on
November 10, 1972 before the Court of First Instance of Manila and docketed thereat as Civil Case No. 88950.
In its answer, PNB contended among others, that the checks in question were regular on its face in all respects, including the genuineness of
the signatures of authorized NWSA signing officers and there was nothing on its face that could have aroused any suspicion as to its
genuineness and due execution and; that NWSA was guilty of negligence which was the proximate cause of the loss.
PNB also filed a third party complaint against the negotiating banks PBC and PCIB on the ground that they failed to ascertain the Identity of
the payees and their title to the checks which were deposited in the respective new accounts of the payees with them.
xxx xxx xxx
On February 6, 1976, the Court of First Instance of Manila rendered judgment in favor of the MWSS. The dispositive portion of the decision
reads:
WHEREFORE, on the COMPLAINT by a clear preponderance of evidence and in accordance with Section 23 of the Negotiable Instruments
Law, the Court hereby renders judgment in favor of the plaintiff Metropolitan Waterworks and Sewerage System (MWSS) by ordering the
defendant Philippine National Bank (PNB) to restore the total sum of THREE MILLION FOUR HUNDRED FIFTY SEVEN THOUSAND NINE
HUNDRED THREE PESOS (P3,457,903.00) to plaintiff's Account No. 6, otherwise known as Account No. 010-50030-3, with legal interest
thereon computed from the date of the filing of the complaint and until as restored in the said Account No. 6.
On the THIRD PARTY COMPLAINT, the Court, for lack of evidence, hereby renders judgment in favor of the third party defendants Philippine
Bank of Commerce (PBC) and Philippine Commercial and Industrial Bank (PCIB) by dismissing the Third Party Complaint.
The counterclaims of the third party defendants are likewise dismissed for lack of evidence.
No pronouncement as to costs.
As earlier stated, the respondent court reversed the decision of the Court of First Instance of Manila and rendered judgment in favor of the
respondent Philippine National Bank.
A motion for reconsideration filed by the petitioner MWSS was denied by the respondent court in a resolution dated January 3, 1983.
The petitioner now raises the following assignments of errors for the grant of this petition:
I. IN NOT HOLDING THAT AS THE SIGNATURES ON THE CHECKS WERE FORGED, THE DRAWEE BANK WAS LIABLE FOR THE
LOSS UNDER SECTION 23 OF THE NEGOTIABLE INSTRUMENTS LAW.
II. IN FAILING TO CONSIDER THE PROXIMATE NEGLIGENCE OF PNB IN ACCEPTING THE SPURIOUS CHECKS DESPITE THE
OBVIOUS IRREGULARITY OF TWO SETS OF CHECKS BEARING IdENTICAL NUMBER BEING ENCASHED WITHIN DAYS OF EACH
OTHER.
Property 148
III. IN NOT HOLDING THAT THE SIGNATURES OF THE DRAWEE MWSS BEING CLEARLY FORGED, AND THE CHECKS SPURIOUS,
SAME ARE INOPERATIVE AS AGAINST THE ALLEGED DRAWEE.
The appellate court applied Section 24 of the Negotiable Instruments Law which provides:
Every negotiable instrument is deemed prima facie to have been issued for valuable consideration and every person whose signature
appears thereon to have become a party thereto for value.
The petitioner submits that the above provision does not apply to the facts of the instant case because the questioned checks were not those
of the MWSS and neither were they drawn by its authorized signatories. The petitioner states that granting that Section 24 of the Negotiable
Instruments Law is applicable, the same creates only a prima facie presumption which was overcome by the following documents, to wit: (1)
the NBI Report of November 2, 1970; (2) the NBI Report of November 21, 1974; (3) the NBI Chemistry Report No. C-74891; (4) the
Memorandum of Mr. Juan Dino, 3rd Assistant Auditor of the respondent drawee bank addressed to the Chief Auditor of the petitioner; (5) the
admission of the respondent bank's counsel in open court that the National Bureau of Investigation found the signature on the twenty-three
(23) checks in question to be forgeries; and (6) the admission of the respondent bank's witness, Mr. Faustino Mesina, Jr. that the checks in
question were not printed by his printing press. The petitioner contends that since the signatures of the checks were forgeries, the
respondent drawee bank must bear the loss under the rulings of this Court.
A bank is bound to know the signatures of its customers; and if it pays a forged check it must be considered as making the payment out of its
obligation funds, and cannot ordinarily charge the amount so paid to the account of the depositor whose name was forged.
xxx xxx xxx
The signatures to the checks being forged, under Section 23 of the Negotiable Instruments Law they are not a charge against plaintiff nor are
the checks of any value to the defendant.
It must therefore be held that the proximate cause of loss was due to the negligence of the Bank of the Philippine Islands in honoring and
cashing the two forged checks. (San Carlos Milling Co. v. Bank of the P. I., 59 Phil. 59)
It is admitted that the Philippine National Bank cashed the check upon a forged signature, and placed the money to the credit of Maasim, who
was the forger. That the Philippine National Bank then endorsed the chock and forwarded it to the Shanghai Bank by whom it was paid. The
Philippine National Bank had no license or authority to pay the money to Maasim or anyone else upon a forged signature. It was its legal duty
to know that Malicor's endorsement was genuine before cashing the check. Its remedy is against Maasim to whom it paid the money. (Great
Eastern Life Ins. Co. v. Hongkong & Shanghai Bank, 43 Phil. 678).
We have carefully reviewed the documents cited by the petitioner. There is no express and categorical finding in these documents that the
twenty-three (23) questioned checks were indeed signed by persons other than the authorized MWSS signatories. On the contrary, the
findings of the National Bureau of Investigation in its Report dated November 2, 1970 show that the MWSS fraud was an "inside job" and that
the petitioner's delay in the reconciliation of bank statements and the laxity and loose records control in the printing of its personalized checks
facilitated the fraud. Likewise, the questioned Documents Report No. 159-1074 dated November 21, 1974 of the National Bureau of
Investigation does not declare or prove that the signatures appearing on the questioned checks are forgeries. The report merely mentions the
alleged differences in the type face, checkwriting, and printing characteristics appearing in the standard or submitted models and the
questioned typewritings. The NBI Chemistry Report No. C-74-891 merely describes the inks and pens used in writing the alleged forged
signatures.
It is clear that these three (3) NBI Reports relied upon by the petitioner are inadequate to sustain its allegations of forgery. These reports did
not touch on the inherent qualities of the signatures which are indispensable in the determination of the existence of forgery. There must be
conclusive findings that there is a variance in the inherent characteristics of the signatures and that they were written by two or more different
persons.
Forgery cannot be presumed (Siasat, et al. v. Intermediate Appellate Court, et al, 139 SCRA 238). It must be established by clear, positive,
and convincing evidence. This was not done in the present case.
The cases of San Carlos Milling Co. Ltd. v. Bank of the Philippine Islands, et al. (59 Phil. 59) and Great Eastern Life Ins., Co. v. Hongkong
and Shanghai Bank (43 Phil. 678) relied upon by the petitioner are inapplicable in this case because the forgeries in those cases were either
clearly established or admitted while in the instant case, the allegations of forgery were not clearly established during trial.
Considering the absence of sufficient security in the printing of the checks coupled with the very close similarities between the genuine
signatures and the alleged forgeries, the twenty-three (23) checks in question could have been presented to the petitioner's signatories
without their knowing that they were bogus checks. Indeed, the cashier of the petitioner whose signatures were allegedly forged was unable
to ten the difference between the allegedly forged signature and his own genuine signature. On the other hand, the MWSS officials admitted
that these checks could easily be passed on as genuine.
The memorandum of Mr. A. T. Tolentino, no, Assistant Chief Accountant of the drawee Philippine National Bank to Mr. E. Villatuya, Executive
Vice-President of the petitioner dated June 9, 1969 cites an instance where even the concerned NWSA officials could not ten the differences
between the genuine checks and the alleged forged checks.
At about 12:00 o'clock on June 6, 1969, VP Maramag requested me to see him in his office at the Cashier's Dept. where Messrs. Jose M.
Sanchez, treasurer of NAWASA and Romeo Oliva of the same office were present. Upon my arrival I observed the NAWASA officials
questioning the issue of the NAWASA checks appearing in their own list, xerox copy attached.
For verification purposes, therefore, the checks were taken from our file. To everybody there present namely VIP Maramag, the two
abovementioned NAWASA officials, AVP, Buhain, Asst. Cashier Castelo, Asst. Cashier Tejada and Messrs. A. Lopez and L. Lechuga, both
C/A bookkeepers, no one was able to point out any difference on the signatures of the NAWASA officials appearing on the checks compared
to their official signatures on file. In fact 3 checks, one of those under question, were presented to the NAWASA treasurer for verification but
he could not point out which was his genuine signature. After intent comparison, he pointed on the questioned check as bearing his correct
signature.
xxx xxx xxx
Moreover, the petitioner is barred from setting up the defense of forgery under Section 23 of the Negotiable Instruments Law which provides
that:

Property 149
SEC. 23. FORGED SIGNATURE; EFFECT OF.- When the signature is forged or made without authority of the person whose signature it
purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof
against any party thereto can be acquired through or under such signature unless the party against whom it is sought to enforce such right is
precluded from setting up the forgery or want of authority.
because it was guilty of negligence not only before the questioned checks were negotiated but even after the same had already been
negotiated. (See Republic v. Equitable Banking Corporation, 10 SCRA 8) The records show that at the time the twenty-three (23) checks
were prepared, negotiated, and encashed, the petitioner was using its own personalized checks, instead of the official PNB Commercial
blank checks. In the exercise of this special privilege, however, the petitioner failed to provide the needed security measures. That there was
gross negligence in the printing of its personalized checks is shown by the following uncontroverted facts, to wit:
(1) The petitioner failed to give its printer, Mesina Enterprises, specific instructions relative to the safekeeping and disposition of excess
forms, check vouchers, and safety papers;
(2) The petitioner failed to retrieve from its printer all spoiled check forms;
(3) The petitioner failed to provide any control regarding the paper used in the printing of said checks;
(4) The petitioner failed to furnish the respondent drawee bank with samples of typewriting, cheek writing, and print used by its printer in the
printing of its checks and of the inks and pens used in signing the same; and
(5) The petitioner failed to send a representative to the printing office during the printing of said checks.
This gross negligence of the petitioner is very evident from the sworn statement dated June 19, 1969 of Faustino Mesina, Jr., the owner of
the printing press which printed the petitioner's personalized checks:
xxx xxx xxx
7. Q: Do you have any business transaction with the National Waterworks and Sewerage Authority (NAWASA)?
A: Yes, sir. I have a contract with the NAWASA in printing NAWASA Forms such as NAWASA Check
xxx xxx xxx
15. Q: Were you given any ingtruction by the NAWASA in connection with the printing of these check vouchers?
A: There is none, sir. No instruction whatsoever was given to me.
16. Q: Were you not advised as to what kind of paper would be used in the check vouchers?
A: Only as per sample, sir.
xxx xxx xxx
20. Q: Where did you buy this Hammermill Safety check paper?
A: From Tan Chiong, a paper dealer with store located at Juan Luna, Binondo, Manila. (In front of the Metropolitan Bank).
xxx xxx xxx
24. Q: Were all these check vouchers printed by you submitted to NAWASA?
A: Not all, sir. Because we have to make reservations or allowances for spoilage.
25. Q: Out of these vouchers printed by you, how many were spoiled and how many were the excess printed check vouchers?
A: Approximately four hundred (400) sheets, sir. I cannot determine the proportion of the excess and spoiled because the final act of
perforating these check vouchers has not yet been done and spoilage can only be determined after this final act of printing.
26. Q: What did you do with these excess check vouchers?
A: I keep it under lock and key in my firing cabinet.
xxx xxx xxx
28. Q: Were you not instructed by the NAWASA authorities to bum these excess check vouchers?
A: No, sir. I was not instructed.
29. Q: What do you intend to do with these excess printed check vouchers?
A: I intend to use them for future orders from the
xxx xxx xxx
32. Q: In the process of printing the check vouchers ordered by the NAWASA, how many sheets were actually spoiled?
A: I cannot approximate, sir. But there are spoilage in the process of printing and perforating.
33. Q: What did you do with these spoilages?
A: Spoiled printed materials are usually thrown out, in the garbage can.
34. Q: Was there any representative of the NAWASA to supervise the printing or watch the printing of these check vouchers?
A: None, sir.
xxx xxx xxx
39. Q: During the period of printing after the days work, what measures do you undertake to safeguard the mold and other paraphernalia
used in the printing of these particular orders of NAWASA?
A: Inasmuch as I have an employee who sleeps in the printing shop and at the same time do the guarding, we just leave the mold attached to
the machine and the other finished or unfinished work check vouchers are left in the rack so that the work could be continued the following
day.
The National Bureau of Investigation Report dated November 2, 1970 is even more explicit. Thus—
xxx xxx xxx
60. We observed also that there is some laxity and loose control in the printing of NAWASA cheeks. We gathered from MESINA
ENTERPRISES, the printing firm that undertook the printing of the check vouchers of NAWASA that NAWASA had no representative at the
printing press during the process of the printing and no particular security measure instructions adopted to safeguard the interest of the
government in connection with printing of this accountable form.
Another factor which facilitated the fraudulent encashment of the twenty-three (23) checks in question was the failure of the petitioner to
reconcile the bank statements with its own records.
It is accepted banking procedure for the depository bank to furnish its depositors bank statements and debt and credit memos through the
mail. The records show that the petitioner requested the respondent drawee bank to discontinue the practice of mailing the bank statements,
Property 150
but instead to deliver the same to a certain Mr. Emiliano Zaporteza. For reasons known only to Mr. Zaporteza however, he was unreasonably
delayed in taking prompt deliveries of the said bank statements and credit and debit memos. As a consequence, Mr. Zaporteza failed to
reconcile the bank statements with the petitioner's records. If Mr. Zaporteza had not been remiss in his duty of taking the bank statements
and reconciling them with the petitioner's records, the fraudulent encashments of the first checks should have been discovered, and further
frauds prevented. This negligence was, therefore, the proximate cause of the failure to discover the fraud. Thus,
When a person opens a checking account with a bank, he is given blank checks which he may fill out and use whenever he wishes. Each
time he issues a check, he should also fill out the check stub to which the check is usually attached. This stub, if properly kept, will contain
the number of the check, the date of its issue, the name of the payee and the amount thereof. The drawer would therefore have a complete
record of the checks he issues. It is the custom of banks to send to its depositors a monthly statement of the status of their accounts,
together with all the cancelled checks which have been cashed by their respective holders. If the depositor has filled out his check stubs
properly, a comparison between them and the cancelled checks will reveal any forged check not taken from his checkbook. It is the duty of a
depositor to carefully examine the bank's statement, his cancelled checks, his check stubs and other pertinent records within a reasonable
time, and to report any errors without unreasonable delay. If his negligence should cause the bank to honor a forged check or prevent it from
recovering the amount it may have already paid on such check, he cannot later complain should the bank refuse to recredit his account with
the amount of such check. (First Nat. Bank of Richmond v. Richmond Electric Co., 106 Va. 347, 56 SE 152, 7 LRA, NS 744 [1907]. See also
Leather Manufacturers' Bank v. Morgan, 117 US 96, 6 S. Ct. 657 [1886]; Deer Island Fish and Oyster Co. v. First Nat. Bank of Biloxi, 166
Miss. 162, 146 So. 116 [1933]). Campos and Campos, Notes and Selected Cases on Negotiable Instruments Law, 1971, pp. 267-268).
This failure of the petitioner to reconcile the bank statements with its cancelled checks was noted by the National Bureau of Investigation in
its report dated November 2, 1970:
58. One factor which facilitate this fraud was the delay in the reconciliation of bank (PNB) statements with the NAWASA bank accounts. x x x.
Had the NAWASA representative come to the PNB early for the statements and had the bank been advised promptly of the reported bogus
check, the negotiation of practically all of the remaining checks on May, 1969, totalling P2,224,736.00 could have been prevented.
The records likewise show that the petitioner failed to provide appropriate security measures over its own records thereby laying confidential
records open to unauthorized persons. The petitioner's own Fact Finding Committee, in its report submitted to their General manager
underscored this laxity of records control. It observed that the "office of Mr. Ongtengco (Cashier No. VI of the Treasury Department at the
NAWASA) is quite open to any person known to him or his staff members and that the check writer is merely on top of his table."
When confronted with this report at the Anti-Fraud Action Section of the National Bureau of Investigation. Mr. Ongtengco could only state
that:
A. Generally my order is not to allow anybody to enter my office. Only authorized persons are allowed to enter my office. There are some
cases, however, where some persons enter my office because they are following up their checks. Maybe, these persons may have been
authorized by Mr. Pantig. Most of the people entering my office are changing checks as allowed by the Resolution of the Board of Directors of
the NAWASA and the Treasurer. The check writer was never placed on my table. There is a place for the check write which is also under
lock and key.
Q. Is Mr. Pantig authorized to allow unauthorized persons to enter your office?
A. No, sir.
Q. Why are you tolerating Mr. Pantig admitting unauthorized persons in your office?
A. I do not want to embarrass Mr. Pantig. Most of the people following up checks are employees of the NAWASA.
Q. Was the authority given by the Board of Directors and the approval by the Treasurer for employees, and other persons to encash their
checks carry with it their authority to enter your office?
A. No, sir.
xxx xxx xxx
Q. From the answers that you have given to us we observed that actually there is laxity and poor control on your part with regards to the
preparations of check payments inasmuch as you allow unauthorized persons to follow up their vouchers inside your office which may
leakout confidential informations or your books of account. After being apprised of all the shortcomings in your office, as head of the
Cashiers' Office of the Treasury Department what remedial measures do you intend to undertake?
A. Time and again the Treasurer has been calling our attention not to allow interested persons to hand carry their voucher checks and we are
trying our best and if I can do it to follow the instructions to the letter, I will do it but unfortunately the persons who are allowed to enter my
office are my co-employees and persons who have connections with our higher ups and I can not possibly antagonize them. Rest assured
that even though that everybody will get hurt, I win do my best not to allow unauthorized persons to enter my office.
xxx xxx xxx
Q. Is it not possible inasmuch as your office is in charge of the posting of check payments in your books that leakage of payments to the
banks came from your office?
A. I am not aware of it but it only takes us a couple of minutes to process the checks. And there are cases wherein every information about
the checks may be obtained from the Accounting Department, Auditing Department, or the Office of the General Manager.
Relying on the foregoing statement of Mr. Ongtengco, the National Bureau of Investigation concluded in its Report dated November 2, 1970
that the fraudulent encashment of the twenty-three (23)cheeks in question was an "inside job". Thus-
We have all the reasons to believe that this fraudulent act was an inside job or one pulled with inside connivance at NAWASA. As pointed
earlier in this report, the serial numbers of these checks in question conform with the numbers in current use of NAWASA, aside from the fact
that these fraudulent checks were found to be of the same kind and design as that of NAWASA's own checks. While knowledge as to such
facts may be obtained through the possession of a NAWASA check of current issue, an outsider without information from the inside can not
possibly pinpoint which of NAWASA's various accounts has sufficient balance to cover all these fraudulent checks. None of these checks, it
should be noted, was dishonored for insufficiency of funds. . .
Even if the twenty-three (23) checks in question are considered forgeries, considering the petitioner's gross negligence, it is barred from
setting up the defense of forgery under Section 23 of the Negotiable Instruments Law.

Property 151
Nonetheless, the petitioner claims that it was the negligence of the respondent Philippine National Bank that was the proximate cause of the
loss. The petitioner relies on our ruling in Philippine National Bank v. Court of Appeals (25 SCRA 693) that.
Thus, by not returning the cheek to the PCIB, by thereby indicating that the PNB had found nothing wrong with the check and would honor
the same, and by actually paying its amount to the PCIB, the PNB induced the latter, not only to believe that the check was genuine and
good in every respect, but, also, to pay its amount to Augusto Lim. In other words, the PNB was the primary or proximate cause of the loss,
and, hence, may not recover from the PCIB.
The argument has no merit. The records show that the respondent drawee bank, had taken the necessary measures in the detection of
forged checks and the prevention of their fraudulent encashment. In fact, long before the encashment of the twenty-three (23) checks in
question, the respondent Bank had issued constant reminders to all Current Account Bookkeepers informing them of the activities of forgery
syndicates. The Memorandum of the Assistant Vice-President and Chief Accountant of the Philippine National Bank dated February 17, 1966
reads in part:
SUBJECT: ACTIVITIES OF FORGERY SYNDICATE
From reliable information we have gathered that personalized checks of current account depositors are now the target of the forgery
syndicate. To protect the interest of the bank, you are hereby enjoined to be more careful in examining said checks especially those coming
from the clearing, mails and window transactions. As a reminder please be guided with the following:
1. Signatures of drawers should be properly scrutinized and compared with those we have on file.
2. The serial numbers of the checks should be compared with the serial numbers registered with the Cashier's Dept.
3. The texture of the paper used and the printing of the checks should be compared with the sample we have on file with the Cashier's Dept.
4. Checks bearing several indorsements should be given a special attention.
5. Alteration in amount both in figures and words should be carefully examined even if signed by the drawer.
6. Checks issued in substantial amounts particularly by depositors who do not usually issue checks in big amounts should be brought to the
attention of the drawer by telephone or any fastest means of communication for purposes of confirmation.
and your attention is also invited to keep abreast of previous circulars and memo instructions issued to bookkeepers.
We cannot fault the respondent drawee Bank for not having detected the fraudulent encashment of the checks because the printing of the
petitioner's personalized checks was not done under the supervision and control of the Bank. There is no evidence on record indicating that
because of this private printing the petitioner furnished the respondent Bank with samples of checks, pens, and inks or took other
precautionary measures with the PNB to safeguard its interests.
Under the circumstances, therefore, the petitioner was in a better position to detect and prevent the fraudulent encashment of its checks.
WHEREFORE, the petition for review on certiorari is hereby DISMISSED for lack of merit. The decision of the respondent Court of Appeals
dated October 29, 1982 is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Feria (Chairman), Fernan, Alampay and Cruz, JJ., concur.
Paras * , J., took no part.

G.R. No. L-12812 September 29, 1959

FILIPINAS COLLEGES, INC., plaintiff-appellee,
vs.
MARIA GARCIA TIMBANG, ET AL., defendants.
------------------------------
G.R. No. L-12813 September 29, 1959
MARIA GARCIA TIMBANG, ET AL., plaintiffs.
MARIA GARICA TIMBANG, plaintiff-appellant,
vs.
MARIA GERVACIO BLAS, defendant-appellee.
De Guzman and Fernandez for appellee Filipinas Colleges, Inc.
San Huan, Africa and Benedicto for appellant Maria Garcia Timbang.
Nicanor S. Sison for appellee Maria Gervacio Blas.
BARRERA, J.:
This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957 (a) declaring the Sheriff's certificate of sale
covering a school building sold at public auction null and void unless within 15 days from notice of said order the successful bidders,
defendants-appellants spouses Maria Garcia Timbang and Marcelino Timbang, shall pay to, appellee Maria Gervacio Blas directly or through
the Sheriff of Manila the sum of P5,750.00 that the spouses Timbang had bid for the building at the Sheriff's sale; (b) declaring the other
appellee Filipinas Colleges, Inc. owner of 24,500/3,285,934 undivided interest in Lot No. 2-a covered by certificate of tile No 45970, on which
the building sold in the auction sale is situated; and (c) ordering the sale in public auction of the said undivided interest of the Filipinas
Colleges, Inc., in lot No. 2-a aforementioned to satisfy the unpaid portion of the judgment in favor of appellee Blas and against Filipinas
Colleges, Inc. in the amount of P8,200.00 minus the sum of P5,750.00 mentioned in (a) above.
The order appealed from is the result of three motions filed in the court a quo in the course of the execution of a final judgment of the Court of
Appeals rendered in 2 cases appealed to it in which the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas were the
parties. IN that judgment of the Court of Appeals, the respective rights of the litigants have been adjudicated as follows:1âwphïl.nêt
(1) Filipinas Colleges, Inc. was declared to have acquired the rights of the spouses Timbang in and to lot No. 2-a mentioned above and in
consideration thereof, Filipinas Colleges, Inc., was ordered to pay the spouses Timbang the amount of P15,807.90 plus such other amounts
which said spouses might have paid or had to pay after February, 1953, to Hoskins and Co. Inc., agent of the Urban Estates, Inc., original
vendor of the lot. Filipinas Colleges, Inc. original vendor of the total amount with the court within 90 days after the decision shall have become
final.

Property 152
(2) Maria Gervacio Blas was declared to be a builder in good faith of the school building constructed on the lot in question and entitled to be
paid the amount of P19,000.00 for the same. Filipinas Colleges, Inc., purchaser of the said building was ordered to deliver to Blas stock
certificate (Exh. C) for 108 shares of Filipinas Colleges, Inc. with a par value of P10,800.00 and to pay Blas the sum of P8,200.00 of the
house.
(3) In case Filipinas Colleges, Inc. failed to deposit the value of the land, which after liquidation was fixed at P32,859.34, within the 90-day
period set by the court, Filipinas Colleges would lose all its rights to the land and the spouses Timbang would then become the owners
thereof. In that eventuality, the Timbangs would make known to the court their option under Art. 448 of the Civil Code whether they would
appropriate the building in question, in which even they would have to pay Filipinas Colleges, Inc. the sum of P19,000.00, or would compel
the latter to acquire the land and pay the price thereof.
Filipinas Colleges, Inc. having failed to pay or deposit the sum of P32,859.34 within the time prescribed, the spouses Timbang, in compliance
with the judgment of the Court of Appeals, on September 28, 1956, made known to the court their decision that they had chosen not of
appropriate the building but to compel Filipinas Colleges, Inc., for the payment of the sum of P32,859,34. The motion having been granted, a
writ of execution was issued on January 8, 1957.
On January 16, 1957, appellee Blas in turn filed a motion for execution of her judgment of P8,200.00 representing the unpaid portion of the
price of the house sold to Filipinas Colleges, Inc. Over the object of the Timbangs, the court grated the motion and the corresponding writ of
execution was issued on January 30, 1957, date of the granting of the motion for execution, Blas through counsel, sent a letter to the Sheriff
of Manila advising him of her preferential claim or lien on the house to satisfy the unpaid balance of the purchase price thereof under Article
2242 of the Civil Code, and to withhold from the proceed of the auction sale the sum of P8,200.00. Levy having been made on the house in
virtue of the writs of execution, the Sheriff of Manila on March 5, 1957, sold the building in public auction in favor of the spouses Timbang, as
the highest bidders, in the amount of P5,750.00. Personal properties of Filipinas Colleges, Inc. were also auctioned for P245.00 in favor of
the spouses Timbang.
As a result of these actuation, three motion were subsequently filed before the lower court:
(1) By appellee Blas, praying that the Sheriff of Manila and/or the Timbang spouses be ordered to pay and deliver to her the sum of
P5,750.00 representing the proceeds of the auction sale of the building of Filipinas Colleges, Inc. over which she has a lien of P8,200.00 for
the unpaid balance of the purchase price thereof;.
(2) Also by the appellee Bals, praying that there being still two unsatisfied executions, one for the sum of P32,859.34 in favor the land
involved, Lot No. 2-a, be sold at public auction; and (3) By Filipinas Colleges, Inc. praying that because its properties, the house and some
personal properties, have been auctioned for P5,750.00 and P245.00 respectively in favor of the Timbang spouses who applied the proceeds
to the partial payment of the sum of P32,859.34 value of the land, Lot No. 2-a, it (Filipinas Colleges, Inc.) be declared part owner of said lot to
the extent of the total amount realized from the execution sale of its properties.1âwphïl.nêt
The Timbang spouses presented their opposition to each and all of these motion. After due hearing the lower court rendered its resolution in
the manner indicated at the beginning of this decision, from which the Timbangs alone have appealed.
In assailing the order of the court a quo directing the appellants to pay appellee Blas the amount of their bid (P5,750.00) made at the public
auction, appellants' counsel has presented a novel, albeit ingenious, argument. It is contended that because the builder in good faith has
failed to pay the price of the land after the owners thereof exercised their option under Article 448 of the Civil Code, the builder lost his right of
retention provided in Article 546 and by operation of Article 445, the appellants as owners of the land automatically became the owners ipso
facto, the execution sale of the house in their favor was superfluous. Consequently, they are not bound to make good their bid of P5,750.00
as that would be to make goods to pay for their own property. By the same token, Blas claim for preference on account of the unpaid balance
of the purchase price of the house does not apply because preference applies only with respect to the property of the debtor, and the
Timbangs, owners of the house, are not the debtors of Blas.
This Court cannot accept this oversimplification of appellants' position. Article 448 and 546 of the Civil Code defining the right of the parties in
case a person in good faith builds, sows or plants on the land of another, respectively provides:
ART. 448. The owner of the land on which anything has been built, sown or plated in good faith shall have the right to appropriate as his own
the works, sowing or planting, after payment of the indemnify provided for in article 546 and 548, or to obligate 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.
ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has
reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention the person who has defeated him in
the possession having to option of refunding the amount of expenses or of paying the case in value which thing may have acquired by reason
thereof.
Under the terms of these article, it is true that the owner of the land has the right to choose between appropriating the building by reimbursing
the builder of the value thereof or compelling the builder in good faith to pay for his land. Even this second right cannot be exercised if the
value of the land is considerably more than that of the building. In addition to the right of the builder to be paid the value of his improvement,
Article 546 gives him the corollary right of retention of the property until he is indemnified by the owner of the land. There is nothing in the
language of these two article, 448 and 546, which would justify the conclusion of appellants that, upon the failure of the builder to pay the
value of the land, when such is demanded by the land-owner, the latter becomes automatically the owner of the improvement under Article
445. The case of Bernardo vs. Bataclan, 66 Phil., 590 cited by appellants is no authority for this conclusion. Although it is true it was declared
therein that in the event of the failure of the builder to pay the land after the owner thereof has chosen this alternative, the builder's right of
retention provided in Article 546 is lost, nevertheless there was nothing said that as a consequence thereof, the builder loses entirely all rights
over his own building. The question is; what is the recourse or remedy left to the parties in such eventuality where the builder fails to pay the
value of the land? While the Code is silent on this Court in the cases of Miranda vs. Fadullon, et al., 97 Phil., 801; 51 Off. Gaz., [12] 6226;
Ignacio vs. Hilario, 76 Phil., 605 and the cited case of Bernardo vs. Bataclan, supra.
Property 153
In the first case, this Court has said:
A builder in good faith not be required to pay rentals. he has right to retain the land on which he has built in good faith until he is reimbursed
the expenses incurred by him. Possibly he might be made to pay rental only when the owner of the land chooses not to appropriate the
improvement and requires the builder in good faith to pay for the land but that the builder is unwilling or unable to pay the land, and then they
decide to leave things as they are and assume the relation of lessor and lessee, and should they disagree as to the amount of rental then
they can go to the court to fix that amount. (Emphasis supplied)
Should the parties not agree to leave things as they are and to assume the relation of lessor and lessee, another remedy is suggested in the
case of Ignacio vs. Hilario, supra, wherein the court has ruled that the owner of the land in entitled to have the improvement removed when
after having chosen to sell his land to the other party, i.e., the builder in good faith fails to pay for the same.
A further remedy is indicated in the case of Bernardo vs. Bataclan, supra, where this Court approved the sale of the land and the
improvement in a public auction applying the proceeds thereof first to the payment of the value of the land and the excess, if any, to be
delivered to the owner of the house in payment thereof.
The appellants herein, owners o the land, instead of electing any of the alternative above indicated chose to seek recovery of the value of
their land by asking for a writ of execution; levying on the house of the builder; and selling the same in public auction. Sand because they are
the highest bidder in their own auction sale, they now claim they acquired title to the building without necessity of paying in cash on account
of their bid. In other words, they in effect pretend to retain their land and acquire the house without paying a cent therefor.
This contention is without merit. This Court has already held in Matias vs. The Provincial Sheriff of Nueva Ecija (74 Phil., 326) that while it is
the inveriable practice, dictated by common sense, that where the successful bidder is the execution creditor himself, he need not pay down
the amount of the bid if it does not exceed the amount of his judgement, nevertheless, when their is a claim by a third-party, to the proceeds
of the sale superior to his judgment credit, the execution creditor, as successful bidder, must pay in cash the amount of his bid as a condition
precedent to the issuance to him of the certificate of sale. In the instant case, the Court of Appeals has already adjudged that appellee Blas is
entitled to the payment of the unpaid balance of the purchase price of the school building. Blas is actually a lien on the school building are
concerned. The order of the lower court directing the Timbang spouses, as successful bidders, to pay in cash the amount of their bid in the
sum of P5,750.00 is therefore correct.
With respect to the order of the court declaring appellee Filipinas Colleges, Inc. part owner of the land to the extent of the value of its
personal properties sold at public auction in favor of the Timbang, this Court Likewise finds the same as justified, for such amount represents,
in effect, a partial payment of the value of the land. If this resulted in the continuation of the so-called involuntary partnership questioned by
the difference between P8,200.00 — the unpaid balance of the purchase price of the building and the sum of P5,750.00 — amount to be paid
by the Timbangs, the order of the court directing the sale of such undivided interest of the Filipinas Colleges, Inc. is likewise justified to satisfy
the claim of the appellee Blas.
Considering that the appellant spouses Marcelino Timbang and Maria Garcia Timbang may not voluntarily pay the sum of P5,750.00 as
ordered, thereby further delaying the final termination of this case, the first part of the dispositive portion of the order appealed from is
modified in the sense that upon failure of the Timbang spouses to pay to the Sheriff or to Manila Gervacio Blas said sum of P5,750.00 within
fifteen (15) days from notice of the final judgment, an order of execution shall issue in favor of Maria Gervasio Blas to be levied upon all
properties of the Timbang spouses not exempt from execution for the satisfaction of the said amount.
In all other respects, the appealed order of the court a quo is hereby affirmed, with costs against the appellants.
It is so ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion and Endencia, JJ., concur.

G.R. No. L-44606 November 28, 1938

VICENTE STO. DOMINGO BERNARDO, Plaintiff-Appellant, vs. CATALINO BATACLAN, Defendant-Appellant.
TORIBIO TEODORO, purchaser-appellee.
Pedro de Leon for plaintiff-appellant.
Angel H. Mojica and Francisco Lavides for defendant appellant.
Jose Y. Garde for appellee.
chanrobles virtual law library
LAUREL, J.: chanrobles virtual law library
This is an appeal taken by both the plaintiff and the defendant from the order of September 26, 1935, hereinabove referred to, of the Court of
First Instance of Cavite in Civil Case No. 2428.chanroblesvirtualawlibrary chanrobles virtual law library
There is no controversy as to the facts. By a contract of sale executed from Pastor Samonte and others ownership of a 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 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 a possessor in good faith,
entitled to reimbursement in the total sum of P1,642, for work done and improvements made. The dispositive part of the decision reads:
Por las consideraciones expuestas, se declara al demandante Vicente Santo Domingo Bernardo dueño con derecho a la posesion del
terreno que se describe en la demanda, y al demandado Catalino Bataclan con derecho a que del demandante le pague la suma de P1,642
por gastos utiles hechos de buena fe en el terreno, y por el cerco y ponos de coco y abaca existentes en el mismo, y con derecho, ademas a
retener la posesion del terreno hasta que se le pague dicha cantidad. Al demandante puede optar, en el plazo de treinta dias, a partir de la
fecha en que fuere notificado de la presente, por pagar esa suma al demandado, haciendo asi suyos el cerco y todas las plantaciones
existentes en el terreno, u obligar al demandado a pagarle el precio terreno, a razon de trescientos pesos la hectarea. En el caso de que el

Property 154
demandante optara por que el demandado le pagara el precio del terreno, el demandado efectuara el pago en el plazo convenientes por las
partes o que sera fijado por el Juzgado. Sin costas.
Both parties appealed to this court (G. R. No. 37319). 2 The decision appealed from was modified by allowing the defendant to recover
compensation amounting 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 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 " Para hacer pago al demandante de la suma de P2,212 y el
remanente despues de deducidos los gastos legales de la venta en publica subasta sera entregado al demandante." On February 21, 1934,
plaintiff moved to reconsider the foregoing order so that he would have preference over the defendant in the order of payment. The motion
was denied on March 1, 1934 but on March 16 following the court below,motu proprio modified its order of January 24, " en el sentido de que
el demandante tiene derecho preferente al importe del terreno no se vendiere en publica subasta, a razon de P200 por hectares y el
remanente, si acaso lo hubiere se entregara al demandado en pago de la cantidad de P2,212 por la limpieza del terreno y las mejoras
introducidas en el mismo por el citado demandado." 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, the dispositive part of which is as follows:
Por tanto, se ordena al Sheriff Provincial de Cavite ponga a Toribio Teodoro en posesion del terreno comprado por el en subasta publica y
por el cual se le expidio certificado de venta definitiva, reservando al demandado su derecho de ejercitar una accion ordinaria para reclamar
del demandante la cantidad de P2,212 a que tiene derecho por la limpieza y mejoras del terreno y cuya suma, en justicia y equidad, debe
ser descontada y deducida de la suma de P8,000 que ya ha recibido el demandante.
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.chanroblesvirtualawlibrary chanrobles virtual law library
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 saarada y legitima la deuda, que, hasta que sea pagada, no consiente que la cosa se
restituya all vencedor." (4 Manresa, 4th ed, p., 304.) We find, however, that the defendant has lost his right of 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.chanroblesvirtualawlibrary chanrobles virtual law library
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 rapture of the situation thus created between them, the defendant-appellant not being
entitled, after all, to recover from the plaintiff the sum of P2,212.chanroblesvirtualawlibrary chanrobles virtual law library
The judgment of the lower court is accordingly modified by eliminating therefrom the reservation made in favor of the defendant-appellant to
recover from the plaintiff the sum of P2,212. In all the respects, the same is affirmed, without pronouncement regarding costs. So
ordered.chanroblesvirtualawlibrarychanrobles virtual law library
Avanceña, C.J., Villa-Real, Imperial and Diaz, JJ., concur.
Endnotes:
G.R. No. L-8220 October 29, 1955
SALVACION MIRANDA, plaintiff-appellants,
vs.
ESTEBAN FADULLON and spouses DIONISIO SEGARRA and CLEMENCIA N. DE SEGARRA, defendants-appellees.
Lopez, Duterte, Guillamac, Rubillos, Montecillo and Bernardo for appellees.
Gaudencio R. Juezan for appellant.
MONTEMAYOR, J.:
The present appeal was first taken to the Court of Appeals. Later by resolution of the said court it was certified to us under section 17,
paragraph 6 of the Judiciary Act of 1948, as amended, the said Tribunal being of the opinion that the case involved only questions of law.
The facts as may be gathered from the pleadings filed by the parties may be briefly stated as follows. In the year 1939 one Lucio Tio was the
owner of a parcel of land, lot 1589-J of the Banilad Estate, Cebu, under Transfer Certificate of Title No. 10548. On December 29, 1939, a
Property 155
power of attorney in favor of one Esteban Fadullon executed by Lucio Tio was registered in the land records of Cebu City and annotated on
the same certificate of title. In the year 1946, on the strength of the said power of attorney Fadullon to make the repurchase within this period,
the Segarras about ten days after the expiration of the period filed a sword petition for the consolidation of their ownership and registered
said petition in the office of the Register of Deeds on May 15, 1946. Apprised of the sale of his property, Lucio Tio on June 4, 1946, filed a
complaint in the Court of First Instance of Cebu, Civil Case No. 181 to annul the sale. Service of summons was made upon the Segarras on
June 10, 1946. After hearing the trial court rendered judgment annulling the sale. The Segarras appealed to the Court of Appeals under CA—
G. R. No.6550-R and the said Tribunal affirmed the appealed decision and further required the Segarras to pay plaintiff the reasonable
rentals on the property from the filing of the action until said property shall have been returned to plaintiff. Upon the decision becoming final
the corresponding writ of execution was issued directing the Sheriff to put plaintiff Tio in possession of the lot. It turned out however that
during the possession of the property by the Segarras they had introduced improvements thereon consisting of a building of three rooms and
a storage room, and one artesian well, with tower and water tank and a cement flooring covering about one-third of the lot which according to
the Segarras cost them P5,300. They then filed a motion with the trial court claiming that they were possessors in good faith of the lot in
question, and that they had introduced the improvements aforementioned in good faith and asked the court to order the plaintiff to pay for the
said improvements valued at P5,300 or to allow them to buy the land should the plaintiff decide not to pay for the improvements. On August
28, 1952, the trial court issued the following order:
The attorney for the plaintiff has been accordingly served with copy of defendant's motion of July 31, 1952, filed through counsel.
As prayed for, without opposition, the plaintiff is hereby ordered to either pay the defendant spouses, Dionisio Segarra and Clemencia N.
Segarra (possessors in good faith) the sum of P5,300, value of the building erected on the land in question, or otherwise allow said
defendants to purchase the aforementioned lot.
The plaintiff filed a motion for reconsideration claiming that the Segarras were possessors and builders in bad faith and so were not entitled
to reimbursement for the value of the improvements; that the reason he (plaintiff) did not file an opposition to the motion of the defendants
asking for reimbursement was that he thought that the trial court was sufficiently informed and impressed with the bad faith with which
defendants bought the land and introduced improvements thereon and that it would consequently deny their motion; and in support of his
motion for reconsideration plaintiff quoted portions of the decision of the trial court and the Court of Appeals. Upon the denial of his motion for
reconsideration, he took the present appeal.
After a careful review of the record we agree with the plaintiff-appellant. The trial court in its decision declaring the sale of the land to the
defendants null and void and commenting on the alleged good faith of defendants in buying the property said the following:
There are two circumstances which seem to stubbornly belie the professed good faith on the part of the Segarras in buying this property;
namely. the circumstances of the power-of-attorney appearing on the back of the title as of five or six years previous and the other
circumstances of the comparatively limited period of one month granted vendor Fadullon to redeem the property. Above all these, is the
further circumstance that the said property had already been mortgaged in favor of the Cebu Mutual Building and Loan Association by virtue
of that power-of-attorney.
While the evidence did not disclose a collusion or conspiracy between Fadullon and the Segarras, yet, considering the short period of one
month within which to redeem and the surrounding circumstances, the possibility of such collusion lingers.
Obviously there was in this transaction a prevailing intention of railroading the property into a new ownership as may be proven by the fact
that said purchasers filed a sworn petition for consolidating their ownership barely ten days after the expiration of thirty days, that is, on April
13, 1946, and registered with the office of Register of Deeds for Cebu twelve days thereafter, or on May 15, 1946.
The Court of Appeals in its decision affirming that of the trial court said:
The Segarra spouses maintain that they are purchasers in good faith. We will now examine the record on this point. The alleged power of
attorney executed by the late Lucio Tio in favor of appellant Fadullon was registered in the land record of the Register of Deeds of Cebu Citly
and annotated at the back of Transfer Certificate of Title No. 10548 on December 29, 1939. On the same date, the deed of mortgage in favor
of the Cebu Mutual Building and Loan Association was annotated in the said Torrens title (Exhibits 1 and 1-B). This encumbrance alone
should have been sufficient to put the Segarra spouses upon an inquiry as to the authority of Fadullon to sell to them the same property six
years later. For instance, the Segarras could have asked themselves this question: Did not the mortgage of P400 serve the purpose for which
the power of attorney was executed?
The Segarras did not require Fadullon to produce his power of attorney. While it is true that said power of attorney is annotated at the back of
the Torrens title of Tio, it was still incumbent upon the Segarras to ascertain the scope and authority of Fadullon under said power of
attorney. Fadullon executed the sale with the right to repurchase within the extraordinary short period of 30 days. This circumstance, again,
should have placed the Segarras on their guards, knowing, as they did, that they were dealing with an agent under a power of attorney
executed before the war. These unusual circumstances would seem to engender in our minds the possibility of collusion between the
appellants, to hasten the registration of the title of the Segarras to the land in dispute . . .
. . . the transfer of dominion on the property in question to the Segarras was null and void and of no effect. The new Certificate of Torrens
Title No. 392 on the property now in the name of the Segarras is hereby ordered cancelled and that a new one issued in the name of Lucio
Tio and his wife Salvacion Miranda; ordering the Segarras to return the possession of said property to plaintiff;
The defendants Segarras are furthermore required to pay plaintiff the reasonable rentals on the property from the filing of this action until
such time as the said property shall have been returned to plaintiff . . ."
Although neither the trial court nor the Court of Appeals did expressly say and in so many words that the defendants-appellees were
possessors in bad faith, from a reading of their decisions particularly those we have just quoted, one can logically infer that that was the
conclusion of the two courts, or to say it more mildly, that the defendants were not possessors in good faith. Moreover, the very fact that the
Court of Appeals sentenced the defendants to pay rentals is an indication, even proof that defendants were considered possessors and
builders in bad faith, or at least that they were not possessors and builders in good faith. A builder in good faith may not be required to pay
rentals. He has a right to retain the land on which he has built in good faith until he is reimbursed the expenses incurred by him. Possibly he
might be required to pay rental only when the owner of the land chooses not to appropriate the improvement and requires the builder in good
faith to pay for the land, but that the builder is unwilling or unable to buy the land, and then they decide to leave things as they are and
assume the relation of lessor and lessee, and should they disagree as to the amount of the rental then they can go to the court to fix that
Property 156
amount. Furthermore, plaintiff-appellant in her brief (page 7) says without denial or refutation on the part of defendants-appellees that they
(defendants) applied for a building permit to construct the improvements in question on December 4, 1946, and the permit was granted on
January 11, 1947, all this about seven months after they received the summons on June 10, 1946, meaning to say that the improvements
were introduced long after their alleged good faith as possessors had ended.
In view of the foregoing, the appealed order of August 28, 1952 and the order of October 15, 1952, denying plaintiff's motion for
reconsideration are set aside. With costs against appellees.
Paras, C. J., Bengzon, Padilla, Reyes, A., Jugo, Bautista Angelo, Labrador, Concepcion, and Reyes, J. B. L., JJ., concur.

G.R. No. L-175 April 30, 1946

DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS IGNACIO, petitioners,
vs.
ELIAS HILARIO and his wife DIONISIA DRES, and FELIPE NATIVIDAD, Judge of First Instance of Pangasinan, respondents.
Leoncio R. Esliza for petitioners.
Mauricio M. Monta for respondents.
MORAN, C.J.:
This is a petition for certiorari arising from a case in the Court of First Instance of Pangasinan between the herein respondents Elias Hilario
and his wife Dionisia Dres as plaintiffs, and the herein petitioners Damian, Francisco and Luis, surnamed Ignacio, as defendants, concerning
the ownership of a parcel of land, partly rice-land and partly residential. After the trial of the case, the lower court, presided over by Hon.
Alfonso Felix, rendered judgment holding plaintiffs as the legal owners of the whole property but conceding to defendants the ownership of
the houses and granaries built by them on the residential portion with the rights of a possessor in good faith, in accordance with article 361 of
the Civil Code. The dispositive part of the decision, hub of this controversy, follows:
Wherefore, judgment is hereby rendered declaring:
(1) That the plaintiffs are the owners of the whole property described in transfer certificate of title No. 12872 (Exhibit A) issued in their name,
and entitled to the possession of the same;
(2) That the defendants are entitled to hold the position of the residential lot until after they are paid the actual market value of their houses
and granaries erected thereon, unless the plaintiffs prefer to sell them said residential lot, in which case defendants shall pay the plaintiffs the
proportionate value of said residential lot taking as a basis the price paid for the whole land according to Exhibit B; and
(3) That upon defendant's failure to purchase the residential lot in question, said defendants shall remove their houses and granaries after
this decision becomes final and within the period of sixty (60) days from the date that the court is informed in writing of the attitude of the
parties in this respect.
No pronouncement is made as to damages and costs.
Once this decision becomes final, the plaintiffs and defendants may appear again before this court for the purpose of determining their
respective rights under article 361 of the Civil Code, if they cannot come to an extra-judicial settlement with regard to said rights.
Subsequently, in a motion filed in the same Court of First Instance but now presided over by the herein respondent Judge Hon. Felipe
Natividad, the plaintiffs prayed for an order of execution alleging that since they chose neither to pay defendants for the buildings nor to sell
to them the residential lot, said defendants should be ordered to remove the structure at their own expense and to restore plaintiffs in the
possession of said lot. Defendants objected to this motion which, after hearing, was granted by Judge Natividad. Hence, this petition by
defendants praying for (a) a restraint and annulment of the order of execution issued by Judge Natividad; (b) an order to compel plaintiffs to
pay them the sum of P2,000 for the buildings, or sell to them the residential lot for P45; or (c), a rehearing of the case for a determination of
the rights of the parties upon failure of extra-judicial settlement.
The judgment rendered by Judge Felix is founded on articles 361 and 453 of the Civil Code which are as follows:
ART. 361. The owner of land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own
the work, sowing or planting, after the payment of the indemnity stated in articles 453 and 454, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent.
ART. 453. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until such
expenses are made good to him.
Useful expenses shall be refunded to the possessor in good faith with the same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or paying the increase in value which the thing may have acquired in
consequence thereof.
The owner of the building erected in good faith on a land owned by another, is entitled to retain the possession of the land until he is paid the
value of his building, under article 453. The owner of the land, upon the other hand, has the option, under article 361, 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. But this is not the case before us.
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 not 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 and 453 of the Civil Code.
There is, however, in the decision of Judge Felix a question of procedure which calls for the clarification, to avoid uncertainty and delay in the
disposition of cases. In that decision, the rights of both parties are well defined under articles 361 and 453 of the Civil Code, but it fails to
determine the value of the buildings and of the lot where they are erected as well as the periods of time within which the option may be
exercised and payment should be made, these particulars having been left for determination apparently after the judgment has become final.
This procedure is erroneous, for after the judgment has become final, no additions can be made thereto and nothing can be done therewith
except its execution. And execution cannot be had, the sheriff being ignorant as to how, for how much, and within what time may the option
Property 157
be exercised, and certainly no authority is vested in him to settle these matters which involve exercise of judicial discretion. Thus the
judgment rendered by Judge Felix has never become final, it having left matters to be settled for its completion in a subsequent proceeding,
matters which remained unsettled up to the time the petition is filed in the instant case.
For all the foregoing, the writ of execution issued by Judge Natividad is hereby set aside and the lower court ordered to hold a hearing in the
principal case wherein it must determine the prices of the buildings and of the residential lot where they are erected, as well as the period of
time within which the plaintiffs-respondents may exercise their option either to pay for the buildings or to sell their land, and, in the last
instance, the period of time within which the defendants-petitioners may pay for the land, all these periods to be counted from the date the
judgment becomes executory or unappealable. After such hearing, the court shall render a final judgment according to the evidence
presented by the parties.
The costs shall be paid by plaintiffs-respondents.
Ozaeta, Paras, Jaranilla, Feria, De Joya, Pablo, Perfecto, Hilado, Bengzon and Briones, JJ., concur.

HEIRS OF EMILIANO NAVARRO, petitioner, vs. INTERMEDIATE APPELLATE COURT AND HEIRS OF SINFOROSO PASCUAL,
respondents. G.R. No. 68166. February 12, 1997 D E C I S I O N HERMOSISIMA, JR., J.:
Unique is the legal question visited upon the claim of an applicant in a Land Registration case by oppositors thereto, the Government and
a Government lessee, involving as it does ownership of land formed by alluvium.
The applicant owns the property immediately adjoining the land sought to be registered. His registered property is bounded on the east
by the Talisay River, on the west by the Bulacan River, and on the north by the Manila Bay. The Talisay River and the Bulacan River flow down
towards the Manila Bay and act as boundaries of the applicant's registered land on the east and on the west.
The land sought to be registered was formed at the northern tip of the applicant's land. Applicant's registered property is bounded on the
north by the Manila Bay.
The issue: May the land sought to be registered be deemed an accretion in the sense that it naturally accrues in favor of the riparian
owner or should the land be considered as foreshore land?
Before us is a petition for review of: (1) the decision[1] and (2) two subsequent resolutions[2] of the Intermediate Appellate Court[3] (now
the Court of Appeals) in Land Registration Case No. N-84,[4] the application over which was filed by private respondents' predecessor-in-
interest, Sinforoso Pascual, now deceased, before the Court of First Instance[5] (now the Regional Trial Court) of Balanga, Bataan.
There is no dispute as to the following facts:

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

Subsequently, petitioners' predecessor-in-interest, also now deceased, Emiliano Navarro, filed a fishpond application with the Bureau of
Fisheries covering twenty five (25) hectares of foreshore land also in Sibocon, Balanga, Bataan. Initially, such application was denied by the
Director of Fisheries on the ground that the property formed part of the public domain. Upon motion for reconsideration, the Director of
Fisheries, on May 27, 1988, gave due course to his application but only to the extent of seven (7) hectares of the property as may be certified
by the Bureau of Forestry as suitable for fishpond purposes.

The Municipal Council of Balanga, Bataan, had opposed Emiliano Navarro's application. Aggrieved by the decision of the Director of
Fisheries, it appealed to the Secretary of Natural Resources who, however, affirmed the grant. The then Executive Secretary, acting in behalf
of the President of the Philippines, similarly affirmed the grant.

On the other hand, sometime in the early part of 1960, Sinforoso Pascual filed an application to register and confirm his title to a parcel of
land, situated in Sibocon, Balanga, Bataan, described in Plan Psu-175181 and said to have an area of 146,611 square meters. Pascual
claimed that this land is an accretion to his property, situated in Barrio Puerto Rivas, Balanga, Bataan, and covered by Original Certificate of
Title No. 6830. It is bounded on the eastern side by the Talisay River, on the western side by the Bulacan River, and on the northern side by
the Manila Bay. The Talisay River as well as the Bulacan River flow downstream and meet at the Manila Bay thereby depositing sand and silt
on Pascual's property resulting in an accretion thereon. Sinforoso Pascual claimed the accretion as the riparian owner.

On March 25, 1960, the Director of Lands, represented by the Assistant Solicitor General, filed an opposition thereto stating that neither
Pascual nor his predecessors-in-interest possessed sufficient title to the subject property, the same being a portion of the public domain and,
therefore, it belongs to the Republic of the Philippines. The Director of Forestry, through the Provincial Fiscal, similarly opposed Pascual's

Property 158
application for the same reason as that advanced by the Director of Lands. Later on, however, the Director of Lands withdrew his
opposition. The Director of Forestry become the sole oppositor.

On June 2, 1960, the court a quo issued an order of general default excepting the Director of Lands and the Director of Forestry.

Upon motion of Emiliano Navarro, however, the order of general default was lifted and, on February 13, 1961, Navarro thereupon filed an
opposition to Pascual's application. Navarro claimed that the land sought to be registered has always been part of the public domain, it being
a part of the foreshore of Manila Bay; that he was a lessee and in possession of a part of the subject property by virtue of a fishpond permit
issued by the Bureau of Fisheries and confirmed by the Office of the President; and that he had already converted the area covered by the
lease into a fishpond.

During the pendency of the land registration case, that is, on November 6, 1960, Sinforoso Pascual filed a complaint for ejectment against
Emiliano Navarro, one Marcelo Lopez and their privies, alleged by Pascual to have unlawfully claimed and possessed, through stealth, force
and strategy, a portion of the subject property covered by Plan Psu-175181. The defendants in the case were alleged to have built a
provisional dike thereon: thus they have thereby deprived Pascual of the premises sought to be registered. This, notwithstanding repeated
demands for defendants to vacate the property.

The case was decided adversely against Pascual. Thus, Pascual appealed to the Court of First Instance (now Regional Trial Court) of
Balanga, Bataan, the appeal having been docketed as Civil Case No. 2873. Because of the similarity of the parties and the subject matter,
the appealed case for ejectment was consolidated with the land registration case and was jointly tried by the court a quo.

During the pendency of the trial of the consolidated cases, Emiliano Navarro died on November 1, 1961 and was substituted by his heirs, the
herein petitioners.

Subsequently, on August 26, 1962, Pascual died and was substituted by his heirs, the herein private respondents.

On November 10, 1975, the court a quo rendered judgment finding the subject property to be foreshore land and, being a part of the public
domain, it cannot be the subject of land registration proceedings.

The decision's dispositive portion reads:

"WHEREFORE, judgment is rendered:

(1) Dismissing plaintiff [private respondent] Sinforoso Pascual's complaint for ejectment in Civil Case No. 2873;

(2) Denying the application of Sinforoso Pascual for land registration over the land in question; and

(3) Directing said Sinforoso Pascual, through his heirs, as plaintiff in Civil Case No. 2873 and as applicant in Land Registration Case No. N-
84 to pay costs in both instances."[6]

The heirs of Pascual appealed and, before the respondent appellate court, assigned the following errors:

"1. The lower court erred in not finding the land in question as an accretion by the action of the Talisay and Bulacan Rivers to the land
admittedly owned by applicants-appellants [private respondents].

2. The lower court erred in holding that the land in question is foreshore land.

3. The lower court erred in not ordering the registration of the and is controversy in favor of applicants-appellants [private respondents].

4. The lower court erred in not finding that the applicants-appellants [private respondents] are entitled to eject the oppositor-appellee
[petitioners]."[7]

On appeal, the respondent court reversed the findings of the court a quo and granted the petition for registration of the subject property
but excluding therefrom fifty (50) meters from corner 2 towards corner 1; and fifty meters (50) meters from corner 5 towards corner 6 of the
Psu-175181.
The respondent appellate court explained the reversal in this wise:

Property 159
"The paramount issue to be resolved in this appeal as set forth by the parties in their respective briefs is whether or not the land sought to be
registered is accretion or foreshore land, or, whether or not said land was formed by the action of the two rivers of Talisay and Bulacan or by
the action of the Manila Bay. If formed by the action of the Talisay and Bulacan rivers, the subject land is accretion but if formed by the action
of the Manila Bay then it is foreshore land.

xxx

It is undisputed that applicants-appellants [private respondents] owned the land immediately adjoining the land sought to be registered. Their
property which is covered by OCT No. 6830 is bounded on the east by the Talisay River, on the west by the Bulacan River, and on the north
by the Manila Bay. The Talisay and Bulacan rivers come from inland flowing downstream towards the Manila Bay. In other words, between
the Talisay River and the Bulacan River is the property of applicants with both rivers acting as the boundary to said land and the flow of both
rivers meeting and emptying into the Manila Bay. The subject land was formed at the tip or apex of appellants' [private respondents'] land
adding thereto the land now sought to be registered.

This makes this case quite unique because while it is undisputed that the subject land is immediately attached to appellants' [private
respondents'] land and forms the tip thereof, at the same time, said land immediately faces the Manila Bay which is part of the sea. We can
understand therefore the confusion this case might have caused the lower court, faced as it was with the uneasy problem of deciding whether
or not the subject land was formed by the action of the two rivers or by the action of the sea. Since the subject land is found at the shore of
the Manila Bay facing appellants' [private respondents'] land, it would be quite easy to conclude that it is foreshore and therefore part of the
patrimonial property of the State as the lower court did in fact rule x x x .

xxx

It is however undisputed that appellants' [private respondents'] land lies between these two rivers and it is precisely appellants' [private
respondents'] land which acts as a barricade preventing these two rivers to meet. Thus, since the flow of the two rivers is downwards to the
Manila Bay the sediments of sand and silt are deposited at their mouths.

It is, therefore, difficult to see how the Manila Bay could have been the cause of the deposit thereat for in the natural course of things, the
waves of the sea eat the land on the shore, as they suge [sic] inland. It would not therefore add anything to the land but instead subtract from
it due to the action of the waves and the wind. It is then more logical to believe that the two rivers flowing towards the bay emptied their cargo
of sand, silt and clay at their mouths, thus causing appellants' [private respondents'] land to accumulate therein.

However, our distinguished colleage [sic], Mr. Justice Serrano, do [sic] not seem to accept this theory and stated that the subject land arose
only when x x x Pascual planted 'palapat' and 'bakawan' trees thereat to serve as a boundary or strainer. But we do not see how this act of
planting trees by Pascual would explain how the land mass came into being. Much less will it prove that the same came from the
sea. Following Mr. Justice Serrano's argument that it were the few trees that acted as strainers or blocks, then the land that grew would have
stopped at the place where the said trees were planted. But this is not so because the land mass went far beyond the boundary, or where the
trees were planted.

On the other hand, the picture-exhibits of appellants' [private respondents'] clearly show that the land that accumulated beyond the so-called
boundary, as well as the entire area being applied for is dry land, above sea level, and bearing innumerable trees x x x. The existence of
vegetation on the land could only confirm that the soil thereat came from inland rather than from the sea, for what could the sea bring to the
shore but sand, pebbles, stones, rocks and corrals? On the other hand, the two rivers would be bringing soil on their downward flow which
they brought along from the eroded mountains, the lands along their path, and dumped them all on the northern portion of appellants' [private
respondents'] land.

In view of the foregoing, we have to deviate from the lower court's finding. While it is true that the subject land is found at the shore of the
Manila Bay fronting appellants' [private respondents'] land, said land is not foreshore but an accretion from the action of the Talisay and
Bulacan rivers. In fact, this is exactly what the Bureau of Lands found out, as shown in the following report of the Acting Provincial Officer,
Jesus M. Orozco, to wit:

'Upon ocular inspection of the land subject of this registration made on June 11, 1960, it was found out that the said land is x x x sandwitched
[sic] by two big rivers x x x These two rivers bring down considerable amount of soil and sediments during floods every year thus raising the
soil of the land adjoining the private property of the applicant [private respondents]. About four-fifth [sic] of the area applied for is now dry land
whereon are planted palapat trees thickly growing thereon. It is the natural action of these two rivers that has caused the formation of said
land x x x subject of this registration case. It has been formed, therefore, by accretion. And having been formed by accretion, the said land
may be considered the private property of the riparian owner who is the applicant herein [private respondents'] x x x .

In view of the above, the opposition hereto filed by the government should be withdrawn, except for the portion recommended by the land
investigator in his report dated May 2, 1960, to be excluded and considered foreshore. x x x'

Property 160
Because of this report, no less than the Solicitor General representing the Bureau of Lands withdrew his opposition dated March 25, 1960,
and limited 'the same to the northern portion of the land applied for, compromising a strip 50 meters wide along the Manila Bay, which should
be declared public land as part of the foreshore' x x x. [8]

Pursuant to the aforecited decision, the respondent appellate court ordered the issuance of the corresponding decree of registration in the
name of private respondents and the reversion to private respondents of the possession of the portion of the subject property included in
Navarro's fishpond permit.
On December 20, 1978, petitioners filed a motion for reconsideration of the aforecited decision. The Director of Forestry also moved for
the reconsideration of the same decision. Both motions were opposed by private respondents on January 27, 1979.
On November 21, 1980, respondent appellate court promulgated a resolution denying the motion for reconsideration filed by the Director
of Forestry. It, however, modified its decision, to read, viz:

"(3). Ordering private oppositors Heirs of Emiliano Navarro to vacate that portion included in their fishpond permit covered by Plan Psu-
175181 and hand over possession of said portion to applicants-appellants, if the said portion is not within the strip of land fifty (50) meters
wide along Manila Bay on the northern portion of the land subject of the registration proceedings and which area is more particularly referred
to as fifty (50) meters from corner 2 towards corner 1; and fifty (50) meters from corner 5 towards corner 6 of Plan Psu-175181. x x x[9]

On December 15, 1980, we granted the Solicitor General, acting as counsel for the Director of Forestry, an extension of time within which
to file in this court, a petition for review of the decision dated November 29, 1978 of the respondent appellate court and of the aforecited
resolution dated November 21, 1980.
Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed a petition for review entitled, "The Director of Forestry vs. the
Court of Appeals."[10] We, however, denied the same in a minute resolution dated July 20, 1981, such petition having been prematurely filed at
a time when the Court of Appeals was yet to resolve petitioners' pending motion to set aside the resolution dated November 21, 1980.
On October 9, 1981, respondent appellate court denied petitioners' motion for reconsideration of the decision dated November 29, 1978.
On October 17, 1981, respondent appellate court made an entry of judgment stating that the decision dated November 29, 1978 had
become final and executory as against herein petitioners as oppositors in L.R.C. Case No. N-84 and Civil Case No. 2873 of the Court of First
Instance (now the Regional Trial Court) of Balanga, Bataan.
On October 26, 1981, a second motion for reconsideration of the decision dated November 29, 1978 was filed by petitioners' new counsel.
On March 26, 1982, respondent appellate court issued a resolution granting petitioners' request for leave to file a second motion for
reconsideration.
On July 13, 1984, after hearing, respondent appellate court denied petitioners' second motion for reconsideration on the ground that the
same was filed out of time, citing Rule 52, Section 1 of the Rules of Court which provides that a motion for reconsideration shall be made ex-
parte and filed within fifteen (15) days from the notice of the final order or judgment.
Hence this petition where the respondent appellate court is imputed to have palpably erred in appreciating the facts of the case and to
have gravely misapplied statutory and case law relating to accretion, specifically, Article 457 of the Civil Code.
We find merit in the petition.
The disputed property was brought forth by both the withdrawal of the waters of Manila Bay and the accretion formed on the exposed
foreshore land by the action of the sea which brought soil and sand sediments in turn trapped by the palapat and bakawan trees planted
thereon by petitioner Sulpicio Pascual in 1948.
Anchoring their claim of ownership on Article 457 of the Civil Code, private respondents vigorously argue that the disputed 14-hectare
land is an accretion caused by the joint action of the Talisay and Bulacan Rivers which run their course on the eastern and western boundaries,
respectively, of private respondents' own tract of land.
Accretion as a mode of acquiring property under said Article 457, requires the concurrence of the following requisites: (1) that the
accumulation 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 the accretion takes place is adjacent to the bank of the river.[11] Accretion is the process whereby the soil is deposited, while alluvium
is the soil deposited on the estate fronting the river bank; [12] the owner of such estate is called the riparian owner. Riparian owners are, strictly
speaking, distinct from littoral owners, the latter being owners of lands bordering the shore of the sea or lake or other tidal waters.[13] The
alluvium, by mandate of Article 457 of the Civil Code, is automatically owned by the riparian owner from the moment the soil deposit can be
seen[14] but is not automatically registered property, hence, subject to acquisition through prescription by third persons. [15]
Private respondents' claim of ownership over the disputed property under the principle of accretion, is misplaced.
First, the title of private respondents' own tract of land reveals its northeastern boundary to be Manila Bay. Private respondents' land,
therefore, used to adjoin, border or front the Manila Bay and not any of the two rivers whose torrential action, private respondents insist, is to
account for the accretion on their land. In fact, one of the private respondents, Sulpicio Pascual, testified in open court that the waves of Manila

Property 161
Bay used to hit the disputed land being part of the bay's foreshore but, after he had planted palapat and bakawan trees thereon in 1948, the
land began to rise.[16]
Moreover, there is no dispute as to the location of: (a) the disputed land; (b) private respondents' own tract of land; (c) the Manila Bay;
and, (d) the Talisay and Bulacan Rivers. Private respondents' own land lies between the Talisay and Bulacan Rivers; in front of their land on
the northern side lies now the disputed land where before 1948, there lay the Manila Bay. If the accretion were to be attributed to the action of
either or both of the Talisay and Bulacan Rivers, the alluvium should have been deposited on either or both of the eastern and western
boundaries of private respondents' own tract of land, not on the northern portion thereof which is adjacent to the Manila Bay. Clearly lacking,
thus, is the third requisite of accretion, which is, that the alluvium is deposited on the portion of claimant's land which is adjacent to the river
bank.
Second, there is no dispute as to the fact that private respondents' own tract of land adjoins the Manila Bay. Manila Bay is obviously not
a river, and jurisprudence is already settled as to what kind of body of water the Manila Bay is. It is to be remembered that we held that:

"Appellant next contends that x x x Manila Bay cannot be considered as a sea. We find said contention untenable. A bay is part of the sea,
being a mere indentation of the same:

'Bay. An opening into the land where the water is shut in on all sides except at the entrance; an inlet of the sea; an arm of the sea, distinct
from a river, a bending or curbing of the shore of the sea or of a lake.' 7 C.J. 1013-1014."[17]

The disputed land, thus, is an accretion not on a river bank but on a sea bank, or on what used to be the foreshore of Manila Bay which
adjoined private respindents' own tract of land on the northern side. As such, the applicable law is not Article 457 of the Civil Code but Article
4 of the Spanish Law of Waters of 1866.
The process by which the disputed land was formed, is not difficult to discern from the facts of the case. As the trial court correctly
observed:

"A perusal of the survey plan x x x of the land subject matter of these cases shows that on the eastern side, the property is bounded by
Talisay River, on the western side by Bulacan River, on the southern side by Lot 1436 and on the northern side by Manila Bay. It is not
correct to state that the Talisay and Bulacan Rivers meet a certain portion because the two rivers both flow towards Manila Bay. The Talisay
River is straight while the Bulacan River is a little bit meandering and there is no portion where the two rivers meet before they end up at
Manila Bay. The land which is adjacent to the property belonging to Pascual cannot be considered an accretion [caused by the action of the
two rivers].

Applicant Pascual x x x has not presented proofs to convince the Court that the land he has applied for registration is the result of the settling
down on his registered land of soil, earth or other deposits so as to be rightfully be considered as an accretion [caused by the action of the
two rivers]. Said Art. 457 finds no applicability where the accretion must have been caused by action of the bay."[18]

The conclusion formed by the trial court on the basis of the foregoing observation is that the disputed land is part of the foreshore of
Manila Bay and therefore, part of the public domain. The respondent appellate court, however, perceived the fact that petitioners' own land lies
between the Talisay and Bulacan Rivers, to be basis to conclude that the disputed land must be an accretion formed by the action of the two
rivers because private respondents' own land acted as a barricade preventing the two rivers to meet and that the current of the two rivers
carried sediments of sand and silt downwards to the Manila Bay which accumulated somehow to a 14-hectare land. These conclusions,
however, are fatally incongruous in the light of the one undisputed critical fact: the accretion was deposited, not on either the eastern or western
portion of private respondents' land where a river each runs, but on the northern portion of petitioners' land which adjoins the Manila Bay. Worse,
such conclusions are further eroded of their practical logic and consonance with natural experience in the light of Sulpicio Pascual's admission
as to having planted palapat and bakawan trees on the northern boundary of their own land. In amplification of this, plainly more reasonable
and valid are Justice Mariano Serrano's observations in his dissenting opinion when he stated that:

"As appellants' (titled) land x x x acts as a barricade that prevents the two rivers to meet, and considering the wide expanse of the boundary
between said land and the Manila Bay, measuring some 593.00 meters x x x it is believed rather farfetched for the land in question to have
been formed through 'sediments of sand and salt [sic] . . . deposited at their [rivers'] mouths.' Moreover, if 'since the flow of the two rivers is
downwards to the Manila Bay the sediments of sand and silt are deposited at their mouths,' why then would the alleged cargo of sand, silt
and clay accumulate at the northern portion of appellants' titled land facing Manila Bay instead of merely at the mouths and banks of these
two rivers? That being the case, the accretion formed at said portion of appellants' titled [land] was not caused by the current of the two rivers
but by the action of the sea (Manila Bay) into which the rivers empty.

The conclusion x x x is not supported by any reference to the evidence which, on the contrary, shows that the disputed land was formed by
the action of the sea. Thus, no less than Sulpicio Pascual, one of the heirs of the original applicant, testified on cross-examination that the
land in dispute was part of the shore and it was only in 1948 that he noticed that the land was beginning to get higher after he had planted
trees thereon in 1948. x x x

Property 162
x x x it is established that before 1948 sea water from the Manila Bay at high tide could reach as far as the dike of appellants' fishpond within
their titled property, which dike now separates this titled property from the land in question. Even in 1948 when appellants had already
planted palapat and bakawan trees in the land involved, inasmuch as these trees were yet small, the waves of the sea could still reach the
dike. This must be so because in x x x the survey plan of the titled property approved in 1918, said titled land was bounded on the north by
Manila Bay. So Manila Bay was adjacent to it on the north. It was only after the planting of the aforesaid trees in 1948 that the land in
question began to rise or to get higher in elevation.

The trees planted by appellants in 1948 became a sort of strainer of the sea water and at the same time a kind of block to the strained
sediments from being carried back to the sea by the very waves that brought them to the former shore at the end of the dike, which must
have caused the shoreline to recede and dry up eventually raising the former shore leading to the formation of the land in question."[19]

In other words, the combined and interactive effect of the planting of palapat and bakawan trees, the withdrawal of the waters of Manila Bay
eventually resulting in the drying up of its former foreshore, and the regular torrential action of the waters of Manila Bay, is the formation of the
disputed land on the northern boundary of private respondents' own tract of land.

The disputed property is an accretion on a sea bank, Manila Bay being an inlet or an arm of the sea; as such, the disputed property is, under
Article 4 of the Spanish Law of Waters of 1866, part of the public domain.

At the outset, there is a need to distinguish between Manila Bay and Laguna de Bay.
While we held in the case of Ignacio v. Director of Lands and Valeriano[20] that Manila Bay is considered a sea for purposes of determining
which law on accretion is to be applied in multifarious situations, we have ruled differently insofar as accretions on lands adjoining the Laguna
de Bay are concerned.
In the cases of Government of the P.I v. Colegio de San Jose,[21] Republic v. Court of Appeals,[22] Republic v. Alagad[23], and Meneses v.
Court of Appeals,[24] we categorically ruled that Laguna de Bay is a lake the accretion on which, by the mandate of Article 84 of the Spanish
Law of Waters of 1866, belongs to the owner of the land contiguous thereto.
The instant controversy, however, brings a situation calling for the application of Article 4 of the Spanish Law of Waters of 1866, the
disputed land being an accretion on the foreshore of Manila Bay which is, for all legal purposes, considered a sea.
Article 4 of the Spanish Law of Waters of August 3, 1866 provides as follows:

"Lands added to the shores by accretions and alluvial deposits caused by the action of the sea, form part of the public domain. When they
are no longer washed by the waters of the sea and are not necessary for purposes of public utility, or for the establishment of special
industries, or for the coast-guard service, the Government shall declare them to be the property of the owners of the estates adjacent thereto
and as increment thereof."

In the light of the aforecited vintage but still valid law, unequivocal is the public nature of the disputed land in this con troversy, the same
being an accretion on a sea bank which, for all legal purposes, the foreshore of Manila Bay is. As part of the public domain, the herein disputed
land is intended for public uses, and "so long as the land in litigation belongs to the national domain and is reserved for public uses, it is not
capable of being appropriated by any private person, except through express authorization granted in due form by a competent
authority."[25]Only the executive and possibly the legislative departments have the right and the power to make the declaration that the lands
so gained by action of the sea is no longer necessary for purposes of public utility or for the cause of establishment of special industries or for
coast guard services.[26] Petitioners utterly fail to show that either the executive or legislative department has already declared the disputed
land as qualified, under Article 4 of the Spanish Law of Waters of 1866, to be the property of private respondents as owners of the estates
adjacent thereto.
WHEREFORE, the instant Petition for Review is hereby GRANTED.
The decision of the Intermediate Appellate Court (now Court of Appeals) in CA G.R. No. 59044-R dated November 29, 1978 is hereby
REVERSED and SET ASIDE. The resolution dated November 21, 1980 and March 28, 1982, respectively, promulgated by the Intermediate
Appellate Court are likewise REVERSED and SET ASIDE.
The decision of the Court of First Instance (now the Regional Trial Court), Branch 1, Balanga, Bataan, is hereby ORDERED REINSTATED.
Costs against private respondents.
SO ORDERED.
Padilla, (Chairman), Bellosillo and Kapunan, JJ., concur.
Vitug, J., concurs; The amendatory provisions of the Water Code (P.D. 1067) did not affect Article 4 of the Spanish Law of Waters of
1866.

Property 163
PABLITO MENESES and LORENZO MENESES, petitioners, vs. THE HONORABLE COURT OF APPEALS, EDUARDO QUISUMBING,
NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all surnamed Quisumbing), HEIRS OF
FERNANDO QUISUMBING (Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed Quisumbing), HEIRS OF
MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing) and HEIRS OF
FRANCISCO QUISUMBING (Fe, Johnny, Ma. Luisa, Norberto, Jimmy, Ma. Victoria, Elsa and Oscar, all surnamed Quisumbing), all
represented by Atty. Galileo Brion, respondents. G.R. No. 82220 July 14, 1995

CESAR ALMENDRAL, petitioner, vs. EDUARDO QUISUMBING, respondent. G.R. No. 82251 July 14, 1995

EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all surnamed
Quisumbing), HEIRS OF FERNANDO QUISUMBING, (Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed
Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing)
and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Victoria, Elsa and Oscar, all surnamed Quisumbing), petitioners, vs.
HON. COURT OF APPEALS, PABLITO MENESES, LORENZO MENESES and BRAULIO C. DARUM, respondents. G.R. No. 83059 July
14, 1995 QUIASON, J.:

For review in these consolidated petitions is the Decision dated August 31, 1987 of the Court of Appeals in CA-G.R. CV No. 07049 affirming
the Decision dated March 26, 1984 of the Regional Trial Court, Branch 37, Calamba, Laguna, in Civil Case No. 474-83-C which declared as
null and void the original certificates of title and free patents issued to Pablito Meneses over lots found by the court to be accretion lands
forming parts of the bigger accretion land owned by Ciriaca Arguelles Vda. de Quisumbing.

Property 164
 I

On March 1, 1977, Braulio C. Darum, then the District Land Officer of Los Baños, Laguna, issued to Pablito Meneses Free Patent No. (IV-5)
P-12807 and Original Certificate of Title No. P-1268 covering Lot 1585 with an area of 417 square meters, and Free Patent No (IV-5) 12808
and Original Certificate of Title No P-1269 for Lot 190 with an area of 515 square meters. Both lots are located in Los Baños, Laguna.

Pablito Meneses acquired said property from Silverio Bautista through a Deed of Waiver and Transfer of Rights executed on May 5, 1975 in
consideration of Bautista's "love and affection" for and "some monetary obligations" in favor of Pablito Meneses (Rollo, p. 45). After the
execution of said document, Pablito Meneses took possession of the land, introduced improvements thereon, declared the land as his own
for tax purposes and paid the corresponding realty taxes. In turn, Bautista acquired the 900-square-meter land from his aunt, Sergia
(Gliceria) M. Almeda. He had been occupying the land since 1956.

On the other hand, the Quisumbing family traces ownership of the land as far back as September 6, 1919 when their matriarch, Ciriaca
Arguelles Vda. de Quisumbing was issued Original Certificate of Title No. 989 covering a lot with an area of 859 square meters located in Los
Baños, Laguna with the Laguna de Bay as its northwestern boundary. The same parcel of land was registered on August 14, 1973 under
Transfer Certificate of Title No. T-33393 in the names of Ciriaca's heirs: Emilio, Manuel, Eduardo, Norberto, Perla, Josefina, Napoleon,
Honorato, Remedios and Alfonso, all surnamed Quisumbing.

In 1962, the Quisumbing instituted and accion publiciana in the then Court of First Instance of Biñan, Laguna to recover possession over a
portion of the property from Dominga Villamor and Lorenzo Lanuzo docketed as Civil Case No. B-350. On January 3, 1966, the case was
decided in favor of the Quisumbings. On appeal, the Court of Appeals sustained the Quisumbings' right over the property.

In LRC Case No. B-327, the Quisumbings applied for registration and confirmation of title over an additional area of 2,387 square meters
which had gradually accrued to their property by the natural action of the waters of Laguna de Bay. In its Decision of September 28, 1978,
the Court of First Instance of Biñan confirmed the Quisumbings' title thereto which, after it was duly surveyed, was identified as Psu-208327.
The additional area was divided into two lots in the survey plan approved by the Director of Lands on November 16, 1964. In ordering the
confirmation and registration of title on favor of the Quisumbings, the land registration court said:

. . . There is no doubt that the applicants' right to the property was bolstered by the unappealed decision of the Court of
Appeals in Civil Case No. B-350 of this Court when the properties applied for were classified as accretions made by the
waters of the Laguna Lake. . . . (G.R. No. 82229, Rollo, p. 20).

On April 17, 1979, the Quisumbings filed Civil Case No. 07049 before the Court of First Instance of Laguna, Branch VI, Calamba against
Lorenzo and Pablito Meneses, Braulio C. Darum and Cesar B. Almendral for nullification of the free patents and titles issued to Pablito
Meneses. They alleged that Lorenzo Menesis, then the Mayor of Los Baños, using his brother Pablito as a "tool and dummy," illegally
occupied their "private accretion land" an August 6, 1976, and, confederating with District Land Officer Darum and Land Inspector Cesar
Almendral, obtained free patents and original certificates of title to the land.

On March 26, 1984, the trial court rendered the decision finding that the lands registered by the Meneses brothers are accretion lands to
which the Quisumbings have a valid right as owners of the riparian land to which nature had gradually deposited the disputed lots. In so
holding, the trial court relied heavily on the decision of the Court of Appeals in Civil Case No. B-350, and quoted the following portions of the
appellate court's decision:

Plaintiffs-appellees are titled owners of a (sic) 859 square meters of land under TCT No. 25978 of the Laguna Land
Registry, the northwest boundary of which is the Laguna de Bay.

It is ascertained that the northwest portion of Quisumbing's lot is bounded by the Laguna de Bay. The nature of the Laguna
de Bay has long been settled in the case of Government of the Philippines v. Colegio de San Jose (55 Phil. 423) when it
held that:

Laguna de Bay is a body of water formed in depression of the earth; it contains fresh water coming
from rivers and brooks and springs, and is connected with Manila Bay by the Pasig River. According to
the definition first quoted, Laguna de Bay is a lake.

Consequently, since Laguna de Bay is a lake, the authorities cited by the appellants referring to seashore would not apply.
The provision of the law on waters will govern in determining the natural bed or basin of the lake. And accordingly, to Art.
84 of the Law of Waters of August 3, 1866:

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

Property 165
 Since the title indicate(s) that the northwest portion of the property is bounded by Laguna de Bay, which is a lake, even if
the area where Lanuza's house and Villamor's house for that matter is located is not included within the title, it must
necessarily be an accretion upon appellees' land by accessions or sediments from the waters thereof which should belong
to the owner of the adjacent land. The authorities cited by the appellants treat of the ownership of accretions by water of
the sea under Title I. Lakewaters being terrestrial waters, their ownership is governed by Title II of the Law of Waters. As
held in the Colegio de San Jose case, the provisions of the Law of Waters regulating the ownership and use of sea water
are not applicable to the ownership and use of lakes which are governed by different provisions. As pointed out by the
lower court, no act of appropriation is necessary in order to acquire ownership of the alluvial formation as the law does not
require the same (Ignacio Grande, et al. vs. Hon. Court of Appeals, et al., G.R. No. L-17652, June 30, 1962 citing Roxas
vs. Tuazon, 9 Phil. 408; Cortez vs. City of Manila, 10 Phil. 567 and 3 Manresa, C.C. pp. 321-326, pp. 4-5) (Records, pp.
80-84).

The trial court also found that the free patents issued to Pablito Meneses had been procured through fraud, deceit and bad faith, citing the
following facts as bases for its conclusion: (1) The Deed of Waiver and Transfer of Rights allegedly executed by Silverio Bautista in favor of
Pablito Meneses was a simulated contract for lack of consideration; (2) The said instrument was sworn to before Mayor Lorenzo Meneses
who had no authority to notarize deeds of conveyances; (3) Although the lots subject of the deed of conveyance were placed in his brother's
name, Mayor Meneses actually exercised rights of ownership thereto; (4) Land Inspector Cesar Almendral admitted having anomalously
prepared the documents to support the free patent applications of Pablito Meneses and, having personally filled up the blank forms, signed
them in the absence of the persons concerned; (5) Almendral kept the documents in his possession from 1979 to 1980 despite orders from
the Director of Lands to produce and surrender the same; (6) District Land Officer Braulio Darum approved the free patent applications and
issued the questioned titles without the required cadastral survey duly approved by the Director of Lands and despite the pendency of LRC
Case No. B-327 involving the contested lots; (7) Darum represented the Bureau of Lands in LRC Case No. B-327 without authority from the
Director of Lands and after he had withdrawn his appearance in said case, persisted in filing a motion to set aside the order for the issuance
of a decree in favor of the Quisumbings; (8) Darum and Almendral in bad faith, refused to produce the missing original records of the free
patent applications and their supporting documents; and (9) When Darum was not yet an oppositor in LRC Case No. B-327, he admitted in
his letter to the Land Registration Commission that the contested lots are portions of the land being claimed by the Quisumbings contrary to
his later representation in the joint answer to the petition that the subject lots are not portions of Lots 1 and 2, Psu-208327 owned by the
Quisumbings. Accordingly, the trial court disposed of the case as follows:

WHEREFORE, judgment is hereby rendered:

1. Declaring that the lands covered by Pablito Meneses' Original Certificate of Title No. P-1268/Free Patent No. 12807
(Exh. "J"), covering Lot No. 1585, consisting of 417 square meters and Original Certificate of Title No. P-1269/Free Patent
No. 12808 (Exh. "H"), covering Lot No. 190, consisting of 515 square meters, both located at Los Baños, Laguna, as
accretion lands forming parts of a bigger accretion land owned by plaintiffs as declared in a final judgment (Exh. "A"),
rendered by the Court of First Instance of Biñan, Laguna, in LRC Case No. B-327, which bigger accretion land is directly
adjacent to or at the back of plaintiffs' riparian land, and consequently, declaring as null and void and cancelled Original
Certificate of Title No. P-1268/Free Patent No. 12807 and Original Certificate of Title No. P-1269/Free Patent No. 12808;

2. Directing that the Register of Deeds of Laguna or his Deputy at Calamba, Laguna, to make the corresponding entries of
cancellation in his Registry of the above mentioned Original Certificate of Titles/Free Patents;

3. Directing defendants Lorenzo Meneses and Pablito Meneses and all persons acting in their behalves to vacate the
subject lands and surrender the possession thereof to the plaintiffs immediately; and

4. Directing the defendants to pay jointly and severally, the plaintiffs the sums of:

a) P20,000.00, plus P500.00 per month from January, 1977, until the subject property is completely
vacated, as actual and compensatory damages;

b) P350,000.00, as moral damages;

c) P70,000.00 as exemplary damages;

d) P40,000.00, as attorney's fees; and

e) the costs (Rollo, pp. 41-42).

Thereafter, the Quisumbings filed a motion for execution pending appeal which the trial court granted in its Order of September 7, 1984
subject to the posting by the Quisumbings of a bond in the amount of P500,000.00. The defendants unsuccessfully moved for the
reconsideration of said order.
Property 166
The Quisumbings also filed before the Sandiganbayan a complaint against Pablito Meneses, Silverio Bautista, Pablo Silva, Virgilio Cruz and
Cesar Almendral for violation of paragraphs (e) and (j), Section 3 of Republic Act No. 3019, for conspiring in the approval and grant of the
free patents over portions of Lots 1 & 2 of Psu-208327 owned by the heirs of Ciriaca Arguelles Vda. de Quisumbing. In due course, the
Sandiganbayan rendered a decision finding the defendants guilty as charged. The case was elevated to this Court but on August 27, 1987,
the judgment of conviction was affirmed (Meneses v. People, 153 SCRA 303 [1987]).

Meanwhile, the Meneses brothers and Darum appealed the decision in Civil Case No. 07049 to the Court of Appeals. On August 31, 1987,
the Court of Appeals found the appeal to be without merit and affirmed in toto the lower court's decision.

The defendants-appellants filed two motions for the reconsideration of the appellate court's decision but it was denied in the Resolution of
February 23, 1988 which in pertinent part stated:

However, for humanitarian considerations, and considering the appeal of the defendants-appellants for a reduction of the
moral and exemplary damages, We favor the reduction of the moral damages from P350,000.00 to P50,000.00 and the
exemplary damages from P70,000.00 to P5,000.00. In all other respects, We find no justification for modifying the
dispositive portion of the decision of the lower court (G.R. No. 82220, Rollo, p. 67).

Pablito and Lorenzo Meneses filed the instant petition for review on certiorari, which was docketed as G.R. No. 82220. Cesar Almendral filed
a motion in G.R. No. 82251 for a 45-day extension within which to file a petition for review on certiorari. After this Court had granted them a
30-day extension, Almendral still failed to file any petition. The Quisumbings also filed a petition for review on certiorari, docketed as G.R. No.
83059, solely on the issue of the propriety of the reduction of the amount of damages in the Court of Appeals' Resolution of February 23,
1988. Upon motion of petitioners in G.R. No. 83059, the three petitions were consolidated in the Resolution of August 1, 1988.

Petitioners in G.R. No. 82220 retell the same errors they had raised before the Court of Appeals, contending in the main: (1) that the lands in
question were not accretion lands but lands of the public domain; (2) that no conspiracy to commit fraud, deceit and bad faith attended the
issuance of the free patent and titles to Pablito Meneses; and (3) that the Deed of Waiver and Transfer of Rights was founded on a valid
consideration.

As regards the issue of whether the lands in question are accretion lands, petitioners relied on the Decision of the Court of Appeals
in Republic of the Philippines v. Braga, CA-G.R. No. 55390-R, October 23, 1980, holding that the property involved therein was part of the
natural bed of the Laguna de Bay and therefore what had to be determined was whether said property was covered by water when the lake
was at its highest depth.

Petitioners' assigned errors in G.R. No. 82220 are evidently factual issues which have been thoroughly passed upon and settled both by the
trial court and the appellate court. Factual findings of the Court of Appeals are conclusive on the parties and not reviewable by this Court
(Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, 229 SCRA 533 [1994]) and they carry even more weight when the Court of Appeals
affirms the factual findings of the trial court (Binalay v. Manalo, 195 SCRA 374 [1991]). The jurisdiction of this Court is thus limited to
reviewing errors of law unless there is a showing that the findings complained of are totally devoid of support in the record or that they are so
glaringly erroneous as to constitute serious abuse of discretion (BA Finance Corporation v. Court of Appeals, 229 SCRA 566 [1941]). We find
no such showing in this case.

Petitioners' protestations notwithstanding the final decision of the Court of Appeals in Civil Case No. B-350 has a bearing in the resolution of
this case for while the lots occupied by Villamor and Lanuzo may not be the very same lots petitioners are claiming here, the two cases refer
to the same accretion lands northwest of the original land owned by the Quisumbings.

In the same vein, the decision of the land registration court in LRC Case No. B-327 ordering the confirmation and registration of title in favor
of the Quisumbings over 2,387 square meters of accretion land is binding on petitioners in G.R. No. 82220. As correctly pointed out by the
Court of Appeals, said decision, being the result of a proceeding in rem, binds the whole world, more so because it became final and
executory upon the Bureau of Lands' failure to interpose an appeal.

Since petitioners in G.R. No. 82220 claim that "the foreshore land known as Lots 190 and 1585 are part of Laguna de Bay" and therefore the
Quisumbings "have no legal right to claim the same as accretion land," we quote the following pertinent portions of the decision in Republic v.
Court of Appeals, 131 SCRA 532 (1984) which, although the case deals with the registration of a reclaimed land along the Laguna de Bay, is
nonetheless enlightening:

Laguna de Bay is a lake. While the waters of a lake are also subject to the same gravitational forces that cause the
formation of tides in seas and oceans, this phenomenon is not a regular daily occurrence in the case of lakes. Thus, the
alternation of high tides and low tides, which is an ordinary occurrence, could hardly account for the rise in the water level
of the Laguna de Bay as observed four to five months a year during the rainy season. Rather, it is the rains which bring
about the inundation of a portion of the land in question. Since the rise in the water level which causes the submersion of
the land occurs during a shorter period (four to five months a year) than the level of the water at which the land is
Property 167
 completely dry, the latter should be considered as the "highest ordinary depth" of Laguna de Bay. Therefore, the land
sought to be registered is not part of the bed or basin of Laguna de Bay. Neither can it be considered as foreshore land.
The Brief for the Petitioner Director of Lands cites an accurate definition of a foreshore land, to wit:

. . . . that part of (the land) which is between high and low water and left dry by the flux and reflux of the
tides.

The strip of land that lies between the high and low water marks and that is alternately wet and dry
according to the flow of the tide.

As aptly found by the Court a quo, the submersion in water of a portion of the land in question is due to the rains "falling
directly on or flowing into Laguna de Bay from different sources." Since the inundation of a portion of the land is not due to
"flux and reflux of tides" it cannot be considered a foreshore land within the meaning of the authorities cited by petitioner
Director of Lands. The land sought to be registered not being part of the bed or basin of Laguna de Bay, nor a foreshore
land as claimed by the Director of Lands, it is not a public land and therefore capable of registration as private property
provided that the applicant proves that he has a registerable title (at pp. 538-539).

Accretion as a mode of acquiring property under Article 457 of the Civil Code requires the concurrence of these requisites: (1) that the
deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3)
that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast). While the trial court mainly relied on the
findings in Civil Case No. B-350 that the lands in controversy are accretion lands and it has not determined on its own the presence of said
requisites, it is too late now for petitioners in G.R. No. 82220 to claim otherwise. Consequently, the lands held to be accretion lands could
only benefit the Quisumbings, who own the property adjacent to the lands in controversy (Cruz v. Court of Appeals, 216 SCRA 350 [1992]).

Petitioners in G.R. No. 82220 also assert that the principle of indefeasibility of title should favor them as the one-year period provided for by
law to impugn their title had elapsed. They also urged that, having been granted by the state, their title is superior to that of the Quisumbings.
We hold, however, that in the light of the fraud attending the issuance of the free patents and titles of Pablito Meneses, said assertions
crumble. Such fraud was confirmed by this Court in Meneses v. People, 153 SCRA 303 (1987) which held the petitioners therein liable for
violation of the Anti-Graft and Corrupt Practices Act in the issuance of the same free patents and titles.

Unlike the petition in G.R. No. 82220, the petition in G.R. No. 83059 (questioning the reduction of the damages awarded to the Quisumbings
by the Court of Appeals in the Resolution of February 23, 1988) is meritorious. The task of fixing the amount of damages is primarily with the
trial court (Air France v. Carrascoso, 18 SCRA 155 [1966]). While it is the appellate court's duty to review the same, a reduction of the award
of damages must pass the test of reasonableness. The Court of Appeals can only modify or change the amount awarded as damages when
they are palpably or scandalously and reasonably excessive (Philippine Airlines, Inc. v. Court of Appeals, 226 SCRA 423 [1993];
Prudenciano v. Alliance Transport System, Inc., 148 SCRA 440 [1987]).

There is no justification for the radical reduction by the Court of Appeals of the damages awarded by the trial court. Its action was premise
merely on "humanitarian considerations" and the plea of the defendants-appellants. We may agree with the Court of Appeals in reducing the
award after scrutinizing its factual findings only if such findings are diametrically opposed to that of the trial court (Prudenciado v. Alliance
Transport System, Inc., supra). But as it is, the Court of Appeals affirmed point by point the factual findings if the lower court upon which the
award of damages had been based.

We, therefore, see no reason to modify the award of damages made by the trial court. Respondent Braulio C. Darum in G.R. No. 83059 must
also be solidarily liable for said damages in his capacity as a public officer. A public official is by law not immune from damages in his
personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity
for official actions (Vidad v. RTC of Negros, Br. 42, 227 SCRA 271 [1993]).

WHEREFORE, the petition in G.R. No. 82220 is DENIED while the petition in G.R. No. 83059 is GRANTED. The Decision dated August 31,
1987 of the Court of Appeals is AFFIRMED while its Resolution of February 23, 1988 insofar as it reduces the amount of damages awarded
to the Quisumbing family is SET ASIDE. Costs against petitioners in G.R. No. 82220 and respondent Braulio Darum in G.R. No. 83059.

SO ORDERED.

Padilla, Davide Jr., Bellosillo and Kapunan, JJ., concur.

Property 168
IGNACIO GRANDE, ET AL., petitioners, vs. HON. COURT OF APPEALS, DOMINGO CALALUNG, and ESTEBAN
CALALUNG, respondents. Bartolome Guirao and Antonio M. Orara for petitioners.
Gonzales and Fernandez for respondents. G.R. No. L-17652 June 30, 1962 BARRERA, J.:

This is an appeal taken by petitioners Ignacio, Eulogia, Alfonso, Eulalia, and Sofia Grande, from the decision of the Court of Appeals (CA-
G.R. No. 25169-R) reversing that of the Court of First Instance of Isabela (Civil Case No. 1171), and dismissing petitioners' action against
respondents Domingo and Esteban Calalung, to quiet title to and recover possession of a parcel of land allegedly occupied by the latter
without petitioners' consent.

The facts of the case, which are undisputed, briefly are: Petitioners are the owners of a parcel of land, with an area of 3.5032 hectares,
located at barrio Ragan, municipality of Magsaysay (formerly Tumauini), province of Isabela, by inheritance from their deceased mother
Patricia Angui (who inherited it from her parents Isidro Angui and Ana Lopez, in whose name said land appears registered, as shown by
Original Certificate of Title No. 2982, issued on June 9, 1934). Said property is identified as Lot No. 1, Plan PSU-83342. When it was
surveyed for purposes of registration sometime in 1930, its northeastern boundary was the Cagayan River (the same boundary stated in the
title). Since then, and for many years thereafter, a gradual accretion on the northeastern side took place, by action of the current of the
Cagayan River, so much so, that by 1958, the bank thereof had receded to a distance of about 105 meters from its original site, and an
alluvial deposit of 19,964 square meters (1.9964 hectares), more or less, had been added to the registered area (Exh. C-1).

On January 25, 1958, petitioners instituted the present action in the Court of First Instance of Isabela against respondents, to quiet title to
said portion (19,964 square meters) formed by accretion, alleging in their complaint (docketed as Civil Case No. 1171) that they and their
predecessors-in-interest, were formerly in peaceful and continuous possession thereof, until September, 1948, when respondents entered
upon the land under claim of ownership. Petitioners also asked for damages corresponding to the value of the fruits of the land as well as
attorney's fees and costs. In their answer (dated February 18, 1958), respondents claim ownership in themselves, asserting that they have
been in continuous, open, and undisturbed possession of said portion, since prior to the year 1933 to the present.

After trial, the Court of First Instance of Isabela, on May 4, 1959, rendered a decision adjudging the ownership of the portion in question to
petitioners, and ordering respondents to vacate the premises and deliver possession thereof to petitioners, and to pay to the latter P250.00
as damages and costs. Said decision, in part, reads:

It is admitted by the parties that the land involved in this action was formed by the gradual deposit of alluvium brought about by the
action of the Cagayan River, a navigable river. We are inclined to believe that the accretion was formed on the northeastern side of
the land covered by Original Certificate of Title No. 2982 after the survey of the registered land in 1931, because the surveyors
found out that the northeastern boundary of the land surveyed by them was the Cagayan River, and not the land in question. Which
is indicative of the fact that the accretion has not yet started or begun in 1931. And, as declared by Pedro Laman, defendant witness
Property 169
 and the boundary owner on the northwest of the registered land of the plaintiffs, the accretion was a little more than one hectare,
including the stony portion, in 1940 or 1941. Therefore, the declarations of the defendant Domingo Calalung and his witness,
Vicente C. Bacani, to the effect that the land in question was formed by accretion since 1933 do not only contradict the testimony of
defendants' witness Pedro Laman, but could not overthrow the incontestable fact that the accretion with an area of 4 hectare more
or less, was formed in 1948, reason for which, it was only declared in that same year for taxation purposes by the defendants under
Tax Dec. No. 257 (Exh. "2") when they entered upon the land. We could not give credence to defendants' assertion that Tax Dec.
No. 257 (Exh. "2") cancelled Tax Dee. No. 28226 (Exh. "1"), because Exh. "2" says that "tax under this declaration begins with the
year 1948. But, the fact that defendants declared the land for taxation purposes since 1948, does not mean that they become the
owner of the land by mere occupancy, for it is a new provision of the New Civil Code that ownership of a piece of land cannot be
acquired by occupation (Art. 714, New Civil Code). The land in question being an accretion to the mother or registered land of the
plaintiffs, the accretion belongs to the plaintiffs (Art. 457, New Civil Code; Art. 366, Old Civil Code). Assuming arguendo, that the
accretion has been occupied by the defendants since 1948, or earlier, is of no moment, because the law does not require any act of
possession on the part of the owner of the riparian owner, from the moment the deposit becomes manifest (Roxas v. Tuason, 9 Phil.
408; Cortez v. City of Manila, 10 Phil. 567). Further, no act of appropriation on the part of the reparian owner is necessary, in order
to acquire ownership of the alluvial formation, as the law does not require the same (3 Manresa, C.C., pp. 321-326).

This brings us now to the determination of whether the defendants, granting that they have been in possession of the alluvium since
1948, could have acquired the property by prescription. Assuming that they occupied the land in September, 1948, but considering
that the action was commenced on January 25, 1958, they have not been in possession of the land for ten (10) years; hence, they
could not have acquired the land by ordinary prescription (Arts. 1134 and 1138, New Civil Code). Moreover, as the alluvium is, by
law, part and parcel of the registered property, the same may be considered as registered property, within the meaning of Section
46 of Act No. 496: and, therefore, it could not be acquired by prescription or adverse possession by another person.

Unsatisfied, respondents appealed to the Court of Appeals, which rendered, on September 14, 1960, the decision adverted to at the
beginning of this opinion, partly stating:

That the area in controversy has been formed through a gradual process of alluvium, which started in the early thirties, is a fact
conclusively established by the evidence for both parties. By law, therefore, unless some superior title has supervened, it should
properly belong to the riparian owners, specifically in accordance with the rule of natural accession in Article 366 of the old Civil
Code (now Article 457), which provides that "to the owner of lands adjoining the banks of rivers, belongs the accretion which they
gradually receive from the effects of the current of the waters." The defendants, however, contend that they have acquired
ownership through prescription. This contention poses the real issue in this case. The Court a quo, has resolved it in favor of the
plaintiffs, on two grounds: First, since by accession, the land in question pertains to the original estate, and since in this instance the
original estate is registered, the accretion, consequently, falls within the purview of Section 46 of Act No. 496, which states that "no
title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession"; and,
second, the adverse possession of the defendant began only in the month of September, 1948, or less than the 10-year period
required for prescription before the present action was instituted.

As a legal proposition, the first ground relied upon by the trial court, is not quite correct. An accretion to registered land, while
declared by specific provision of the Civil Code to belong to the owner of the land as a natural accession thereof, does not ipso
jure become entitled to the protection of the rule of imprescriptibility of title established by the Land Registration Act. Such protection
does not extend beyond the area given and described in the certificate. To hold otherwise, would be productive of confusion. It
would virtually deprive the title, and the technical description of the land given therein, of their character of conclusiveness as to the
identity and area of the land that is registered. Just as the Supreme Court, albeit in a negative manner, has stated that registration
does not protect the riparian owner against the erosion of the area of his land through gradual changes in the course of the adjoining
stream (Payatas Estate Development Co. v. Tuason, 53 Phil. 55), so registration does not entitle him to all the rights conferred by
Land Registration Act, in so far as the area added by accretion is concerned. What rights he has, are declared not by said Act, but
by the provisions of the Civil Code on accession: and these provisions do not preclude acquisition of the addition area by another
person through prescription. This Court has held as much in the case of Galindez, et al. v. Baguisa, et al., CA-G.R. No. 19249-R,
July 17, 1959.

We now proposed to review the second ground relied upon by the trial court, regarding the length of time that the defendants have
been in possession. Domingo Calalung testified that he occupied the land in question for the first time in 1934, not in 1948 as
claimed by the plaintiffs. The area under occupancy gradually increased as the years went by. In 1946, he declared the land for
purposes of taxation (Exhibit 1). This tax declaration was superseded in 1948 by another (Exhibit 2), after the name of the
municipality wherein it is located was changed from Tumauini to Magsaysay. Calalung's testimony is corroborated by two witnesses,
both owners of properties nearby. Pedro Laman, 72 years of age, who was Municipal president of Tumauini for three terms, said
that the land in question adjoins his own on the south, and that since 1940 or 1951, he has always known it to be in the peaceful
possession of the defendants. Vicente C. Bacani testified to the same effect, although, he said that the defendants' possession
started sometime in 1933 or 1934. The area thereof, he said, was then less than one hectare.

We find the testimony of the said witnesses entitled to much greater weight and credence than that of the plaintiff Pedro Grande and
his lone witness, Laureana Rodriguez. The first stated that the defendants occupied the land in question only in 1948; that he called
Property 170
 the latter's attention to the fact that the land was his, but the defendants, in turn, claimed that they were the owners, that the
plaintiffs did not file an action until 1958, because it was only then that they were able to obtain the certificate of title from the
surveyor, Domingo Parlan; and that they never declared the land in question for taxation purposes or paid the taxes thereon. Pedro
Grande admitted that the defendants had the said land surveyed in April, 1958, and that he tried to stop it, not because he claimed
the accretion for himself and his co-plaintiffs, but because the survey included a portion of the property covered by their title. This
last fact is conceded by the defendants who, accordingly, relinquished their possession to the part thus included, containing an area
of some 458 square meters.1äwphï1.ñët

The oral evidence for the defendants concerning the period of their possession — from 1933 to 1958 — is not only preponderant in
itself, but is, moreover, supported by the fact that it is they and not the plaintiffs who declared the disputed property for taxation, and
by the additional circumstance that if the plaintiff had really been in prior possession and were deprived thereof in 1948, they would
have immediately taken steps to recover the same. The excuse they gave for not doing so, namely, that they did not receive their
copy of the certificate of title to their property until 1958 for lack of funds to pay the fees of the surveyor Domingo Parlan, is too
flimsy to merit any serious consideration. The payment of the surveyor's fees had nothing to do with their right to obtain a copy of
the certificate. Besides, it was not necessary for them to have it in their hands, in order to file an action to recover the land which
was legally theirs by accession and of which, as they allege, they had been illegally deprived by the defendants. We are convinced,
upon consideration of the evidence, that the latter, were really in possession since 1934, immediately after the process of alluvion
started, and that the plaintiffs woke up to their rights only when they received their copy of the title in 1958. By then, however,
prescription had already supervened in favor of the defendants.

It is this decision of the Court of Appeals which petitioners seek to be reviewed by us.

The sole issue for resolution in this case is whether respondents have acquired the alluvial property in question through prescription.

There can be no dispute that both under Article 457 of the New Civil Code and Article 366 of the old, petitioners are the lawful owners of said
alluvial property, as they are the registered owners of the land which it adjoins. The question is whether the accretion becomes automatically
registered land just because the lot which receives it is covered by a Torrens title thereby making the alluvial property imprescriptible. We
agree with the Court of Appeals that it does not, just as an unregistered land purchased by the registered owner of the adjoining land does
not, by extension, become ipso facto registered land. Ownership of a piece of land is one thing, and registration under the Torrens system of
that ownership is quite another. 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 Acts does not
vest or give title to the land, but merely confirms and thereafter protects the title already possessed by the owner, making it imprescriptible by
occupation of third parties. But to obtain this protection, the land must be placed under the operation of the registration laws wherein certain
judicial procedures have been provided. The fact remain, however, that petitioners never sought registration of said alluvial property (which
was formed sometime after petitioners' property covered by Original Certificate of Title No. 2982 was registered on June 9, 1934) up to the
time they instituted the present action in the Court of First Instance of Isabela in 1958. The increment, therefore, never became registered
property, and hence is not entitled or subject to the protection of imprescriptibility enjoyed by registered property under the Torrens system.
Consequently, it was subject to acquisition through prescription by third persons.

The next issue is, did respondents acquire said alluvial property through acquisitive prescription? This is a question which requires
determination of facts: physical possession and dates or duration of such possession. The Court of Appeals, after analyzing the evidence,
found that respondents-appellees were in possession of the alluvial lot since 1933 or 1934, openly, continuously and adversely, under a
claim of ownership up to the filing of the action in 1958. This finding of the existence of these facts, arrived at by the Court of Appeals after an
examination of the evidence presented by the parties, is conclusive as to them and can not be reviewed by us.

The law on prescription applicable to the case is that provided in Act 190 and not the provisions of the Civil Code, since the possession
started in 1933 or 1934 when the pertinent articles of the old Civil Code were not in force and before the effectivity of the new Civil Code in
1950. Hence, the conclusion of the Court of Appeals that the respondents acquired alluvial lot in question by acquisitive prescription is in
accordance with law.

The decision of the Court of Appeals under review is hereby affirmed, with costs against the petitioners. So ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Paredes and Dizon, JJ., concur.
Reyes, J.B.L., Regala and Makalintal, JJ., took no part.

Property 171
MAXIMO JAGUALING, ANUNCITA JAGUALING and MISAMIS ORIENTAL CONCRETE PRODUCTS, INC.,petitioners, vs. COURT OF
APPEALS (FIFTEENTH DIVISION), JANITA F. EDUAVE and RUDYGONDO EDUAVE, respondents. Cabanlas, Resma & Cabanlas Law
Offices for petitioners. Jaime Y Sindiong for private respondents. G.R. No. 94283 March 4, 1991 GANCAYCO, J.:

Between the one who has actual possession of an island that forms in a non-navigable and non-flotable river and the owner of the land along
the margin nearest the island, who has the better right thereto? This is the issue to be resolved in this petition.

The parties to this case dispute the ownership of a certain parcel of land located in Sta. Cruz, Tagoloan, Misamis Oriental with an area of
16,452 square meters, more or less, forming part of an island in a non-navigable river, and more particularly described by its boundaries as
follows:

North — by the Tagoloan River,

South — by the Tagoloan River,
East — by the Tagoloan River and
West — by the portion belonging to Vicente Neri.

Private respondents filed with the Regional Trial Court of Misamis Oriental 1 an action to quiet title and/or remove a cloud over the property in
question against petitioners.

Respondent Court of Appeals2 summarized the evidence for the parties as follows:

The appellant [private respondent Janita Eduave] claims that she inherited the land from his [sic] father, Felomino Factura, together
with his co-heirs, Reneiro Factura and Aldenora Factura, and acquired sole ownership of the property by virtue of a Deed of Extra
Judicial Partition with sale (Exh. D). The land is declared for tax purposes under Tax Decl. No. 26137 (Exh. E) with an area of
16,452 square meters more or less (Exh. D). Since the death of her father on May 5, 1949, the appellant had been in possession of
the property although the tax declaration remains in the name of the deceased father.

The appellants further state that the entire land had an area of 16,452 square meters appearing in the deed of extrajudicial partition,
while in [the] tax declaration (Exh. E) the area is only 4,937 square meters, and she reasoned out that she included the land that
was under water. The land was eroded sometime in November 1964 due to typhoon Ineng, destroying the bigger portion and the
improvements leaving only a coconut tree. In 1966 due to the movement of the river deposits on the land that was not eroded
increased the area to almost half a hectare and in 1970 the appellant started to plant bananas [sic].

In 1973 the defendants-appellees [petitioners herein] asked her permission to plant corn and bananas provided that they prevent
squatters to come to the area.

The appellant engaged the services of a surveyor who conducted a survey and placed concrete monuments over the land. The
appellant also paid taxes on the land in litigation, and mortgaged the land to the Luzon Surety and Co., for a consideration of
P6,000.00.

The land was the subject of a reconveyance case, in the Court of First Instance of Misamis Oriental, Branch V, at Cagayan de Oro
City, Civil Case No. 5892, between the appellant Janita Eduave vs. Heirs of Antonio Factura which was the subject of judgment by
compromise in view of the amicable settlement of the parties, dated May 31, 1979. (Exh. R);

That the heirs of Antonio Factura, who are presently the defendants-appellees in this case had ceded a portion of the land with an
area of 1,289 square meters more or less, to the appellant, Janita Eduave, in a notarial document of conveyance, pursuant to the
decision of the Court of First Instance, after a subdivision of the lot No. 62 Pls-799, and containing 1,289 square meters more or less
was designated as Lot No. 62-A [sic], and the subdivision plan was approved as Pls-799-Psd-10-001782. (Exh. R; R-1 and R-2);

The portion Lot No. 62-A, is described as follows:

A parcel of land (Lot No. 62-A, Psd-10-001782 being a portion of Lot 62, Pls-799, Tagoloan Public Land Subdivision)
situated in Bo. Sta. Cruz, Municipality of Tagoloan, Province of Misamis Oriental. Bounded on the W, and on the N along
lines 4-5-1 by Lot 62-B of the subdivision plan 10-001782; on the E by line 1-2 by Lot 64; Pls-799; on the S, along line 2-3-
4 by Saluksok Creek, containing an area of one thousand two hundred eighty nine (1,289) square meters more or less.

Property 172
 Appellant also applied for concession with the Bureau of Mines to extract 200 cubic meters of gravel (Exh. G & G-1); and after an
ocular inspection the permit was granted (Exh. K, and K-1 and K-2). That the appellant after permit was granted entered into an
agreement with Tagoloan Aggregates to extract sand and gravel (Exh. L; L-1; and L-2), which agreement was registered in the
office of the Register of Deeds (Exh. M; M-1; and M-2);

The defendants-appellees [petitioners herein] denied the claim of ownership of the appellant, and asserted that they are the real
owners of the land in litigation containing an area of 18,000 square meters more or less. During the typhoon Ineng in 1964 the river
control was washed away causing the formation of an island, which is now the land in litigation. The defendants started occupying
the land in 1969, paid land taxes as evidenced by tax declaration No. 26380 (Exh. 4) and tax receipts (Exhs. 7 to 7-G), and tax
clearances (Exhs. 8 & 9). Photographs showing the actual occupation of the land by the defendants including improvements and the
house were presented as evidence (Exh. 11 to 11-E). The report of the Commissioner who conducted the ocular inspection was
offered as evidence of the defendants (Exh. G).

The sketch plan prepared by Eng. Romeo Escalderon (Exh. 12) shows that the plaintiffs' [private respondents'] land was across the
land in litigation (Exh. 12-A), and in going to the land of the plaintiff, one has to cross a distance of about 68 meters of the Tagoloan
river to reach the land in litigation.3

On 17 July 1987 the trial court dismissed the complaint for failure of private respondents as plaintiffs therein to establish by preponderance of
evidence their claim of ownership over the land in litigation. The court found that the island is a delta forming part of the river bed which the
government may use to reroute, redirect or control the course of the Tagoloan River. Accordingly, it held that it was outside the commerce of
man and part of the public domain, citing Article 420 of the Civil Code.4

As such it cannot be registered under the land registration law or be acquired by prescription. The trial court, however, recognized the validity
of petitioners' possession and gave them preferential rights to use and enjoy the property. The trial court added that should the State allow
the island to be the subject of private ownership, the petitioners have rights better than that of private respondents. 5

On appeal to the Court of Appeals, respondent court found that the island was formed by the branching off of the Tagoloan River and
subsequent thereto the accumulation of alluvial deposits. Basing its ruling on Articles 463 and 465 of the Civil Code 6 the Court of Appeals
reversed the decision of the trial court, declared private respondents as the lawful and true owners of the land subject of this case and
ordered petitioners to vacate the premises and deliver possession of the land to private respondents.7

In the present petition, petitioners raise the following as errors of respondent court, to wit:

1. Whether [or not] respondent court correctly applied the provisions of Articles 463 and 465 of the new Civil Code to the facts of the
case at bar; and

2. Whether [or not] respondent court gravely abused its discretion in the exercise of its judicial authority in reversing the decision
appealed from.8

Petitioners point out as merely speculative the finding of respondent court that the property of private respondents was split by the branching
off or division of the river. They argue that because, as held by the trial court, private respondents failed to prove by preponderance of
evidence the identity of their property before the same was divided by the action of the river, respondent court erred in applying Article 463 of
the Civil Code to the facts of this case.

It must be kept in mind that the sole issue decided by respondent court is whether or not the trial court erred in dismissing the complaint for
failure of private respondents (plaintiffs below] to establish by preponderance of evidence their claim of ownership over the island in question.
Respondent court reversed the decision of the trial court because it did not take into account the other pieces of evidence in favor of the
private respondents. The complaint was dismissed by the trial court because it did not accept the explanation of private respondents
regarding the initial discrepancy as to the area they claimed: i.e., the prior tax declarations of private respondents refer to an area with 4,937
square meters, white the Extra-judicial Partition with Sale, by virtue of which private respondents acquired ownership of the property, pertains
to land of about 16,452 square meters.

The trial court favored the theory of petitioners that private respondents became interested in the land only in 1979 not for agricultural
purposes but in order to extract gravel and sand. This, however, is belied by other circumstances tantamount to acts of ownership exercised
by private respondents over the property prior to said year as borne out by the evidence, which apparently the trial court did not consider at
all in favor of private respondents. These include, among others, the payment of land taxes thereon, the monuments placed by the surveyor
whose services were engaged by the private respondent, as evidenced by the pictures submitted as exhibits, and the agreement entered into
by private respondents and Tagoloan Aggregates to extract gravel and sand, which agreement was duly registered with the Register of
Deeds.

Property 173
Private respondents also presented in evidence the testimony of two disinterested witnesses: Gregorio Neri who confirmed the metes and
bounds of the property of private respondents and the effects of the typhoon on the same, and Candida Ehem who related on the agreement
between private respondents and petitioners for the latter to act as caretakers of the former. 9 The trial court disregarded their testimony
without explaining why it doubted their credibility and instead merely relied on the self-serving denial of petitioners.10

From the evidence thus submitted, respondent court had sufficient basis for the finding that the property of private respondents actually
existed and was Identified prior to the branching off or division of the river. The Court of Appeals, therefore, properly applied Article 463 of the
Civil Code which allows the ownership over a portion of land separated or isolated by river movement to be retained by the owner thereof
prior to such separation or isolation.11

Notwithstanding the foregoing and assuming arguendo as claimed by petitioners that private respondents were not able to establish the
existence and identity of the property prior to the branching off or division of the Tagoloan River, and hence, their right over the same, private
respondents are nevertheless entitled under the law to their respective portion of the island.

It is clear petitioners do not dispute that the land in litigation is an island that appears in a non-flotable and non-navigable river; they instead
anchor their claim on adverse possession for about fifteen years. It is not even controverted that private respondents are the owners of a
parcel of land along the margin of the river and opposite the island. On the other hand, private respondents do not dispute that the island in
question has been in the actual physical possession of petitioners; private respondents insist only that such possession by petitioners is in
the concept of caretakers thereof with the permission of private respondents.

This brings Us, as phrased earlier in this opinion, to the underlying nature of the controversy in this case: between the one who has actual
possession of an island that forms in a non-navigable and non-flotable river and the owner of the land along the margin nearest the island,
who has the better light thereto?

The parcel of land in question is part of an island that formed in a non-navigable and non-flotable river; from a small mass of eroded or
segregated outcrop of land, it increased to its present size due to the gradual and successive accumulation of alluvial deposits. In this regard
the Court of Appeals also did not err in applying Article 465 of the Civil Code. 12 Under this provision, the island belongs to the owner of the
land along the nearer margin as sole owner thereof; or more accurately, because the island is longer than the property of private
respondents, they are deemed ipso jure to be the owners of that portion which corresponds to the length of their property along the margin of
the river.

What then, about the adverse possession established by petitioners? Are their rights as such not going to be recognized? It is well-settled
that lands formed by accretion belong to the riparian owner.13 This preferential right is, under Article 465, also granted the owners of the land
located in the margin nearest the formed island for the reason that they are in the best position to cultivate and attend to the exploitation of
the same.14 In fact, no specific act of possession over the accretion is required.15 If, however, the riparian owner fails to assert his claim
thereof, the same may yield to the adverse possession of third parties, as indeed even accretion to land titled under the torrens system must
itself still be registered.16

Petitioners may therefore, acquire said property by adverse possession for the required plumber of years under the doctrine of acquisitive
prescription. Their possession cannot be considered in good faith, however, because they are presumed to have notice of the status of
private respondents as riparian owners who have the preferential right to the island as recognized and accorded by law; they may claim
ignorance of the law, specifically Article 465 of the Civil Code, but such is not, under Articles 3 and 526 of the same code, an adequate and
valid defense to support their claim of good faith.17 Hence, not qualifying as possessors in good faith, they may acquire ownership over the
island only through uninterrupted adverse possession for a period of thirty years.18 By their own admission, petitioners have been in
possession of the property for only about fifteen years. Thus, by this token and under the theory adopted by petitioners, the island cannot be
adjudicated in their favor.

This case is not between parties as opposing riparian owners contesting ownership over an accession but rather between a riparian owner
and the one in possession of the island. Hence, there is no need to make a final determination regarding the origins of the
island, i.e., whether the island was initially formed by the branching off or division of the river and covered by Article 463 of the Civil Code, in
which case there is strictly no accession because the original owner retains ownership, or whether it was due to the action of the river under
Article 465, or, as claimed by petitioners, whether it was caused by the abrupt segregation and washing away of the stockpile of the river
control, which makes it a case of avulsion under Article 459. 19

We are not prepared, unlike the trial court, to concede that the island is a delta which should be outside the commerce of man and that it
belongs to the State as property of the public domain in the absence of any showing that the legal requirements to establish such a status
have been satisfied, which duty properly pertains to the State.20 However, We are also well aware that this petition is an upshot of the action
to quiet title brought by the private respondents against petitioners. As such it is not technically an action in rem or an action in personam, but
characterized as quasi in rem which is an action in personam concerning real property.22 Thus, the judgment in proceedings of this nature is
conclusive only between the parties23 and does not bind the State or the other riparian owners who may have an interest over the island
involved herein.

Property 174
WHEREFORE, We find no error committed by respondent court and DENY the petition for lack of sufficient merit. The decision of respondent
Court of Appeals is hereby AFFIRMED, without pronouncement as to costs.

SO ORDERED.

Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.

Footnotes
4Art, 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.

6 Art. 463. Whenever the current of a river divides itself into branches, leaving a piece of land or part thereof isolated, the owner of
the land retains his ownership. He also retains it if a portion of land is separated from the estate by the current.

Art. 465. Islands which through successive accumulation of alluvial deposits are formed in non-navigable and non-flotable
rivers, belong to the owners of the margins or banks nearest to each of them, or to the owners of both margins if the island
is in the middle of the river, in which case it shall be divided longitudinally in halves. If a single island thus formed be more
distant from one margin than from the other, the owner of the nearer margin shall be the sole owner thereof.

17Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw
which invalidates it.

He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.

Mistake upon a doubtful or difficult question of law may be the basis of good faith.

Art. 3. Ignorance of the law excuses no one from compliance therewith.

18 The Civil Code provides:

Art. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession
thereof for thirty years, without need of title or of good faith.

19 Art. 459. Whenever the current of a river, creek or torrent segregates from an estate on its bank a known portion of land and
transfers it to another estate, the owner of the land to which the segregated portion belonged retains the ownership of it, provided
that he removes the same within two years.

Property 175
49. G.R. No. 168386
LUCITA A. CANTOJA,
Petitioner,
- versus - Promulgated:
HARRY S. LIM, March 29, 2010
Respondent.
x--------------------------------------------------x
RESOLUTION CARPIO, Acting C.J.:

The Case

This is a petition for review[1] of the Decision[2] dated 24 January 2005 and the Resolution dated 12 May 2005 of the Court of Appeals in CA-

G.R. SP No. 76661.

The Facts

Petitioner in this case is the widow of the late Roberto Cantoja, Sr. (Cantoja), whom the DENR awarded a Foreshore Lease Agreement over

the foreshore area situated in Makar, General Santos City. Under the Lease Contract [3] executed on 23 November 1990, the foreshore lease

would expire on 21 October 2015.

The facts as found by the Court of Appeals are as follows:

On 16 November 1989, the late Roberto Cantoja Sr. filed with the Office of the DENR, General Santos City, an application
for a Foreshore Lease Contract over an area situated in Makar, General Santos City, per Survey Plan No. (XI-5B) 000002-
D. Cantoja was awarded the Foreshore Lease Agreement (FLA) on 23 November 1990.

On 4 March 1994, herein petitioner [Harry S. Lim] filed his protest docketed as DENR Case No. 5231, questioning the grant
of the FLA to Cantoja. The protest was based on petitionersallegation that Cantoja committed fraud and misrepresentation
in declaring in his application that the subject foreshore area adjoined his (Cantojas) property. To prove this allegation,
petitioner presented his Transfer Certificate of Title (TCT) No. 8423, over Lot 2-B, (LRC) Psd-210799, which adjoins the
foreshore area subject of the lease.

On 23 May 1995, Regional Executive Director Augustus L. Momongan of DENR XI, Davao City, issued Memorandum/Order
assigning the above entitled case to Special Investigator Romulo Marohomsalic of the DENR Office No. XI-5D, General
Santos City, for further investigation and appropriate action Upon ocular inspection, during which petitioner failed to appear
despite notice, Special Investigator Marohomsalic found that Cantoja was in actual possession of the foreshore area which
was utilized as dock-board of the Cantojas Fishing Business. It was further ascertained, that no portion thereof, has been
occupied or possessed by any other person or persons, nor was there any adverse claimant thereof.

On 12 December 1995, Geodetic Engineer Bernardo L. Soria, in compliance with the 27 October 1995 Order of the City
Environment and Natural Resources Office (CENRO) XI-5B, submitted his report stating, inter alia, that there was no
overlapping of xxx Lot 2-B, (LRC) Psd-210799; and Fli-XI-5b-000002-D xxx all shown in the prepared sketch xxx of (the)
report.
On 1 February 1996, Director Momongan issued [an] Order dismissing petitioners protest on the ground that (i)n view of all
the xxx circumstances and facts gathered during the investigative proceedings, this Office finds that the foreshore area under
survey plan Fli-XI-5B-000002-
D, covered by FLA No. (XI-5B) 000002 is separate and distinct from that parcel of land, identified as Lot 2-B, Psd-210799,
registered in the name of Claimant-Protestant Harry G. Lim. The petitioner, concluded the Director, has no legal personality
to question the veracity of the possession and occupation of herein Applicant-Respondent over the foreshore area in
question, as the same has been legally and regularly acquired by Applicant-Respondent Roberto Cantoja, through public
bidding and Applicant-Respondents occupation and possession thereof is by virtue of a valid award granted by the
Department of Environment and Natural Resources (DENR).

On 5 May 1997, petitioner filed Motion for Reconsideration of the said Order.

Meanwhile, on 6 October 1997, the DENR through the Office of the Solicitor General instituted Civil Case No. 6438 for
annulment/cancellation of Patent No. 188030 and OCT No. P-14720 both issued in the name of Jacinto Acharon, as well as
petitioners TCT No. 8423. The suit was anchored on the findings and recommendations of Special Investigator Romulo J.
Marohomsalic that the area in question is xxx partly foreshore and partly river bed of the Makar and therefore inalienable.

Property 176
 On 2 May 2000, then DENR Secretary Antonio H. Cerilles, rendered a Decision reconsidering the 1 February 1996 Order
issued by Executive Director Momongan, and thereby cancelled the FLA previously granted to Cantoja. Secretary Cerilles
ratiocinated that:

Clearly, the foreshore area leased to Cantoja is bounded on the West by Lot 2, Psu-164268, of which Lot
2-B (LRC) Psd-210799 of herein protestant is a portion. In other words, the said Lot 2-B immediately
adjoins the foreshore area leased to Cantoja, contrary to Roberto Cantojas statement and declaration in
his Application for Foreshore Lease that his properties adjoin the foreshore area leased to him. Obviously,
Mr. Cantoja could not be expected to state otherwise for this will result in his outright disqualification as
Cantoja could not have legal access to said foreshore area without passing thru Lot-2-B of herein
protestant.
(Rollo, p. 79)

A motion for reconsideration with supplemental grounds was subsequently filed by Cantoja. Petitioner in turn filed his
opposition.

On 16 August 2000, Secretary Cerilles issued Special Order No. 2000-820 for the Creation of a Team to Conduct
Investigation and Ocular Inspection of the Land Located in General Santos City subject of DENR Case No. 5231. Said order
was issued (i)n view of the request of the Office of the Solicitor General for comment on the proposal of Mr. Harry Lim for
amicable settlement of the case xxx.

Without waiting, however, for the result of the investigation of said team, Secretary Cerilles, in an Order dated 17 October
2000, set aside its 2 May 2000 Order and reinstated the FLA in favor of Cantoja. The DENR Secretary also denied petitioners
motion for reconsideration.

On appeal, the Office of the President rendered the herein assailed Decision affirming the 17 October 2000 Order of the
DENR Secretary. Like the DENR Secretary, the Office of the President also relied on the findings of Special Investigator
Marohomsalic that the petitioners titled land is an inalienable foreshore area which could not be subject of a valid patent or
title.[4]

Aggrieved, respondent Harry Lim (respondent) appealed to the Court of Appeals. On 24 January 2005, the Court of Appeals rendered a

decision, setting aside the 27 March 2003 decision of the Office of the President and reinstating the 2 May 2000 decision of the Secretary of

the Department of Environment and Natural Resources (DENR).

Hence, this petition for review.

The Ruling of the Court of Appeals

The Court of Appeals reinstated the 2 May 2000 decision of the DENR Secretary, which cancelled and rescinded the Foreshore Lease Contract

covering the foreshore area under survey plan Fli-XI-5B- 000002-D in favor of Cantoja.

The Court of Appeals held that Cantoja committed misrepresentation amounting to fraud in his application for lease when he declared in his

application that his lot adjoins that of the foreshore area sought to be leased.
The Issue

The primary issue in this case is whether the Court of Appeals erred in cancelling the Foreshore Lease Contract granted to Cantoja covering

the foreshore area under survey planFli-XI-5B-000002-D.

The Ruling of the Court

The petition has no merit.

Property 177
It is undisputed that respondent is the registered owner of the land adjacent to the foreshore area leased to Cantoja, which is covered by TCT

No. 8423[5] issued on 20 January 1975. Respondents predecessor-in-interest, Jacinto Acharon, was issued OCT No. P-14720 on 17 August

1961 by virtue of a free patent grant. Thus, prior to Cantojas foreshore lease application on 16 November 1989 and the grant of the foreshore

lease contract on 23 November 1990, respondent already owned the land adjacent to the foreshore land. The sketch plan [6] dated 12 December

1995 submitted by the Geodetic Engineer clearly shows that respondents property is in between the foreshore land and Cantojas property. As

stated by the DENR Secretary in his Decision[7] dated 2 May 2000:

Clearly, the foreshore area leased to Cantoja is bounded on the West by Lot 2, Psu-164268, of which Lot 2-B (LRC) Psd-210799 of
herein protestant is a portion. In other words, the said Lot 2-B immediately adjoins the foreshore area leased to Cantoja, contrary to
Roberto Cantojas statement and declaration in his Application for Foreclosure Lease that his properties adjoin the foreshore area
leased to him. Obviously, Mr. Cantoja could not be expected to state otherwise for this will result in his outright disqualification as
Cantoja would not have legal access to said foreshore area without passing thru Lot 2-B of herein protestant.[8]

Being the owner of the land adjoining the foreshore area, respondent is the riparian or littoral owner [9] who has preferential right to lease the

foreshore area[10] as provided under paragraph 32 of the Lands Administrative Order No. 7-1, dated 30 April 1936, which reads:

32. Preference of Riparian Owner. The owner of the property adjoining foreshore lands, marshy lands or lands covered with
water bordering upon shores or banks of navigable lakes or rivers, shall be given preference to apply for such lands adjoining
his property as may not be needed for the public service, subject to the laws and regulations governing lands of this nature,
provided that he applies therefor within sixty (60) days from the date he receives a communication from the Director of Lands
advising him of his preferential right.

The Court explained in Santulan v. The Executive Secretary[11] the reason for such grant of preferential right to the riparian or littoral owner,

thus:

Now, then, is there any justification for giving to the littoral owner the preferential right to lease the foreshore land abutting
on his land?

That rule in paragraph 32 is in consonance with Article 4 of the Spanish Law of Waters of 1866 which provides that, while
lands added to the shore by accretions and alluvial deposits caused by the action of the sea form part of the public domain,
such lands, when they are no longer washed by the waters of the sea and are not necessary for purposes of public utility, or
for the established [sic] of special industries, or for the coast guard service, shall be declared by the Government to be the
property of the owners of the estates adjacent thereto and as increment thereof.

In other words, article 4 recognizes the preferential right of the littoral owner (riparian according to paragraph 32) to the
foreshore land formed by accretions or alluvial deposits due to the action of the sea.

The reason for that preferential right is the same as the justification for giving accretions to the riparian owner, which is that
accretion compensates the riparian owner for the diminutions which his land suffers by reason of the destructive force of the
waters. So, in the case of littoral lands, he who loses by the encroachments of the sea should gain by its
recession.[12] (Citations omitted)

In this case, Cantoja committed fraud when he misrepresented himself as the riparian or littoral owner in his application for the foreshore lease.

Under stipulation no. 15 of the Foreshore Lease Agreement, any fraud or misrepresentation committed by the applicant is a ground for

cancellation or rescission of the Foreshore Lease Agreement.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 24 January 2005 and the Resolution dated 12 May 2005 of the Court

of Appeals in CA-G.R. SP No. 76661.

SO ORDERED.

Property 178
 ANTONIO T. CARPIO
Acting Chief Justice

JULIAN SANTULAN substituted by his children named PATROCINIO, ADORACION, ARTURO, CONSTANCIA, and PEPITA, all
surnamed SANTULAN and minor grandchildren, JOCELYN, ROSAURO and ROBERTO, all surnamed SANTULAN assisted by their
guardian ad litem, PATROCINIO SANTULAN petitioners-appellants, vs. THE EXECUTIVE SECRETARY, THE SECRETARY OF
AGRICULTURE AND NATURAL RESOURCES, THE DIRECTOR OF LANDS, and ANTONIO LUSIN, substituted by his Heirs named
TEODOSIA BALANZA (widow) and Children LEOPOLDO, ARMANDO. ALFONSO, EMILIANO, MAGDALENA, ERLINDA and
ESTRELLA (ESTER), all surnamed LUSIN, and Heirs of CAROLINA LUSIN-LUCERO named MANOLITO LUCERO and MARIO
LUCERO, respondents-appellees. G.R. No. L-28021 December 15, 1977 AQUINO, J.

This case is about the lease of a parcel of foreshore land of the public domain with an area of about four and one-half hectares located at
Barrio Kaingin, Kawit, Cavite abutting on Bacoor Bay and the Ankaw Creek.

It is protracted controversy that has been pending for more than thirty years between the rival claimants Julian Santulan plan and Antonio
Lusin, who have been succeeded by their heirs.

Santulan claimed that foreshore land was an extension of his land, Lot No. 986 of the Kawit cadastre, with an area of 17,301 square meters,
registered in his name in 1937 under Original Certificate of Title No. 6 which was issued by virtue of a free patent. The northern boundary of
Lot No. 986 is Bacoor (Manila) Bay (Exh. A). The said foreshore land was allegedly formed by soil deposits accumulated by the alluvial action
of the sea.

On December 5, 1942 Santulan caused the said land to be surveyed. The survey plan was approved by the Director of Lands in 1944 (Exh.
B). On December 29, 1942 Santulan, pursuant to Lands Administrative Order No. 7-1, filed an application, F.L.A. No. V 562, to lease for five
years for agricultural purposes an area of 36,120 square meters of the said foreshore land (Exh. F).

On that same date, December 29, 1942, Santulan, pursuant to Act No. 3077 and Lands Administrative Order No. 8-3, filed with the Bureau of
Lands an application for a revocable permit to occupy the said land. He indicated therein that he would use the land for 11 capiz beds and
oyster beds, the planting of bakawan and pagatpat and later to be developed into a fishpond" (Exh. G).

Seven years later, or on December 22, 1949, Santulan filed with the Bureau of Fisheries an application for an ordinary fishpond permit or
lease of the said foreshore land (Special Use Permit, pp. A. No. 5114, Exh. H).

At the instance of the Director of Fisheries, the Director of Forestry investigated the condition of the said foreshore land. The latter in his first
indorsement dated June 19, 1950 found that it was swampy "and not an improved fishpond as alleged by Antonio Lusin" and that it is within
the disposable areas for agricultural purposes under the jurisdiction of the Bureau of Lands (Exh. L-1).

The chief of the division of commercial fisheries sent a letter to Lusin dated April 28, 1950 apprising him that he was reported to have illegally
entered the area covered by Santulan's fishpond permit application and directing him to refrain from introducing improvements, with the
warning that court proceedings would be taken against him (Exh. J).

On January 12, 1951 an attorney, acting for the Director of Lands wrote the following letter to Lusin advising him to vacate the disputed land
and maintain the status quo:

Mr. Antonio Lusin

Caiñgin, Kawit, Cavite

S i r:

We have been informed that the area which is presently controverted by and between you and Julian Santulan, under the
applications noted above, was recently entered by you and some companion and that you are destroying the dikes and
other improvements previously constructed thereon by said Julian Santulan.

Property 179
 If this information is true, and inasmuch as you are aware that the controversy is still pending final adjudgment in this
Office, is desired that you take proper advice and leave the area and its existing improvements in status quo in order to
avoid possible confusion of rights which ma delay the final disposition of the area in question.

You are advised further that the acts imputed to you may make you liable to prosecution and punishment under the law;
and that whatever improvements you may make for yourself in the premises will not legally accrue to your benefit, nor will
they serve as basis for a claim to preferential rights. (Paragraphing supplied, Exh, J-1).

Santulan declared the said foreshore land in his name for tax purposes. Tax Declaration No. 2923, which took effect in 1948 and which
cancelled Tax Declaration No. 13816 also in Santulan's name, shows that the land was assessed at P460. He paid the realty taxes due on
the said land for the years 1945-46, 1948-55 and 195760 (Exh. C, D and E, el seq.).

On the other hand, Antonio Lusin in 1942 and 1945 (he died in 1962) filed with the Bureau of Lands applications for a revocable-permit and
lease of a foreshore land, respectively, for the purpose of producing salt on the said land. He claimed that he had been in the continuous and
exclusive possession of the land since 1920, when it was still under water, and that he had used it as a site of his fish corrals.

He allegedly converted two hectares of the said land into a fishpond. The entire area was enclosed with mud dikes and provided with a
concrete sluice gate and another sluice gate made of wood On the northern part of the land bordering the bay were bamboo stakes placed at
close intervals to serve as water breakers to protect the mud dikes from being washed away by the action of the sea. Lusin introduced the
alleged improvements from 1951 to 1953.

The 1942 foreshore lease applications of Santulan and Lusin gave rise to Bureau of Lands Conflict No. 8 (N). The Director of Lands in his
decision in that case dated February 1, 1951 found that the disputed land is foreshore land covered and uncovered by the flow and ebb of the
ordinary tides that it is an extension of Santulan's Lot No. 986 and it was formerly a part of the sea; that Santulan was the first to enter the
land and to make dikes thereon, and that Lusin entered the land later and made dikes also (Exh. K made a part hereof for reference as
Annex A).

The Director ruled that the disputed foreshore land was subject "to reparian rights which may he invoked by Santulan as owner of the upland
in accordance with section 32 of Lands Administrative Order No. 7-1" (Exh. K). Hence the Director rejected Lusin's application for a foreshore
lease and for a revocable permit and gave due course to Santulan's foreshore lease application.

Lusin filed a motion for reconsideration. The Director in his order of October 19, 1951 denied that motion. lie found that Lusin was a
possessor in bad faith: that it is not true that Lusin had improved and possessed the said foreshore land for twenty years, that the disputed
area is covered by water, two to three feet deep during ordinary tides and is exposed land after the ebb of the tides, and that Lusin's alleged
possession and improvements could not nullify Santulan's preferential right to lease the land by reason of his riparian rights. The Director
ordered Lusin to vacate the land within sixty days from notice (Exh. L made a part hereof for reference as Annex B).

Lusin appealed to the Acting Secretary of Agriculture and Natural Resources who in his decision of October 13, 1952 dismissed the appeal
and affirmed the Director's 1951 decision (Exh. M made a part hereof for reference as Annex C). Lusin's motion for reconsideration was
denied in the Secretary's order of February 28, 1953 (Exh. N made a part hereof for reference as Annex D).

Lusin asked for a reinvestigation of the case. His request was granted. The Department ordered a reinvestigation on May 12, 1953.

After receipt of the report of reinvestigation, the Undersecretary of Agriculture and Natural Resources, by authority of the Secretary, in his
order of December 14, 1954, reaffirmed the rejection of Lusin's revocable permit and foreshore lease applications but ordered Santulan to
reimburse to Lusin the appraised value of his improvements (Exh. O made a part hereof for reference as Annex E).

Lusin appealed to the President of the Philippines after his motion for reconsideration was denied in the Undersecretary's order of May 19,
1955 (Exh. OO made a part hereof for reference as Annex F).

Executive Secretary Juan C. Pajo, by authority of the President, held in his decision of April 10, 1958 that section 32 of Lands Administrative
Order No. 7-1 (promulgated by the Secretary of Agriculture and Natural Resources on April 30, 1936 pursuant to Acts Nos. 2874 and 3038)
was "rendered obsolete" by section 67 of the Public Land Law which took effect on December 1, 1936 (Exh. P made a part hereof for
reference as Annex G).

On the basis of the foregoing ruling and since the record is silent as to whether or not the land in question has been declared by the
President as not necessary for the public service and as open to disposition (Sec. 61, Public Land Law), the Executive Secretary sustained
Lusin's appeal and reversed the orders of the Director of Lands and the Secretary of Agriculture and Natural Resources in favor of Santulan.
Secretary Pajo decided the case in the alternative as follows:

Property 180
 On the assumption that the land in question has been declared open for disposition and is not necessary for the public
service, this Office directs that an oral bidding for the leasing thereof to interested parties pursuant to the provisions of
Section 67 of Commonwealth Act .No. 141 be conducted and the contract of lease awarded to the highest bidder whoever
shall be the highest bidder, if other than the appellant, shall be required to pay to the appellant the appraised value of the
improvements introduced by him on the land to be determined by that Department.

If the land in question has not been so declared, this Office directs that a revocable permit under Section 68 of
Commonwealth Act No. 141 be Id to the appellant requiring him to pay permit fees since the year 1951.

Accordingly, the orders and decisions of that Department and the Bureau of Lands are hereby revoked.

Santulan's case was distinguished from that of Gonzalo Monzon whose Lot No. 987 adjoins Santulan's Lot No. 986. Executive Secretary
Fred Ruiz Castro (now Chief Justice) in his decision of May 10, 1954 upheld the preferential right of Monzon to lease the foreshore land north
of his lot, which foreshore land is adjacent to the foreshore land now in dispute in this case (Exh. Q made a part hereof for reference as
Annex H).

Santulan's motion for reconsideration was denied in the letter of the Acting Executive Secretary dated August 20, 1959 (Exh. W).

On October 22, 1959 Santulan filed in the Court of First Instance of Cavite a petition for certiorari wherein he alleged that the Executive
Secretary committed a grave abuse of discretion in misinterpreting certain provisions of Act No. 2874, Commonwealth Act No. 141, and
Lands Administrative Order No. 7-1.

In the lower court the parties agreed that the case Involves only a question of law. On August 18. 1961 the lower court dismissed the petition
and affirmed the Executive Secretary's decision. Santulan appealed to the Court of Appeals which in its resolution of July 21, 1967 elevated
the record to this Court on the ground that Santulan in his brief raised only the legal questions of whether the Public Land Law repealed
section 32 of Lands Administrative Order No. 7 1 and whether the Executive Secretary's decision is "legally sound and correct" (CA-G. R. No.
30708-R).

It should be emphasized that. as found by tile investigators of the Bureau of Lands, Santulan was the prior possessor of the foreshore land in
question. lie had it surveyed in 1942. The survey plan Psu-115357) was approved by the Director of Lands in 1944. Santulan paid the realty
taxes on that land .

It should further be underscored that the regulations pie him a preferential right to lease the land as a riparian owner. Lands Administrative
Order No. 7-1 dated April 30. 1936. which was issued by the Secretary of Agriculture and Natural Resources upon the recommendation of
the Director of Lands for the disposition of alienable lands of the public domain, provides:

32. Preference of the Reparian Owner — The owner of the property adjoining foreshore lands, marshy lands or lands
covered with water bordering upon shores or banks of navigable lakes or rivers, shall be given preference to apply for such
lands adjoining his property as may not be needed for the public service, subject to the laws and regulations governing
lands of this nature, provided that he applies therefor within sixty (60) days from the date he receives a communication
from the Director of Lands advising him of his preferential right.

Paragraph 32 quoted above is a substantial copy of paragraph 4 of Lands Administrative Order No. 8-3 dated April 20, 1936, which was
promulgated by the Secretary of Agriculture and Natural Resources upon the recommendation of the Director of Lands for issuance of
temporary permits of occupation and use of agricultural lands of the public domain.

The word "riparian" in paragraphs 32 and 4 of the departmental regulations is used in a broad sense as referring to any property having a
water frontage (Shepard's Point Land Co. vs. Atlantic Hotel, 44 S. E. 39, 45, 132 N. C. 517, 65 C. J. S. 143, note 84). Strictly speaking,
"riparian" refers to rivers. A riparian owner is a person who owns land situated on the bank of a river.

But in paragraphs 32 and 4, the term "riparian owner" embraces not only the owners of lands on the banks of rivers but also the littoral
owners, meaning the owners of lands bordering the shore of the sea or lake or other tidal waters. The littoral is the coastal region including
both the land along the coast and the water near the coast or the shore zone between the high and low watermarks.

Therefore, on the basis of paragraphs 32 and 4 of the said administrative regulations, Santulan or his heirs Should be allowed to leased or
occupy the said foreshore land.

But the Executive Secretary ruled that paragraph 32 was rendered obsolete by Commonwealth Act No. 141 or, as held by the trial court,
Lands Administrative Order No. 7-1 was repealed by the Public Land Law. Is that conclusion correct? We hold that it is wrong.

Property 181
It is true that Lands Administrative Orders Nos. 7-1 and 8-3 were issued when the 1919 Public Land Act was in force or before the present
Public Land Law took effect on December 1, 1936. But that circumstance would not necessarily mean that the said departmental regulations
are not good under the 1936 Public Land Law.

In rationalizing the alleged repeal of paragraph 32, the Executive Secretary cited the following provisions of Act No. 2874, the 1919 Public
Land Act (15 Public Land laws 24):

SEC. 64. The lease or sale shall be adjudicated to the highest bidder; and if there is no bidder besides the applicant, it shall
be adjudicated to him. The provisions of section twenty-seven of this Act shall be applied wherever applicable. If all or part
of the lots remain unleased or unsold the Director of Lands Shall from time to time announce in the Offcial Gazette or
otherwise the lease or sale of those lots if necessary . (Section 27 refers to sealed bidding).

The Executive Secretary held that the above-quoted section 64 was by the for provisions of on wealth Act No. 141 which took effect on
December 1, 1936:

SEC. 67. The lease or sale shall be made through oral bidding-, and ajudication shall be made to the highest bidder.
However, where m applicant has made improvements on the land by virtue of a permit issued to him by competent
authority, the sale or lease shall be made by sealed bidding as prescribed in section twenty-six of this Act, the provisions of
which shall be applied wherever applicable. If all or Dart of the lots remain unleased or unsold. the Director of Lands shall
from time to time announce in the Official Gazzate, or in any other newspapers of general circulation, the lease or sale of
those lots, if necessary. (Section 26, like section 27 of Act No. 2874, refers to sealed bidding).

The Executive Secretary noted that under section 64 of Act No. 2874 sealed bidding was the general rule of procedure in an award of a lease
of foreshore land and that the t is entitled to equal the bid of the highest bidder. On the other hand, under 67, oral bidding is the general rule.

Hence, the Executive Secretary assumed that, while under section 64 of the 1919 old Public Land Act, the fact that the applicant has a
preferential right to lease foreshore land was a crucial factor it is thus under section 67 of the 1936 Public Land Law because in oral bidding
the appellant is not entitled to equal the bid of the highest bidder.

The Executive Secretary concluded that, because the preferential right of the applicant to lease foreshore land was immaterial under 67 of
the present Public Land Law, paragraph 32 of Lands Administrative Order No. 7-1, which gives such preference. had become "idle and
useless".

That conclusion is wrong because it is based on the erroneous hypothesis that section 64 of the 1919 Public Land Act is different from
section 67 of the 1936 Public Land Law. They are not different. The truth is that section 64 was amended by Act No. 3517 which took effect
on February 4, 1919 (24 Public Laws 416). Section 64, as thus amended, is substantially the same as section 67 of the 1936 Public Land
Law.

That fact was overlooked by the Executive Secretary. Hence, his conclusion, that paragraph 32 of Lands Administrative Order No. 71 was
repealed or rendered obsolete by section 67 of the present Public Land Law, is wrong because its premise is wrong.

In other words, paragraph 32 of Lands Administrative Order No. 7-1, issued on April 30, 1936, was promulgated under section 64 of the old
Public Land Law, as amended. And since the amended section 64 was substantially reproduced in section 67 of the 1936 Public Land Law, it
is glaringly incorrect to say that section 67 rendered obsolete the said paragraph 32. Paragraph 32 is still in force and is good under the
existing Public Land Law.

The foregoing discussion reveals that the Executive Summary's rationalization of the alleged repeal of paragraph 32 of Lands Administrative
Order No. 7-1 (identical to paragraph 4 of Lands Administrative Order No. 8-3) is not only deficient in clarity and cogency but is predicated on
the false assumption that section 64 of the 1919 Public Land Act is different from section 67 of the present Public Land Law. Consequently,
the aforementioned decision of Executive Secretary Juan C. Pajo under review bas to be set aside.

This case is governed by the precedent established in the case of Gonzalo Monzon, which, as already noted, is similar to this cm since the
foreshore land involved in the Monzon case is adjacent to the foreshore land involved in this case.

In the Monzon case, the Office of the President, applying the oft-cited paragraph 32 of Lands Administrative Order No. 7-1 held that Monzon,
the littoral owner of the registered land abutting upon the foreshore land, has the preferential right to lease the foreshore land,

The location of the lots of Santulan and Monzon and the foreshore lands abutting thereon is shown in the following sketch bawd on the plan,
Psu-115357 (Exh. B):

Property 182
 Manila Bay or Bacoor Bay

Disputed Area

Psu-1 15357 Psu- 1 15358

Foreshore land Forshore land

claimed by leased to

Julian Santulan Gonzalo Monzon

and

Antonio Lusin

Lot No. 986 Lot no. 987

Belonging to Belonging to

Julian Santulan Gonzalo Monzon

Considering that the foreshore land abutting upon Santolan's lot is in the same situation as the foreshore land abutting upon Monzon's lot,
there is no reason why Santulan should not enjoy, with respect to the disputed foreshore land, the rights given to Monzon over the foreshore
land adjacent to his lot.

Now, then, is there any justification for giving to the littoral owner the preferential right to lease the foreshore land abutting on his land?

That rule in paragraph 32 is in consonance with article 4 of the Spanish Law of Waters of 1866 which provides that, while lands added to the
shores by accretions and alluvial deposits caused by the action of the sea form part of the public domain, such lands, "when they are no
longer washed by the waters of the sea and are not necessary for purposes of public utility, or for the establishment of special industries, or
for the coast guard service", shall be declared by the Government "to be the property of the owner of the estates adjacent thereto and as
increment thereof" (cited in Ignacio vs. Director of Lands, 108 Phil. 335, 338).

In other words, article 4 recognizes the preferential right of the littoral owner (riparian according to paragraph 32) to the foreshore land formed
by accretions or alluvial deposits due to the action of the sea (Ker & Co. vs. Cauden 6 Phil. 732, 736, 223 U.S. 268, 56 L. Ed. 432, 435; Jover
vs. Insular Government, 10 Phil. 522, 40 Phil. 1094, 1100, 221 U.S. 623, 55 L. Ed. 884).

The reason for that preferential right is the same as the justification for giving accretions to the riparian owner, which is that accretion
compensates the riparian owner for the diminutions which his land suffers by reason of the destructive force of the waters (Cortes vs. City of
Manila, 10 Phil. 567). So, in the case of littoral lands, he who loses by the encroachments of the sea should gain by its recession (Banks vs.
Ogden 2 Wall. 57, 67, 17 L. Ed. 818, 821).

That preferential right is recognized in American jurisprudence where the rule is that the owner of the land adjacent to navigable waters has
certain riparian or littoral rights of a proprietary nature not possessed by the general public which rights are incident to the ownership of the
banks or the uplands: riparian as respects the waters of a river and littoral as to sea waters or the waters of a lake (65 C.J. S. 143-145).

It may be mentioned that the Director of Lands stated in his manifestation of October 26, 1977 that Lands Administrative Orders Nos. 7-1 and
8-3 are still in force and have not been superseded by any later regulations and that the directive of the President of the Philippines to the
Director of Lands dated May 24, 1966, stopping the grant of foreshore leases all along Manila Bay, towards Cavite and Bataan, has not
rendered the instant case moot and academic "because the foreshore lease application involved is pending award."

In view of the foregoing considerations, the trial court's decision and the decision of the Executive Secretary dated April 10, 1958 are
reversed and set aside and the order of the Undersecretary of Agriculture and Natural Resources dated December 14, 1954 and the orders
of the Director of Lands dated February I and October 19, 1951 are affirmed.

The lease application of Julian Santulan mentioned in the order of February 1, 1951 should be recorded in the names of his heirs and the
obligation to make reimbursement mentioned in the dispositive part of the Undersecretary's order should now devolve upon the heirs of
Santolan. The reimbursement should be made to the heirs of the late Antonio Lusin The obligation to vacate the disputed land, as required in

Property 183
the Director's order of October 19, 1951 devolves upon the heirs of Lusin Costs in both instances against respondent heirs of Lusin (As
amended by Resolution of February 17, 1977.

SO ORDERED.

ANNEX A

ORDER

Julian Santolan, who owns Lot No. 986 of the Kawit Cadastre, under a free patent grant with Original Certificate of Title No. 6 issued to him
on June 9, 1937, claims preferential rights to all the areas extending seaward from the said lot. He caused the said areas to be surveyed for
him in 1942, and the survey plan thereof was approved in 1944, as may be seen in the Survey Plan Psu-115357 of this Office which is
reproduced in the sketch drawn. on the back of the last page hereof. Except the portion marked "A" in the sketch, he made a foreshore lease
application and a revocable permit application for these areas in 1942 to devote the areas applied for to fishpond purposes. Presently, he
now includes the portion "A" in his applications herein mentioned to be devoted to the same purposes — in fact, he now intends to utilize the
entire area comprised in his Survey Psu-115357 for fishery purposes and has filed therefor with the Bureau of Fisheries fishpond permit
application No. 5114. Upon this claim he contests the revocable permit (new) application and the foreshore lease (new) application for the
portion O these mm marked "X" in the sketch which were filed by Antonio Lusin in 1942 and 1945, respectively, for salt-producing purposes.

Lot No. 986 of the Kawit Cadastre, mentioned above as owned by Julian Santolan, a to be bounded on the north by the Bacoor Bay. It is
evident therefore that the areas now in Santolan's Survey Psu-115357, were formerly parts of the bay, and that presently they exist as a
result of the of the waters of the sea. Investigation disclosed that these areas are now foreshore lands, — covered and uncovered by the flow
and ebb of the tides. Santolan was found to have entered the areas first and made dikes Lusin was found to have entered lately and made
does also. None of them, however, has obtained from this Office any permit of occupancy and use, and their applications are not yet
approved.

On the basis alone of actual occupancy or introduction of improvements neither of the parties here may claim preferential rights, for under the
law and regulations, it is only such occupancy and introduction of improvements as are made upon the authority of an official permit issued
by this Office which could serve as a reason for holding a sealed bidding in a public auction of the right to low at which the permittee is given
the preferred right to equal the highest bid that might be put by any other party. This is the rule prescribed by Section 67 of Commonwealth
Act No. 141 (the Public land Act)' It appears, however, that the areas — portions "A", "X" and the parts extending up to the Bar Bay now, as
may be seen in the sketch, — which are comprised by Santolan's Survey Plan -Psu-115357, are immediately adjoining Lot No. 986, which is
his private property, and are extensions of the said lot to the sea. The areas, being foreshore lands, are therefore subject to riparian fights
which may be invoked by Santolan as owner of the upland in accordance With Section 32 of lands Administrative Order No. 7-1 which
provides the following:

Sec. 32. The owner of the property adjoining foreshore lands, marshy lands, or lands covered with water bordering upon
the shores or banks of navigable lakes or rivers, shall be given preference to apply for such lands adjoining his property as
may not be needed for the public service, subject to the laws and regulations governing lands of this nature, provided that
he applies therefor within 60 days from the date he receives a communication from the Director of Lands advising him of
his preferential right

As Julian Santolan is interested in utilizing the entire area covered by his Survey Psu- 1 15357 over which he is fully entitled to exercise his
riparian rights, the above-noted foreshore lease (new) application and revocable (new) application of Antonio Lusin, both covering the portion
marked "X" in the sketch, are hereby rejected. The lease application of Santolan, shall be recorded as Foreshore Urn Application No. 562
and given due course for the whole area (including portion "A) shown in the said sketch.

SO ORDERED.

Manila, Philippines, February 1, 1951.

JOSE P. DANS
Director of Lands

ANNEX B

Property 184
 ORDER

Counsel for respondent Antonio Lusin has filed in due time a motion for the reconsideration of our Order of February 1, 1951, which
resolved this case in favor of contestant Julian Santolan, praying that the said order be set aside and the case, reopened for
purposes of a formal hearing for the submission of evidence. Substantially stated, respondent Lusin claims that he is entitled to
preference because he has been in possession of the premises for a period of over twenty years, placing stakes and planting
aquatic trees for the raising and cultivation of shell fish and sea shells, besides constructing dikes for pending fish and making salt
beds, — all these works undertaken by him being the cause for the gradual filling of the area and its conversion into a productive
state. He contends that the areas under question had been formed thru "artificial accretion" caused by his own labor and,
consequently, he has the right of pre-emption.

There is no question, however, that the areas under question are parts of the foreshore. Under Section 61 of Commonwealth Act
No. 141 (Public Land Act), they are disposable to private parties by k only and not otherwise; and under Section 67 of the same Act,
the lease shall be made thru oral bidding, the adjudication to be made to the highest bidder.

There is no question also that the areas under question extend to the sea from lot No. 986 of the Kawit Cadastre, which is actually
owned by respondent Santolan under Original Certificate of Title No. 6 of the land records of Cavite. Undoubtedly, respondent has
riparian rights to the foreshore in question which he can invoke against contestant Lusin under the provisions of Section 32 of Lands
Administrative Order No. 7-1, quoted in toto in the order sought to be reconsidered.

Records show that the areas under question are also involved in the Fishpond Application No. 5114 of Julian Santolan with the
Bureau of Fisheries which is also contested by Antonio. lt appears that upon request of the Director of Fisheries to the Bureau of
Forestry for certification as to the availability of the areas for fishery purposes, the latter made investigation, inquiring at the same
time into the claim of Antonio Lusin, made formally in writing, that he has improved the areas into a fishpond and has been in
occupation thereof for more than 20 years. The Bureau of Forestry made the findings that those areas are within the disposable
areas for agricultural purposes under the jurisdiction of the Bureau of Lands; and that they are swampy lands, formerly under sea
water of the Bacoor Bay, "and not an improved fishpond as alleged by Antonio Lusin". These findings were transmitted to the
Director of Fisheries under first indorsement dated June 19, 1950.

Our own investigating officer, reporting on this case on January 25, 1951, stated the following: "On December 15, 1950, when I
conducted the first ocular inspection of the premises in the presence of both parties, the only visible improvements found thereon
are the newly-constructed dikes made thereon by Julian Santolan, a few bacauan and ape-ape trees of about two to three years old,
bamboo stakes placed thereon at intervals, and a small old hut located at almost the middle of the land in question. All these
improvements were claimed to have been introduced by Julian Santolan. Antonio Lusin, however, claimed that those bamboo
stakes found therein were his."

It is evident from the findings of both the inspecting officer of the Bureau of Forestry and our own investigating officer that the areas
under question are foreshore lands, and that they have not been really improved and possessed by respondent Lusin for over
twenty years as he alleged. The improvements found therein have been recently made, and they are not of such nature and extent
as would have changed the character of the areas as foreshore. In fact, according to the investigating officer, the areas have been
seen by him on different occasions, and he found that the same, as well as the neighboring areas in the same belt, were covered by
tidal waters of from 2 to 3 feet deep during ordinary rise of the tides, and uncovered by the tides at ebb.

There is, therefore, no reason for changing our disposition in our order of February 1, 1951. It is not necessary to re-open the case
to receive evidence on respondent's allegation that he has been in possession of the premises for over 20 years and has gradually
improved them because, aside from the fact that the allegation is belied by the physical condition of the premises, whatever
evidence may be gathered on that allegation could not change the nature of the areas as foreshore, nor would it avoid the rights of
contestant as riparian owner. The presence of the respondent in the premises has not been authorize by competent authorities, and
his introduction of improvements thereon was not done with proper permit of temporary occupancy and -use such as is prescribed in
our administrative practice. The circumstances under which he made improvements cannot justify his claim for a preferred right
under Section 67 of the Public Land Act; on the contrary, he stands to forfeit the improvements to the Government for, as reported
by our investigating officer, he entered the Premises and commenced making the improvements after contestant Santolan himself
has already made improvements, and after he has been warned on December 15, 1950 by the investigating officer not to continue
working, which warning was confirmed by us in our letter to him of January 12, 1951. His bad faith is quite evident, and he cannot
avail of his presence in the premises now to demand the issuance to him of a provisional or revocable permit of temporary
occupancy and use under our rules and regulations in order to legal his entry and give validity to his improvements. The right to
demand issuance of such a permit is concomittant to the right of contestant Santolan to be a preferred applicant by virtue of his
riparian right recognized in Section 32 of Lands Administrative Order No. 7-1 cited hereinabove.

IN VIEW HEREOF, the instant motion for reconsideration and reinvestigation of respondent Antonio Lusin is hereby denied, and he
shall vacate the premises within 60 days from receipt of notice hereof.

Property 185
 SO ORDERED.

Manila, Philippines, October 19, 1951.

JOSE P. DANS
Director of Lands

ANNEX C

DECISION

The order of the Director of Lands dated February 1, 1951, rejected Foreshore Lease Application (New) and Revocable Permit Application
(New) of Antonio Lusin and gave due course to the Foreshore Lease Application No. 562 of Julian Santolan. Antonio Lusin claims that the
order is against the fact and the law. He presented three (3) motions for reconsideration: one on October 19, 1951; the other on December
12, 1951; and the last on April 9, 1952. Said motions were all denied. Hence, the present appeal. The subject of contention is the strip of land
having an area of 41/2 hectares from Lot No. 986 of the Kawit Cadastre No. 203 to the waters of Bacoor Bay. Lot No. 986 is covered by I
Certificate of Title No. 6 issued to Julian Santolan on June 9, 1937. Santolan's titled property is bounded on the north by Bacoor Bay.

On December 5, 1942, Santolan filed his foreclosure km application for the entire tract entervening between his property and Bacoor Bay. So
he caused Psu- 115357 to be executed and same was approved in 1944 by the Director of Lands.

On November 26, 1945, Antonio Lusin applied for permit for an area of 4.5 for salt bed purposes. The area for which permit was asked is by
his F.L.A. (New) filed on November 17, 1945, the boundaries of which are as follows:

NE — V. del Rosario and E. del Rosario

SE — Julian Santolan

SW — Ankaw River

NW — Bacoor Bay

The two applications of Santolan and Lusin cover the same area. Julian Santolan duly protested in 1946 against Lusin's application. The
question to be decided in this appeal is: Which of the two applicants, Julian Santolan or Antonio Lusin, has right of preference to the land in
controversy?

By virtue of the fact that he is a riparian owner, Julian Santolan has the right of preference pursuant to the provisions of Section 32 Of
Administrative Order No. 7-1, which reads as follows:

Sec. 32. The owner of the property adjoining foreshore lands, marshy lands, or hinds covered with water bordering upon
the shores or banks of navigable lakes or rivers, shall be given preference to apply for such lands adjoining his property as
may not be needed for the public service, subject in the laws and regulations governing lands of this nature, provided that
he applies therefor within sixty (60) days from the date he receives communication from the Director of Lands advising him
of his preferential right.

It is true that appellant Lusin introduced improvements on the in question, but that fact does not give him preferential right , not only because
he had not acquired any permit from the Bureau of Lands before doing so, but also because his entry on the was duly protested by Santolan.

IN VIEW OF ALL THE FOREGOING, and finding that the order of the Director of lands on Feb. 1, 1951, is in accordance with the facts of
record and the provisions of the law on the matter, the herein appeal from said order should be, as hereby it is, dismissed.

SO ORDERED.

Manila, Philippines, October 13, 1952.

Property 186
 JOSE S. CAMUS
Acting Secretary of Agriculture
and Natural Resources

ANNEX D

ORDER

This is a motion filed by Antonio Lusin, thru counsel, for the reconsideration of the decision of this Office dated October 13, 1952, dismissing
his appeal from the decision of the Director of Lands under date of February 1, 1951.

In support of the said motion for reconsideration, Lusin substantially alleges that he has been improving the land in question since 1920,
spending for such improvements no more than P20,000.00, and for that reason, he should be given the preferential right to acquire the said
land. To reinforce his allegation, movant cites the case of Rosalia Vida Vda. de Tirona vs. Magdaleno Tragico, CA G.R. No. 9050, decided by
the Court of Appeals on June 30, 1943, wherein it was held that because Tragico has constructed fishpond on a portion of the land in
question by means of the improvements he has introduced thereon and has possessed the land for sufficient time to acquire the land by right
of prescription, he was awarded the land in dispute.

We have found this allegation of movant to be far from the truth. lt is the finding of the investigating officer who made an investigation of this
case that it is Julian Santolan and not movant Lusin who has been actually occupying the land in question and introducing improvements
thereon. The pertinent portion of his M reads as follows:

On December 16, 1950,, when I conducted the first ocular inspection of the premises in the presence of both parties, the
only visible improvements found thereon were the newly constructed dikes made thereon by Julius Santolan, a few
bacauan and ape-ape trees of about two to three years old, bamboo stakes placed thereon at intervals and a small old hut
located at almost the middle of the land in question. All these improvements were claimed to have been introduced thereon
by Julian Santolan. Antonio Lusin, however, claimed that the bamboo stakes found thereon were his.

Moreover, according to the further finding of the said investigating officer, the WW in question fails under the category of foreshore land. That
portion of his report referring to this finding is hereby quoted as follows:

It may not be amiss to state in this connection that I have. or different occassions, the opportunity to inspect the land
subject hereof on both high and low tides. During ordinary low tide, the whole area. and further seaward, is entirely ex to
the surface while during ordinary high tide, it is wholly covered with tidal water with an approximate depth of two to three
feet. The land in question in its entirety is marshy covered and uncovered by the ebb and flow of tidal water.

As the land is a foreshore land, the same is susceptible to the riparian right of the owner of the adjoining land. According to Section 32 of
Lands Administrative Order No. 7-1, the owner of the property adjoining foreshore land, shall be given preference to apply for such land
adjoining his property as may not be needed for the public service. Inasmuch as the land in question adjoins Lot No. 980, Kawit Cadastre,
which is a private property of Julian Santolan, said Julian Santolan shall have the preference right to apply therefor over and above any other
applicant. It may be mentioned, in this connection, that the said case of Rosalia Vida Vda. de Tirona vs. Magdaleno Tragicowho had and
improved the land claimed by him, it is Santolan and riot movant Lusin who has been actually occupying and improving the land subject of
the present controversy.

WHEREFORE, the instant motion for reconsideration filed by Antonio Lusin, as well as his request for reinvestigation of this case, should be,
as hereby it is, denied.

SO ORDERED.

Manila, Philippines, February 28,1953.

FERNANDO LOPEZ
Secretary of Agriculture and
Natural Resources

Property 187
 ANNEX E

ORDER

On October 13, 1952, the Office a in connection with the above-case can, the dispositive portion of which reads as follows:

In view of all the foregoing and that the order of the Director of Lands on February 1, 1961, is in with the facts of record and
the provisions of law on the matter the herein appeal from the said order should be, as hereby it is dismissed.

From the said decision Antonio Lusin filed a motion for reconsideration which was denied as per order of this Office dated February 28, 1953.
Still not satisfied with the aforementioned order, Lusin again filed a second notion for reconsideration predicating his motion on the following
grounds:

1. That he (Lusin) is in actual ion of the land in question since 1920;

2. That said area is an agricultural land actually devoted to fishpond and, therefore, is not a foreshore land;

3. That even granting without admitting that Santolan is a riparian owner, Santolan had lost his riparian right thereto in view of the continuous
ion by Lusin of the area since 1920; and

4. That in the investigation relied upon by the Director of Lands in his decision and confirmed by this Office, the movant herein was not given
opportunity to be heard because the said investigation was never completed, and as a result, the conclusions of the investigator thereat were
one sided

Adhering to its Policy of giving party litigants the outmost opportunity to present their respective sides of the case, this Office ordered a
reinvestigation of the case to determine whether or not the allegations of Antonio Lusin are true.

From the said reinvestigation, the facts of this case may be stated as follows:

The disputed area is a strip of land containing an approximate area of 4-1/2 hectares located at the Barrio of Kaingin, Municipality of Kawit,
Province of Cavite- lt is bounded on the North by Bacoor Bay, on the East by the property occupied by Vicente del Rosario and E. del
Rosario, on the South by Lot No. 896 of Kawit Cadastre No. 203; and on the West by Ankaw River. Lot 986, mentioned above as the
boundary of the area in question on the South, is owned and possessed by Julian Santolan, his ownership thereof being evidenced by a free
patent grant with Original Certificate of Title No. 6 issued on June 9, 1937. The only issue to be resolved in this case is whether or not Julian
Santolan, as riparian owner, is entitled to the preference provided for in Section 32, Lands Administrative Order No. 7-1, which reads as
follows:

32. Preference of Riparian Owner.— The owner of the property adjoining foreshore lands, marshy lands, or lands covered
with water bordering upon the shores or banks of navigable lakes or rivers, shall be given preference to apply or such lands
adjoining his property as may not be needed for the public service, subject to the laws and regulations governing Ian of this
nature, provided that he applies therefor within sixty (60) days from the date he receives a communication from the Director
of Lands advising him of his preferential right.

During the reinvestigation of this case by a representative of this Office, it was disclosed that Antonio Lusin is the actual occupant of the area
in question - his present possession thereof dating back as of 1951. During his occupation, Lusin has introduced considerable improvements
in the area investing his fife sa therein. Today, a portion of approximately two hectares of the said area is a complete fishpond surrounded
with dikes. A concrete gate was constructed on the western side of the fishpond in 1951. Water breakers were constructed around the dikes
to protect them from the action of the waves. The remaining portion of the area in question is fenced with bamboo stakes.

On the other hand, it is apparent that the area in question is an extension of Lot 986 to the sea and that its present existence is the result of
the continuous recession of the water of the sea. There is no doubt that the area in question is a foreshore, it being situated along the shore
lying between medium high and low water marks and is covered and uncovered by the flow and ebb of ordinary tide.

Both Parties claim prior ion of the disputed area, Santolan's claim dating way back in 1907, the year he claims said area was donated to him
by his father-in-law while Lusin alleges that he was already in possession of the same since 1920. The evidence presented by both parties
during the reinvestigation were so diametrically opposed with each other that they only create doubts as to the veracity of the respective
claims of said parties. From the testimonies of witnesses for both sides, there could be gathered sufficient grounds to believe that prior to
1942, neither Party Possessed the area to the exclusion of the other. Rather, there are good reasons to believe that both parties fished in the
premises jointly and/or simultaneously without claiming the property exclusively for themselves because then the area was covered with
water which at that time was still deep. It was only in 1942 that Julian Santolan took positive step to claim the property by filing a foreshore
Property 188
lease and a revocable permit application for said area with the intention of converting the same into a fishpond. Santolan caused said area to
be surveyed in 1942, the survey plan was approved in 1944 as may be seen in survey Plan Psu- 115357 of the Bureau of Lands. Since 1942,
Santolan exercised dominion over the property although Lusin occasionally entered the premises with a similar intention of claiming the area
for himself. In January of 1951 Lusin entered the area in question and wrested the n thereof from Santolan. Since then up to the present,
Lusin is in continuous possession of the same notwithstanding the vigorous opposition of Santolan.

Lusin alleges that the area in question does not fall within the purview of the above quoted Section 32 of Lands Administrative Order No. 7-1
on the theory that the lands enumerated in said provision, whether foreshore lands, marshy lands, or lands covered with water, must be
bordering upon the shores or banks of navigable lakes or rivers. And it is argued that the area in question is bordering the shores of Manila
Bay, which is neither a lake nor a river, the owner of the adjoining property is not en to the preferential right accorded by said Lands
Administrative Order.

We cannot agree with this contention. This Office is of the opinion and so holds that the said provision of Lands Administrative Order No. 7-1,
Section 32 speaks of the following kinds of lands, distinct and separate from one another:

(1) Foreshore lands

(2) Marshy lands, or

(3) Land covered with water bordering upon the shores of navigable lakes or rivers.

The phrase "bordering upon the shores of navigable lakes or river" in said provision modifies only the third classification, that is, "lands
covered with water", for if the law that said phrase should modify the three types of land enumerated are then the punctuation mark, comma,
should not have been placed before the alternative "or" but instead between the words "water" and "bordering" making said provision to
appear as follows:

The owner of the property adjoining foreshore ands marshy lands or lands covered with water, bordering upon the shores
or banks of navigable lakes or rivers ... .

The use of the alternative "or" instead of the conjunction "and" shows the intention of the law in segregating foreshore lands from marshy
lands and those two from lands covered with water bordering upon shores of navigable lakes or rivers.

It is also alleged that even granting that Santolan was the preferential rights accorded to a riparian owner, said right has prescribed on the
ground that Lusin has been in continuous ion of the said area since 1920. This allegation was not duly proven during the reinvestigation.
While Lusin claims ion of the disputed area since 1920, on the other hand. Santolan claims that he possessed the same since 1907 when it
was donated to him by his father-in-law. As we have- already stated, it is the - finding of this Office that prior to 1942, neither party the
premises exclusively. It was only in 1942 when Santolan took positive steps to claim the area for himself. There are even evidence on record
that Santolan paid the land taxes for the area in 1936. In 1951, Lusin effected his entry to the area up to the present. It may be recalled,
however, that these actuations of Lusin had been the subject of a criminal complaint filed by Santolan before the Justice of the Peace Court
of Kawit, Cavite, wherein Lusin was acquitted on the ground that his guilt was not proven beyond reasonable doubt.

Needless to say, proof beyond reasonable doubt is absolutely necessary before conviction in criminal cases could be had. On the other
hand, preponderance of evidence is sufficient to prove a matter of fact in civil and/or administrative cases. The preponderance of evidence
adduced at the reinvestigation of this case conducted by a representative of this Office, shows that the present occupation of Lusin of the
area in question was effected by force, although there are good reasons to believe that such force was employed by Lusin to assert what he
believed was his right over the property in question.

From the foregoing facts and circumstances, it is therefore, apparent that the area in question is a foreshore land, and Santolan, being the
riparian owner, is entitled to the preferential rights accorded by the provision of Section 32 of Lands Administrative Order No. 7-1.
Considering, however, the fact that during the reinvestigation of this case, it was disclosed that Antonio Lusin had introduced considerable
improvements in the premises and had invested his life savings therefor, and considering further that if Santolan were the one who converted
the area into a fishpond, as he intends to do, he would have incurred the same expenses as was incurred by Lusin in the premises in
question, it is the belief of this Office that justice would be fully served if Santolan be required to reimburse Lusin of the value of the
improvements now existing in the area as may be appraised by the Committee on Appraisal of the Bureau of Lands.

WHEREFORE, the above-noted foreshore lease (New) application and revocable permit (New) application of Antonio Lusin should remain,
as hereby it is, REJECTED; and Foreshore Lease Application No. V-65 of Julian Santolan given due course, PROVIDED, he reimburses
Antonio Lusin of the appraised value of the improvements now existing in the area within sixty (60) days after notification of said appraisal.

Property 189
The Director of Lands is hereby directed to instruct the Committee on Appraisal concerned to make the necessary appraisal of the value of
the improvements now existing in the area in question within thirty (30) days from receipt of this order and to notify Julian Santolan of the
result of said appraisal.

In the event that Julian Santolan fails to reimburse Antonio Lusin of the appraisal value of the said improvements within the period specified
in this order, he shall lose his preferential rights over the area and Antonio Lusin will be allowed to file an appropriate public land application
therefor.

SO ORDERED.

Manila, Philippines, December 14, 1954.

By Authority of the Secretary:

JAIME M. FERRER
Undersecretary of Agriculture
and Natural Resources

ANNEX F

ORDER

On December 14, 1954, this Office issued an order in connection with the above-entitled case wherein the rejection of the foreshore lease
application and revocable permit (both new) of Antonio Lusin was upheld and Foreshore Lease Action No. V-62 of Julian Santolan given due
course provided he reimburses Antonio Lusin of the appraised value of the improvements now existing in the area within sixty (60) days after
notification of said appraisal.

From said order, both parties to this conflict filed separate motions seeking reconsideration of the same.

Santolan premised his motion on the theory that as fat as that po of the order which requires him to reimburse Lusin of the appraised value of
the improvements within sixty (60) days after notification of said appraisal is concerned, same is contrary to the provisions of Commonwealth
Act No. 141 and of the New Civil Code.

Santolan argues that the best procedure that should have been followed in the disposition of this case was for the Government to forfeit all
the improvements introduced by Lusin in the area in question in its (Government's) favor and then let Santolan pay to the Government the
appraised value of said improvements within ten (10) years after notification of said appraisal. He further argues that the "law does not
authorize the Secretary of Agriculture and Natural Resources to dispose of the proceeds of the sale of the improvement to any person
whomsoever", and "certainly the Secretary does not claim the prerogative of disbursing government funds without authority of law."

In the first place, the order sought to be reconsidered does not contemplate any ale from which proceeds could be disposed of by the
Secretary "to any person whomsoever". In the second Place, in the issuance of the order sought to be reconsidered this Office has taken into
consideration the Provisions of Wealth Act No. 141 and those of the Civil Code cited by movant Santolan with in go me respect to the
forfeiture ' favor of the government of the improvements found in the areas covered by rejected applications. However, this Office is also fully
aware of that cardinal principle that 'no man shall enrich himself at the expense of another.

During the reinvestigation of this case by a representative of this Office, it was found that Lusin was the, actual occupant of the disputed area
since 1951. During his occupation, Lusin was introduced considerable improvements in the area, investing his life savings therein. At the time
of inspection, approximately two (2) hectares of the said area was a veritable and complete with dikes and water breakers, and the remaining
portion was surrounded with bamboo stakes. While this Office of Lusin's occupation as having effected by force, this Office also believes that
such force was employed by Lusin only to enforce what he believed was his right over the property in question. This being the case, justice
and equity demands that Lusin should be compensated of the improvements introduced by him in the area in question by whomsoever shall
enjoy the fruits of his (Lusin's) toil. Julian Santolan, being the person who shall benefit from said improvements, it is only fair and just that he
should reimburse Lusin of the value of said improvements, especially considering that the said area adjudicated to Santolan is already a
producing fishpond.

Antonio Lusin, on the other hand, contends that the order sought to be reconsidered is contrary to the facts of the case and to the law
applicable thereto.

Property 190
Lusin assigns the following errors as having been allegedly committed by this Office:

(1) In holding that the possession of Lusin dated only as Of 195 1;

(2) In holding that the ion of Lusin was effected through force;

(3) In holding that Section 32 of Lands Administrative Order No. 7-1 is applicable in the instant case;

(4) In not holding that the preferential rights of Julian Santolan, granting that he has any, has already prescribed; and

(5) In giving due course to the foreshore lease application of Santolan for the entire area in question.

With respect to the first two assignments of errors, a review of the records of this case shows that the findings of this Office are in accordance
with the facts of the case as deduced from the reinvestigation Of this conflict, and as supported by previous records of this case. This Office,
therefore, finds no sufficient ground to disturb its findings of facts.

Anent the next two assignments of errors, which are mere reiteration of movant's allegation in his previous memorandum, and which were
thoroughly passed upon by this Office, it is believed that discussing them further is no longer necessary since after another close examination
of the case, this Office finds its disposition in this particular respect well justified and in accordance with the law and regulations applicable
thereto.

Now coming to the last allegation, Lusin contends that the foreshore lease application of Julian Santolan, if given the course, should not
cover the entire area in question. Movant Lusin advances the theory that since the reason behind the law in granting preferential rights to
reparian owners is to compensate for whatever loss said riparian owner may suffer from the actions of the water, said riparian owner cannot
stand to lose more than what he owns, and therefore, since Santolan's property, which adjoins the area in question, is only two (2) hectares,
Santolan can never lose more than two hectares.

Section 32 of Lands Administrative Order No. 7-1, the particular Point of law involved provides as follows:

32. Preference of Riparian Owner.— The owner of the property adjoining foreshore lands, marshy lands, or lands covered
with water bordering upon the shores or banks of navigable lakes or rivers, shall be given preference to apply for such
lands, adjoining his property as may not be needed for the public service, subject to the laws and regulations governing
lands of this nature, provided that he applied therefor within sixty (60) days from the date he receives a communication
from the Director of Lands advising him of his preferential right.

The above-quoted provision of the Lands Administrative Order does not impose any restriction or limitation with respect to the extent of the
area to which a riparian owner is preferred as long as said area is not needed for public service. The said order, being clear on this point, this
Office has no other alternative but to interpret said regulation in the meaning it clearly conveys.

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the instant motion for reconsideration filed respectively by the conflicting parties
herein, should be, as hereby they are, denied.

SO ORDERED.

Manila, Philippines, May 19, 1955.

By authority of the Secretary:

JAIME N. FERRER
Undersecretary of Agriculture
and Natural Resources

ANNEX G

4th Indorsemen

Property 191
 Manila, April 10, 1958

Respectfully returned to the Secretary of Agriculture and Natural Resources, Manila.

This is with reference to the appeal by Antonio Lusin from the order of that Department in DANR Case No. 625 (Julian Santolan vs. Antonio
Lusin) dated May 19. 1955, whereby his motion for reconsideration of the order of that office of December 14, 1954, rejecting his foreshore
lease application for the disputed land but awarding to him the right of reimbursement for the improvements he had introduced thereon and
giving due course to appellee's application therefor, was denied.

The land in question is a foreshore land of about 4-1/2 hectares located along Bacoor Bay in barrio Kaingin, Kawit, Cavite. A preferential right
to lease it is claimed by the appellant on the ground that he has been in the continuous and exclusive possession thereof since 1920. when
said land was still under water and used as a site of his fish corals. On the other hand, it is alleged by the appellee that the disputed lot is an
extension of his property into the sea, as he is the owner of Lot No. 986 which, according to its technical description, borders Bacoor Bay on
the North; that the present foreshore land was formed by soil deposits brought by the action of the sea; and that he has the right of
preference to apply for the land in question in accordance with Section 32 of Lands Administrative Order No. 7-1.

Upon the foregoing facts, the Director of Lands in an order dated February 1, 1951, rejected the appellant's foreshore lease application and
forfeited the improvements he had introduced thereon in favor of the appellee. From this order, Lusin appealed to the Secretary of Agriculture
and Natural Resources after his three motions for reconsideration had been denied. On October 13, 1952, the Secretary dismiss his appeal.
Thereafter, the appellant moved for a reconsideration of the Secretary's decision but his motion was denied on February 28, 1953. He then
filed another motion requesting a formal reinvestigation of the case. The motion was granted and that Department ordered a reinvestigation
of the case on May 12, 1953.

In the reinvestigation of the case, the following facts were established: That Lusin had converted two (2) hectares of the area in dispute into a
veritable fishpond; and that the entire area in question was enclosed with dikes and provided with two (2) sluice gates, one of which was
made of concrete and the other of lumber; that on the northern part of the disputed land bordering Bacoor Bay were bamboo poles placed at
close intervals serving as water breakers to protect the mud dikes from being washed away by the action of the sea; that all of these
improvements were introduced by Lusin in 1951 up to the time of the reinvestigation; that the disputed land was, as it still is. bounded on the
South by Lot No. 986 of Julian Santolan; that said land was formed by soil deposits brought by the action of the sea; that in December 1942,
Santulan caused the survey of the land, and the survey plan was approved by the Director of Lands in 1944; that on December 29, 1942,
Santulan filed a foreshore lease application covering an area of 36,120 square meters of the land in dispute; that the filing of Santolan's
foreshore lease application resulted in the investigation of the case in March 1943, involving the parties herein. and that said investigation
was not finally terminated for unknown reasons.

After receiving and considering the report of the reinvestigation, that office on December 14, 1954, issued an order modifying its previous
stand by giving the appellant the right to reimbursement for the improvements he had introduced on the disputed lot, the dispositive part of
which reads:

Wherefore, the above noted foreshore lease (New) application and revocable permit (New) application of Antonio Lusin
should remain, as hereby it is, REJECTED; and Foreshore Lease application No. V-62 of Julian Santulan given due
course, PROVIDED, he reimburse Antonio Lusin of the appraised value of the improvements now existing in the area
within sixty (60) days after notification of said appraisal.

xxx xxx xxx

In the event that Julian Santulan fails to reimburse Antonio Lusin of the appraised value of the said improvements within
the period specified in this order, he shall lose his preferential rights over the area and Antonio Lusin will be allowed to file
an appropriate public land application therefor.

The appellant moved for a reconsideration of the foregoing order but his motion was denied on May 19, 1955. Dissatisfied, he appealed to
this Office, averring that the Department erred in finding the following: That the possession of Antonio Lusin of the land in question began
only in 195 1; that since 1942, Julian Santulan had been exercising dominion over the property in question; that the area in question is
apparently an extension of lot No. 986 into the sea and that its present existence was the result of the continuous recession of the sea; that
the possession of Antonio Lusin over the property in question was effected through force; that Section 32, Lands Administrative Order No. 7-
1, is applicable to the instant case; and that the preferential rights of Julian Santolan, granting he has any, has not prescribed. He contends
further that the Department erred in rejecting his foreshore lease application and in giving due course to that of the appellee.

The main issue presented by the parties to be resolved in this controversy is, which of them has a better right to lease the foreshore land
under consideration? For a clear resolution of the question, it is necessary to look into the legal provisions governing the administration and
disposition of foreshore lands. As correctly held by that Department and the Bureau of Lands, the administration and disposition of foreshore
lands are governed by Chapter IX, Title III of Commonwealth Act No. 141, (Secs. 58 and 59), otherwise known as the Public Land Act.
Property 192
Section 61 of said law provides that foreshore lands shall be disposed of to private parties by lease only and not otherwise, as soon as the
President, upon recommendation by the Secretary of Agriculture and Natural Resources, shall declare that the same are not necessary for
the public service and are open to disposition, The procedure for the award of a lease of foreshore land is found in Section 67 of the same
law which provides, as a general rule, that the award of the right to lease a foreshore land shall be determined by oral bidding, except where
improvements were introduced thereon by reason of a permit issued by competent authority, in which case the award thereof shall be
determined by sealed bidding pursuant to the provisions of section 26, whereby the permittee is granted the right to equal the highest bidder.

Noteworthy is the fact that both parties herein claim to have been in prior possession of the land in controversy than the other. Not one of
them, however, was granted a permit by competent authority to occupy and use the land and introduce improvements thereon. Since not one
of them was granted such a permit, the fact that one or the other had been in prior possession of the premises in question is immaterial, as
will be seen hereafter, in the determination of the instant controversy. Neither is the alleged finding that one of the parties herein entered the
premises and introduced improvements thereon in bad faith material to the resolution of the case.

It is likewise significant to note that while the Bureau held that none of the parties herein was entitled to a preferential right to lease the land in
question "on the basis alone of Actual occupancy or introduction of improvements," it ruled that the appellee, Julian Santolan, by reason of
the fact that he was, as he still is, a riparian owner of the disputed area, had a preferential right to apply for a lease therefor, citing Section 32
of Lands Administrative Order No. 7-1, which reads:

Sec. 32. The owner of the property adjoining foreshore lands, marshy lands, or lands covered with water bordering upon
the shores or banks of navigable lakes or rivers, shall be given preference to apply for such lands adjoining his property as
may not be needed for the public service, subject to the laws and regulations governing lands of this nature, provided that
he applies therefor within 60 days from the date he receives a communication from the Director of Lands advising him of
his preferential right.

In this appeal, the appellant reiterates his contention before that Department that the foregoing is not applicable to the instant case "because
the property in question borders upon the shores or banks of the Manila Bay and not upon navigable lakes or rivers." The fallacy of the
argument is too obvious to require any discussion since the provision expressly speaks of foreshore lands. At any rate, this Office finds that
Section 32 of Lands Administrative Order No. 7-1 has been rendered obsolete by Commonwealth Act No. 141.

Lands Administrative Order No. 7-1, dated April 30, 1936, but made effective on January 1, 1936, was promulgated before. the passage of
Commonwealth Act No. 141. Its provisions which have not been altered, modified or amended, particularly Section 32 thereof, were
promulgated pursuant to the existing public land law at the time of its promulgation, namely, Act No. 2874. A perusal of Section 32 of Lands
Administrative Order No. 7-1 will show that while it speaks of a preferential right to apply for a foreshore land, it does not specify the mode of
application, i.e., whether by sale, lease, homestead, permit, etc., contemplated by it. Nevertheless it is clear under Act No. 2874 that a
foreshore land may be the subject only of a lease (Sec. 58), or of a revocable permit to occupy and use it (Sec. 65). Seemingly therefore
Section 32 of Lands Administrative Order No. 7-1 contemplates an application for a lease of foreshore land or a revocable permit to use or
occupy it. However, Section I of said order provides, among other things, the following:

... Those rules and regulations shall not apply to applications for temporary occupation or provisional use of Said lands and
property which shall be governed by the provisions of Section 1844 of the Administrative Code, as amended, by Acts Nos.
3077 and 3852, Lands Administrative Order No. 8 and other regulations promulgated thereunder.

Since Lands Administrative Order No. 7-1 expressly exempts from its operation temporary permits for the use and occupation of public lands,
the conclusion is inescapable that Section 32 thereof contemplates an application for a lease under Section 58 of Act No. 2874 only and does
not include a revocable permit application under Section 65 of said Act.

The procedure for the award of the right to lease a foreshore land under Act No. 2874 is found in Section 64 thereof, which reads:

Sec. 64. The lease or sale shall be adjudicated to the highest bidder; and if there is no bidder besides the applicant, it shall
be adjudicated to him. The provisions of Section twenty-seven of this Act shall be applied wherever applicable.

Section 67 of Commonwealth Act No. 141, repealing the foregoing provisions, provides:

Sec. 67. The lease or sale shall be made through oral bidding; and adjudication shall be made to the highest bidder.
However, where an has made improvements on the land by virtue of a permit issued to him by competent authority, the
sale or lease shall be made by sealed bidding as prescribed in section twenty-six of this Act, "the provisions of which shall
he applied wherever applicable. x x" (Italics supplied).

While Section 64 of Act No. 2874 makes a reference to Section 27 of the same Act, Section 67 of Commonwealth Act No. 141 also Makes a
reference to Section 26 of the latter law, Section 26 of Commonwealth Act No. 141 is practically a reproduction of Section 27 of Act No. 2874

Property 193
and prescribes the manner or procedure of determining an award through sealed bidding in the sale of a public land. Under its provision, an
applicant is given the option or right to equal the highest bidder.

Section 67 of Commonwealth Act No. 141 differs, however, from Section 64 of Act No. 2874 in that while the latter provides that "section
twenty- seven of this Act shall be applied wherever applicable," making sealed bidding the general rule of procedure in determining an award
of a lease of foreshore land, the former Provides the contrary, as under its provisions sealed bidding is not the general rule of procedure in
the determination of lease awards of foreshore lands but may be resorted to only when the conditions specified therein are present.

Since Section 64 of Act No. 2874 provides that Section 27 thereof should be applied wherever applicable in determining an award of a lease
of foreshore land, the mere fact that the land is covered by a lease application therefor warrants the holding of a sealed bidding for its
disposition, whereby the applicant therefor should be granted the option or right to equal the highest bid. In such a legal set-up, the question
of preference in the right to apply for a lease of foreshore land became a necessary consequence, as one need only apply to be entitled to
the right to equal the highest bid hence, the applicability of Section 32 of Lands Administrative Order No. 7-1.

On the other hand, under Section 67 of Commonwealth Act No. 141, a foreshore land may be leased, as a general rule, by oral bidding only.
In such a case, the award of the foreshore lease shall always be made to the highest bidder, notwithstanding the fact that one among the
bidders is an applicant, as no one in an oral bidding is entitled to equal the highest bid, unlike in the case of a sealed bidding either under
Section 27 of Act No. 2874 or under Section 26 of Commonwealth Act No. 141. Since the award of a foreshore lease shall be given to the
highest bidder in an oral bidding, the necessity of determining who among several interested parties has a preferential right to apply for the
land has been obviated under the present law, because the mere fact that one is an applicant does not entitle him to equal the highest bid,
rendering the provisions of Section 32 of Lands Administrative Order No. 7-1 Idle and useless.

Parenthetically, it may be stated that the appellee brought to the attention of this Office its previous decision in DANR Case No. 694 (Del
Rosario vs. Monzon), where the facts involved therein are more or less similar to those in the present controversy. While this Office in that
case relied on Section 32 of Lands Administrative Order No. 7-1 in resolving the appeal therein, it did not touch on the question of whether or
not said provision is still enforceable, as the same was not squarely placed in issue. For this reason, the ruling in that case can not be availed
of as a precedent in the adjudication of the one under consideration.

In the instant case the parties are vying for the preferential right to apply for a lease of the disputed land, as if by the mere fact of application
the land should be disposed of by scaled bidding, whereby the recognized applicant therefor should be given the right accorded to applicants
under Section 26 of Commonwealth Act No. 141. The only instance under Section 67 of Commonwealth Act No. 141 when a foreshore land
may be leased through sealed bidding is when the conditions specified therein — namely, a that improvements had been introduced on the
land and (b) that said improvements were introduced thereon by reason of a permit issued by competent authority — are present, in which
case the permittee shall be granted the right to equal the highest bid. In the absence of these conditions, the land should be leased through
oral bidding only and, as stated earlier. the question of preference in the right to apply therefor is immaterial.

As the conditions specified in Section 67 of Commonwealth Act No. 141 are not present in the instant case, the land in question can be
leased only through oral bidding, if it can be disposed of under the provisions of Section 61 of said Act, which requires as a condition sine
qua non in the lease of foreshore lands that the same have been declared by the President not necessary for the public service and are open
for disposition. Without such a declaration, a foreshore land may only be occupied and used by private persons for lawful purposes upon the
issuance of a revocable permit therefor under Section 68 of Commonwealth Act No. 141. Since the record is silent as to whether or not the
land under consideration has been so declared, this Office is constrained to render two alternative resolutions of the instant case.

On the assumption that the land in question has been declared open for disposition and is not necessary for the public service, this Office
directs that an oral bidding for the leasing thereof to interested parties pursuant to the provisions of Section 67 of Commonwealth Act No. 141
be conducted and the contract of lease awarded to the highest bidder. Whoever shall be the highest bidder, if other than the appellant, shall
be required to pay to the appellant the appraised value of the improvements introduced by him on the land to be determined by that
Department.

If the land in question has not been so declared, this Office directs that a revocable permit under Section 68 of Commonwealth Act No. 141
be issued to the appellant requiring him to pay permit fees since the year 1951.

Accordingly, the orders and decisions of that Department and the Bureau of Lands are hereby revoked. The record of the case is returned
herewith.

By authority of the President:

(SGD) JUAN C. PAJO

Executive Secretary

ANNEX H
Property 194
 5th Indorsement

Manila, May 10, 1954

Respectfully returned to the Honorable, the Secretary of Agriculture and Natuaral Resources, Manila.

In his decision of February 4, 1952, the Director ofLands amended the miscellaneous sales application of Emiliano del Rosario by excluding
therefrom portion "B" and adjudicating the same to Gonzalo Monzon under his foreshore lease application. On appeal by Del Rosario, the
decision of the Director of Lands was affirmed by the Secretarty of Agriculture and Natural Resources on February 6, 1953. Del Rosario now
appeals to this office.

The question presented for determination is, which of theparties has a better right to the area in question?

It appears that the area in dispute, portion "B", is a foreshore land, an extension od portion "a", which lies immediately adjacent to lot No.
987, private property ofMonzon. The record shows that Monzon and his predecessor in interest have been in possession od said area since
before the war, using it as a site for their oyster and "kapis" beds and for the fish coral. It was only in 1951 that Del Rosario through stealth
occupied a portion of area in question, building earthen dikes preparatory to converting the land into a fishpond. His entry upon the area was
duly protested by Monzon with the Bureau of Lands and the Bureau of Fisheries, both of wich is advised Del Rosario to vacate the premises
and to refrain from introducing further improvements thereon.

Upon the facts and the circumstances narrated above, and the pursuant to Section 32 of Lands Administrative Order No. 7-1, which gives tot
he owner of the property adjoining foreshores lands and the prefrential right to apply therefor under the provisions of the Public Act, it is
evident that Monzon has a better right than Del Rosario tot he area in dispute which, as stated above, is aforeshore land.

By authority of the President:

(SGD.) FRED RUIZ CASTRO

executive Secretary

JOSE C. MENDOzA

Associate Justice

ANTONIO T. CARPIO

Acting Chief Justice

SIAIN ENTERPRISES, INC., Petitioner, v. F.F. CRUZ & CO., INC., Respondent. 51. [G.R. NO. 146616 :August 31, 2006] D E C I S I O
N CARPIO MORALES, J.:

Western Visayas Industrial Corporation (WESVICO) filed on September 18, 1973 a foreshore lease application over the foreshore land
adjacent to certain lots registered in its name, located in Loboc, Lapuz, La Paz, Iloilo City, including Lot 3309. It eventually withdrew the
application and filed on March 1976 a petition for registration over the same foreshore land with the then Court of First Instance of Iloilo. The
case was, however, archived as WESVICO's representative could no longer be contacted.

It appears that WESVICO ceased to hold operations and its properties including Lot 3309 were foreclosed by the Development Bank of the
Philippines (DBP) which later consolidated its ownership thereon. 1

On July 7, 1983, F.F. Cruz & Co. (F.F. Cruz) filed with the Bureau of Lands, Iloilo City, District Land Office VI-1 a foreshore lease
application 2 over a foreshore land, a portion of which is adjacent to Lot 3309. The application was docketed as FLA (VI-1) 176.

Property 195
In the preliminary investigation report 3 on F.F. Cruz' FLA (VI-1) 176, Senior Special Investigator Ramon Torre who personally visited and
examined the land applied for recommended that the application be given due course.

District Land Officer Norberto Bernas thereafter submitted to the Director of Lands a report, 4 together with relevant documents including the
preliminary investigation report. The pertinent portion of Bernas' report reads:

. . . I personally visited the area applied for by the herein applicant and found that the same is actually occupied and used by them as a
sanctuary of their marine equipment which they are using in their construction work of the Iloilo Port. The applicant has also introduced some
facilities on the area applied for in the repair and maintenance of said equipment. A portion of the land applied for has already been filled
up by the applicant as they are in need of a land area for the repair and maintenance of their equipment and in the loading and unloading of
materials that they use in the construction of the Iloilo City Port.

x x x x 5 (Emphasis and underscoring supplied)cralawlibrary

Petitioner Siain Enterprises Inc. (SIAIN), who purchased from the DBP the properties previously owned by WESVICO including Lot
3309, 6 filed on September 29, 1986 a foreshore lease application 7 over the foreshore land adjacent to the properties it bought from DBP.

Upon learning that 130 linear meters of the foreshore land subject of F.F. Cruz's foreshore lease application overlapped that covered by its
foreshore lease application, SIAIN filed on January 9, 1987 a protest 8alleging that it being the owner of the property adjoining the
overlapping area, it should be given preference in its lease.

On March 6, 1987, the Sangguniang Panglungsod of Iloilo City, by Resolution No. 174, 9 approved the recommendation of its Committee on
Finance that "for the mutual interest" of F.F. Cruz and SIAIN, SIAIN would get 70 linear meters and F.F. Cruz would get 60 linear meters of
the disputed area, in light of its finding that, among other things, both SIAIN and F.F. Cruz would "contribute substantially to the economic
growth of the City of Iloilo."

Concurring with the Sangguniang Panglungsod, the Land Management Bureau (LMB) through its Director, by Order 10 of July 15, 1989,
dismissed SIAIN's protest in this wise:

. . . While it cannot be denied that protestant is now the registered owner of the property adjoining the foreshore in question, the disputed
foreshore cannot be considered to have been built or formed by means of accretion but is a reclaimed land made by respondent F.F. Cruz
and Company for the purpose of utilizing the same in the loading and unloading of their equipment and materials and for the repair and
maintenance of said equipment which respondents use in the reclamation of the Iloilo City Port. This is supported by the findings of the
District Land Officer Norberto Bernas who, in his letter dated February 18, 1984 to this Office, reported that he personally visited the
foreshore in question and found that the same is now actually occupied and used by the respondent company as a sanctuary of its
marine equipment which it is using in its construction work of the Iloilo City Port and that a portion of the land applied for has already been
filled up by the applicantto be utilized in the repair and maintenance of its equipment and in the loading and unloading of materials it uses
in the construction of the Iloilo City Port. It is therefore clear that the foreshore in question is neither an accretion nor an accessory to
protestants' property. While protestant SEI appears to be owner of the property adjacent to the disputed foreshore, it cannot be considered
as a riparian owner within the contemplation of the aforementioned law. 11 (Emphasis and underscoring supplied)cralawlibrary

Accordingly, the LMB disposed:

WHEREFORE, it is ordered that the protest of SIAIN Enterprises, Inc. be, as it hereby it is, dismissed and this case, dropped from the
records. Both Foreshore Lease Application Nos. (VI-5) 220 and (VI-1) 176 of SIAIN Enterprises, Inc. and F.F. Cruz and Co., Inc.
respectively, shall be amended in such a way that SIAIN's application shall cover SEVENTY (70) linear meters of the disputed foreshore
adjoining Lot 3309 while F.F. Cruz's application shall cover SIXTY (60) linear meters thereof. Accordingly, both applications shall be give due
course in accordance with the provisions of the Public Land Law, otherwise known as Commonwealth Act No. 141, as
amended.12 (Underscoring supplied)cralawlibrary

SIAIN appealed to the Secretary of the Department of Environment and Natural Resources (DENR), arguing that the LMB:

1. . . . made [a] false assumption of fact when it considered the foreshore area under . . . controversy as reclaimed land;

2. . . . committed a grave error in not considering the preferential right of the riparian owner/littoral owner, . . . to apply for a lease over the
foreshore under controversy; [and]

3. . . . erred in awarding sixty (60) linear meters of the foreshore under controversy to [F.F. Cruz]. 13

Property 196
By Decision 14 of May 6, 1997, then DENR Acting Secretary Antonio G.M. La Viña set aside the LMB Order, the pertinent portions of which
decision read:

It is blatant error to consider the contested area as reclaimed land as it has no basis in fact, in law and jurisprudence.

The area in question is unquestionably a natural foreshore for which various applicants prior to the herein parties have
applied. CRUZ's F.L.A. No. (VI-1) 176 itself which was filed on July 7, 1983, long after it had allegedly filled up the area undeniably
shows CRUZ's admission that it is a foreshore and not something else.

The assumption that the contested area is a reclaimed land runs smack against the provision of Article 5 of the Spanish Law on Waters of
August 3, 1866 stating that:

"Lands reclaimed from the sea in consequence of works constructed by the State, or by provinces, pueblos or private persons, with proper
permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant of authority."

We cannot find in the records anything to show that a "permission" was ever sought by or granted to, CRUZ for the alleged reclamation of the
land in question.

xxx

It is by reason of the Director of Lands' erroneous classification of the contested area as "reclaimed" that he awarded 60 linear
meters thereof to CRUZ. However, as heretofore discussed, the said area in question is clearly a natural foreshore and SIAIN is
correct in claiming it to be so. Hence, the law that applies in this case is Section 32 of Lands Administrative Order No. 7-1 which was
issued by the Secretary of the then Department of Agriculture and Natural Resources . . .

xxx

It is an undisputed fact that SIAIN is the registered owner of the land adjoining the foreshore area in controversy. Hence SIAIN is the
riparian/littoral owner insofar as the contested foreshore area is concerned and should enjoy the preferential right to lease the entire one
hundred thirty (130) linear meters of said area adjoining its property, which includes the sixty (60) linear meters thereof awarded to CRUZ in
the questioned Order.

x x x x 15 (Emphasis supplied; underscoring partly in the original and partly supplied)

The DENR Acting Secretary thus ordered that the application of F.F. Cruz be amended to exclude the disputed foreshore area adjacent to
Lot 3309 and that SIAN's application be given due course.

F.F. Cruz appealed to the Office of the President, contending that the DENR Acting Secretary acted with grave abuse of discretion:

I. IN DISREGARDING THE FINDINGS OF THE DIRECTOR OF LANDS MANAGEMENT BUREAU THAT THE CONTROVERTED AREA IS
A RECLAIMED LAND UNDERTAKEN BY APPELLANT F.F. CRUZ . . .

II. IN RULING THAT [SIAIN] HAS A PREFERENTIAL RIGHT OVER THE PROPERTY IN DISPUTE; [and]

III. IN ISSUING THE SUBJECT DECISION CONSIDERING THAT HE IS NOT EMPOWERED BY LAW OR RULE TO ISSUE THE SAME.16

By Decision 17 of March 12, 1999, the Office of the President, through then Executive Secretary Ronaldo B. Zamora, reversed the decision of
the DENR Acting Secretary and reinstated that of the LMB in this wise:

Records reveal that WESVICO, who may be considered as the real riparian owner, had previously availed itself of the preferential
right to apply for the foreshore area adjacent to its property. However, it withdrew its application, and instead sought the titling of
said property via a petition for registration filed with the court, which eventually archived the case for petitioner's lack of
interest. In net effect, WESVICO's preferential right adverted to, albeit initially pursued, was thereafter abandoned due to its
voluntary withdrawal of the corresponding application and its erroneous resort to some other mode of acquisition, i.e., the filing of
a petition for registration. Consequent to such abandonment, it may be said that WESVICO had already waived its preferential right
over the controverted area at the time SIAIN purchased the adjacent property. As vendee, SIAIN was subrogated not only to the
rights and actions of its predecessor-in-interest, WESVICO, but also to the absence/lack of those.

Property 197
Also decidedly going for CRUZ is the fact that it applied for the disputed area, occupied the same and introduced improvements
thereon long before SIAIN filed its own lease application. Subject to certain exceptions, it is axiomatic in public land grant that he
who is first in time is preferred or stronger in law - Priore in tempore, potior jure.

It may be, as stated by the DENR, that the contested area abuts upon the titled property of SIAIN, a circumstance which ordinarily would
accord that firm a preferential right to lease the property in question, the rule being that a riparian/littoral owner enjoys preference over the
abutting foreshore lands formed by accretion or alluvial deposits.

xxx

. . . The principle thus enunciated in Santulan properly applies where the adjoining lot is a natural foreshore, meaning that the foreshore was
formed by what may rightfully be considered as accretion, or the settling down, by natural causes, of soil, earth and other deposits. But such
is not what it obtains in this case, contrary to the bare assertion of the DENR Acting Secretary that the "area in question is unquestionably a
natural foreshore." . . .

xxx

Not being the product of accretion, the disputed strip of foreshore land cannot be the proper subject of a riparian or littoral claim.

xxx

The actuality of the DENR not formally granting CRUZ a permit to undertake reclamation works on the disputed area can be conceded. But in
the light of the Bernas report, . . . there can be no quibbling that CRUZ occupied and raised, thru filling, the area to its present level, with the
implicit consent, if not approval, of lands authorities. That consent and/or approval have been given may be deduced from the fact that the
Bureau of Lands required the payment of, and received from appellant, the amount of P40,032.00 as occupation fee. Any suggestion that
CRUZ, after paying the occupational fee, merely planted itself on the disputed area without as much as dredging and filling the same is
unacceptable. In a very real sense, therefore, the reclamation work undertaken by CRUZ was with the proper permission, or at least the
acquiescence of the Bureau of Lands, the agency which, following Insular Government v. Aldecoa (19 Phil. 505), is empowered to grant such
permit in behalf of the DENR Secretary.18 (Emphasis and underscoring supplied)cralawlibrary

In its Petition for Review before the Court of Appeals, SIAIN raised the issues of 1) whether the disputed area is reclaimed land or foreshore
land and if found to be foreshore land, 2) whether SIAIN has preferential right to lease the same. 19

By Decision of July 3, 2000, 20 the appellate court dismissed SIAIN's petition, ruling that there is no justification to digress from the findings
and conclusions of the Office of the President and the LMB and that administrative matters within the executive jurisdiction can only be set
aside on proof of gross abuse of discretion, fraud or error of law.

Hence, the present Petition for Review filed by SIAIN.

SIAIN contends that the evidence overwhelmingly proves that the disputed area is foreshore land and not reclaimed land as found by the
Office of the President. It invites attention to F.F. Cruz's own declaration in its foreshore lease application that the disputed area is a "parcel
of foreshore land." To SIAIN, this declaration is equivalent to a judicial admission which does not require proof and is conclusive as to it.

Further, SIAIN argues that the records reveal that the only evidence relied upon by the Office of the President is the Bernas report which
speaks of a portion allegedly filled-up by F.F. Cruz, the identity, location and size of which were never established; and that there is no
evidence to prove that the filled-up portion is one and the same as the disputed area, but that even assuming that it is, F.F. Cruz cannot have
a better right over it as the reclamation was made without the necessary permit, hence, it cannot be allowed to benefit from its own
wrongdoing.

Furthermore, SIAIN contends that there can be no waiver of preferential right over the disputed property, no advice from the Director of
Lands having been communicated to WESVICO, DBP or SIAIN of their preferential right to lease the adjacent foreshore land, and therefore,
the 60 days within which they are supposed to apply 21 has not begun to run.

The key to the present controversy lies in the classification of the disputed area.

The DENR Secretary found that the disputed area is a "natural foreshore," hence, it concluded that SIAIN, being a littoral owner (owner of
land bordering the sea or lake or other tidal waters 22 ), has preferential right to lease it as provided in paragraph 32 of Lands Administrative
Order No. 7-1 dated April 30, 1936 which reads:

Property 198
32. Preference of Riparian Owner. - The owner of the property adjoining foreshore lands or lands covered with water bordering upon
shores or banks of navigable lakes or rivers, shall be given preference to apply for such lands adjoining his property as may not be
needed for the public service, subject to the laws and regulations governing lands of this nature, provided that he applies therefore within
sixty (60) days from the date he receives a communication from the Director of Lands advising him of his preferential right. 23 (Emphasis
supplied)cralawlibrary

The DENR Secretary found the LMB's classification of the disputed area as "reclaimed" erroneous for lack of basis in fact, law and
jurisprudence.

On the other hand, while the Office of the President recognized the preferential right of littoral owner WESVICO, it held that it had waived its
preferential right and SIAIN, as successor-in-interest, was subrogated to WESVICO's right or lack of it.

The Office of the President went on to hold that since the disputed area is already reclaimed land, it cannot be subject to littoral claim, SIAIN,
not being the littoral owner within the contemplation of the law, citing Santulan v. The Executive Secretary 24 which elucidated on the principal
reason for giving a riparian or littoral owner preferential right, thus:

Now, then, is there any justification for giving to the littoral owner the preferential right to lease the foreshore land abutting on his
land?cralawlibrary

That rule in paragraph 32 is in consonance with article 4 of the Spanish Law of Waters of 1866 which provides that, while lands added to the
shores by accretions and alluvial deposits caused by the action of the sea form part of the public domain, such lands, when they are no
longer washed by the waters of the sea are not necessary for purposes of public utility, or for the establishment of special industries, or for
the coast guard service," shall be declared by the Government "to be the property of the owners of the estates adjacent thereto and as
increment thereof."

In other words, article 4 recognizes the preferential right of the littoral (riparian according to paragraph 32) to the foreshore land
formed by accretions or alluvial deposits due to the action of the sea.

The reason for the preferential right is the same as the justification for giving accretions to the riparian owner for the diminutions which his
land suffers by reason of the destructive force of the waters. So, in the case of littoral lands, he who loses by the encroachments of the sea
should gain by its recession.25 (Emphasis and underscoring supplied)cralawlibrary

Furthermore, as reflected above, the Office of the President, finding that F.F. Cruz's occupation and introduction of improvements on the
contested area long before SIAIN filed its lease application, held that "it is axiomatic in public land grant that he who is first in time is preferred
or stronger in law."

The petition is impressed with merit.

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

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

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

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

WHEREFORE, the Court of Appeals Decision dated July 3, 2000 is REVERSED and SET ASIDE.

The May 6, 1997 Decision of then Acting Secretary Antonio G.M. La Viña of the Department of Environment and Natural Resources is
REINSTATED.

Property 199
SO ORDERED.

Endnotes:

23 In Santulan (supra note 22), this Court held:

The word "riparian" in paragraphs 32 and 4 of the departmental regulations is used in a broad sense as referring to any property having a
water frontage. Strictly speaking, "riparian" refers to rivers. A riparian owner is a person who owns land situated on a bank of a river.

But in paragraphs 32 and 4, the term "riparian owner" embraces not only the owners of lands on the banks of rivers but also the littoral
owners, meaning the owners of lands bordering the shore of the sea or lake or other tidal waters. The littoral is the coastal region including
both the land along the coast and the water near the coast of the shore zone between the high and low watermarks.

24 Supra.

25 Id. at 557-558.

Property 200
BRUNA ARANAS DE BUYSER, plaintiff-appellant, vs. DIRECTOR OF LANDS, IGNACIO TANDAYAG and CANDIDA DE
TANDAYAG, defendants-appellees. G.R. No. L-22763 March 18, 1983 ESCOLIN, J.:

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

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

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

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

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

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

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

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

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

Plaintiff's reliance on the above article is quite misplaced. The true construction of the cited provision is that the State shall grant these lands
to the adjoining owners only when they are no longer needed for the purposes mentioned therein. In the case at bar, the trial court found that
plaintiff's evidence failed to prove that the land in question is no longer needed by the government, or that the essential conditions for such
grant under Article 4 of the Spanish Law of Waters, exists.

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

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

With reference to your revocable permit application no. v-8040, I wish to inform you that as the District Engineer of that
province has in his 1st indorsement dated July 7, 1954 certified that the land applied for by you is/may be needed by the
Government for future public improvements (Boulevard and seawall protection purposes) you may be allowed to continue
with your temporary occupation and provisional use of the premises under a revocable permit renewable every year in the
meantime that the land is not actually needed by the Government for the purposes aforestated, subject however to the
following conditions:

That no further structures shall be constructed on the land and that any structure constructed thereon
shall be removed and/or by you at your expense upon thirty (30) days notice if and when the
Government is ready to actually use the land for Boulevard and seawall protection purposes. (p. 113,
Exhibit 4.)

Property 201
From the foregoing, it is clear that the State never relinquished ownership over the land.

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

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

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

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

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

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

The Secretary of Agriculture and Natural Resources may grant to qualified persons temporary permission upon the
payment of a reasonable charge, for the use of any portion of the lands covered by this chapter for any lawful private
purpose, subject Lo revocation, at any time when, in his judgment the public interest shall require.

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

SO ORDERED.

Property 202
G.R. No. L-40399 February 6, 1990

MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS, HILARIO ESCORPIZO, ISABELO MAURICIO, HEIRS OF ROMAN DAMASO, NAMELY: JORGE
DAMASO and ALEJANDRO DAMASO, HEIRS OF FRANCISCO RAMOS, NAMELY: ENCARNACION R. LEANO and DOMINGA R. MEDRANO, HEIRS OF
SABINA GELACIO AGAPITO, NAMELY: SERAPIO AGAPITO, and NICOLASA AGAPITO, FELISA DICCION AGNE, ESTANISLAO GOROSPE, LIBRADO BADUA,
NICOLAS VILLANUEVA, HEIRS OF CARLOS PALADO, NAMELY: FORTUNATA PALADO and ISABELITA PALADO, PRIMITIVO TAGANAS, PANFILO
SOINGCO, BERNARDO PALATTAO, MARCELINO S. SANTOS and PAULINO D. AGNE JR. (Minor), represented by his mother FELISA DICCION AGNE,
petitioners, vs. THE DIRECTOR OF LANDS, PRESENTACION AGPOON GASCON, JOAQUIN GASCON and HON. ROSALIO C. SEGUNDO, Presiding Judge,
Court of First Instance of Pangasinan, Branch V, respondents.

G.R. No. L-72255 February 6,1990

MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS (deceased), represented by FLORENTINO C. TAGANAS, FELISA DICCION AGNE, HILARIO
ESCORPIZO, NICOLAS VILLANUEVA, ISABELO MAURICIO, ESTANISLAO GOROSPE (deceased), represented by ELIZABETH G. BADUA and SILVINA G.
VALERIO, LIBRADO BADUA, JOSE ALSISTO, SERAPIO AGAPITO, NICOLASA AGAPITO, JORGE DAMASO, ALEJANDRO DAMASO, ENCARNACION RAMOS,
DOMINGA RAMOS and CARLOS PALADO, petitioners, vs. HON. INTERMEDIATE APPELLATE COURT, PRESENTACION AGPOON GASCON and JOAQUIN
GASCON, respondents.

Espiritu Taganas for petitioners.Adriatico T. Bruno for private respondents. REGALADO, J.:

Before us are two separate petitions for review on certiorari of the order of the defunct Court of First Instance of Pangasinan, Branch V, in Civil Case No.
2649, entitled "Marcelino Agne et al. vs. The Director of Lands, et al.," dismissing the complaint filed by herein petitioners in said case; 1 and the
decision of the then Intermediate Appellate Court in AC-G.R. CV No. 60388-R, entitled "Presentacion Agpoon Gascon vs. Marcelino C. Agne et al.,"
promulgated on January 30, 1985, affirming in toto the decision of the trial court in favor of herein private respondents 2 which cases are docketed
herein as G.R. No. L-40399 and G.R. No. 72255, respectively.

These two petitions, arising from the same facts and involving the same parties and common questions of law, were ordered consolidated in our
resolution of August 9, 1989.

As found by respondent court and disclosed by the records, the land subject matter of this case was originally covered by Free Patent No. 23263 issued
on April 17, 1937 in the name of Herminigildo Agpoon. On May 21, 1937, pursuant to the said patent, the Register of Deeds of Pangasinan issued to
said Herminigildo Agpoon Original Certificate of Title No. 2370. 3 Presentacion Agpoon Gascon inherited the said parcel of land upon the death of her
father, Herminigildo, and was issued Transfer Certificate of Title No. 32209 on April 6,1960. Respondent Presentacion declared the said land for
taxation purposes in her name under Tax Declaration No. 11506 and taxes were paid thereon in her name. 4

On April 13, 1971, private respondent spouses filed Civil Case No. U-2286 in the then Court of First Instance of Pangasinan for recovery of possession
and damages against petitioners. Their complaint states that they are the registered owners under the aforesaid Transfer Certificate of Title No. 32209
of the parcel of land situated in Barrio Bantog, Asingan, Pangasinan which is now in the possession of petitioners; that during the Japanese occupation,
petitioners, taking advantage of the abnormal conditions then obtaining, took possession of said land by means of fraud, stealth, strategy and
intimidation; that private respondents repeatedly demanded the surrender of the physical possession of said property but the latter refused. 5

Petitioners, in answer to said complaint, alleged that the land in question was formerly a part of the river bed of the Agno-Chico River; that in the year
1920, a big flood occurred which caused the said river to change its course and abandon its original bed; that by virtue of the provisions of Article 370
of the Spanish Civil Code which was then the law in force, petitioners, by operation of law, became the owners by accession or accretion of the
respective aliquot parts of said river bed bordering their properties; that since 1920, they and their predecessors in interest occupied and exercised
dominion openly and adversely over said portion of the abandoned river bed in question abutting their respective riparian lands continuously up to the
present to the exclusion of all other persons, particularly Herminigildo Agpoon; that they have introduced improvements thereon by constructing
irrigation canals and planting trees and agricultural crops thereon 6 and converted the land into a productive area.

Property 203
In their joint stipulation of facts, the parties agreed as follows:

1. That the parties admit the identity and area of the land in question, which forms part of the river bed of the Agno-Chico River, and further
admit that the said river bed was abandoned as a result of a flood in 1920 and opened a new bed. The location and course of the aforesaid abandoned
river bed as well as the relative position of the lands bordering the same can be gleaned from Cadastral Survey Plan of Asingan, Pangasinan, Street No.
49 thereof, as approved by the Director of Lands on October 12, 1912, a photostat copy of which is hereto attached and made an integral part hereof a
Annex "A".

2. That the parties admit that the defendants are the riparian owners of the area in question and further admit that the defendants are in
possession thereof but that each of them is in possession only of an aliquot part of the said area proportionate to the length of their respective lands.
(As amended).

3. That the parties likewise admit that a Free Patent No. 23263 in the name of Herminigildo Agpoon covering the area in question was issued on
April 17, 1937 and that they admit O.C.T. No. 2370 of the Register of Deeds of Pangasinan covering the same parcel of land was issued to the same
Herminigildo Agpoon on May 21, 1937, a photostat copy of said O.C.T. is hereto attached as Annex "B".

4. That the parties admit that the property in controversy is now covered by T.C.T. No. 32209 in the name of Presentacion Agpoon Gascon and by
Tax Declaration No. 11506 in the name of said Presentacion Agpoon Gascon, a photostat reproduction of said T.C.T. No. and Tax Declaration are hereto
attached and marked as Annexes "C" and "F", respectively. 7

On March 6, 1974, while the above-mentioned case was still pending, petitioners filed a complaint against the respondents Director of Lands and
spouses Agpoon with the former Court of First Instance of Pangasinan for annulment of title, reconveyance of and/or action to clear title to a parcel of
land, which action was docketed as Civil Case No. U-2649. Petitioners alleged in their said complaint that the land in question, which was formerly a
portion of the bed of Agno-Chico river which was abandoned as a result of the big flood in 1920, belongs to them pursuant to the provision of Article
370 of the old Civil Code; that it was only on April 13, 1971, when respondent spouses filed a complaint against them, that they found out that the said
land was granted by the Government to Herminigildo Agpoon under Free Patent No. 23263, pursuant to which Original Certificate of Title No. 2370 was
issued in the latter's name; and that the said patent and subsequent titles issued pursuant thereto are null and void since the said land, an abandoned
river bed, is of private ownership and, therefore, cannot be the subject of a public land grant. 8

On June 21, 1974, the trial court rendered a decision in Civil Case No. U-2286, the dispositive part of which reads as follows:

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court renders judgment:

1. Ordering the defendants to surrender to the plaintiffs the physical possession of the land in question described in paragraph 3 of the amended
complaint;

2. Ordering the defendants to pay jointly and severally to the plaintiff the produce of the land in question in the total sum of P5,000.00 per year
from the date of the filing of the present action at the rate of 6% interest per annum until fully paid;

3. Ordering the defendants to pay jointly and severally the amount of P800.00 representing attorney's fees;

4. And to pay the costs.

Property 204
SO ORDERED. 9

Not satisfied with said decision, petitioners appealed to respondent court. As earlier stated, on January 30, 1985 the former Intermediate Appellate
Court affirmed in toto in AC-G.R. CV No. 60388-R the said decision of the court a quo, 10 and with the denial of petitioner's motion for reconsideration,
11 the case came up to us as G.R. No. 72255.

On June 24, 1974, the aforesaid Court of First Instance of Pangasinan, acting on the motion to dismiss filed by respondents Director of Lands and
spouses Agpoon, issued an order dismissing Civil Case No. U-2649 for annulment of title by merely citing the statement in the case of Antonio, et al. vs.
Barroga, et al. 12 that an action to annul a free patent many years after it had become final and indefeasible states no cause of action . 13 Petitioners'
motion for the reconsideration of said order was denied on September 11, 1974, 14 hence the recourse to us in G.R. No. L-40399.

In these petitions, petitioners raise the following issues:

1. Whether or not the lower court is justified in dismissing the complaint by simply invoking the ruling in the aforestated case of Antonio although
the facts and circumstances set forth in the complaint show that the land in question was private land under Article 370 of the old Civil Code and that
the subsequent derivative certificates of title in question were null and void ab initio because the said land was not within the authority of the
government to dispose of in favor of any party and must be ordered annulled, cancelled or rescinded; 15

2. Whether or not the trial court and the former Intermediate Appellate Court were justified in not basing their judgments on the judicial
admissions of private respondents in the stipulation of facts of the parties, since such admissions have the legal force and effect of precluding private
respondents from disputing such admission;

3. Whether or not respondent court can presume that private respondents or their predecessor had prior possession of the land in dispute in the
light of provisions of law which oblige them to prove such possession, as well as the stipulated facts and other facts and circumstances on record
showing that private respondents or their predecessor were not in actual occupancy of the said land, and without appreciating the evidence put up by
petitioners to prove their prior possession thereof;

4. Whether or not respondent court was justified in its application of Section 41 of the Code of Civil Procedure in favor of private respondents,
although the private respondents did not invoke said law in this case and did not adduce any evidence or proof that all the essential requisites of
acquisitive prescription under the said law were present in their favor;

5. Whether or not the Government had the right to convey by way of free patent to any party the land in dispute which belonged to the riparian
owners as decreed by Article 370 of the old Civil Code, the law then in force, and despite the fact that the patentee herein never occupied the said land
during the period prescribed by Act No. 2874; and

6. Whether or not private respondents are guilty of laches for not having attempted to file suit to recover the land in dispute during an interval of
50 or 30 years. 16

The issues and arguments raised by the proponents in these petitions are well taken.

Property 205
We agree with petitioners that the lower court erred in ordering the dismissal of Civil Case No. U-2649. The aforesaid case of Antonio relied upon by
the lower court in its dismissal order is not controlling. In that case, the complaint was dismissed for failure to state a cause of action, not only because
of the delay in the filing of the complaint but specifically since the ground relied upon by the plaintiff therein, that is, that the land was previously
covered by a titulo real, even if true, would not warrant the annulment of the free patent and the subsequent original certificate of title issued to
defendant. Thus:

It is true that by filing the application for a free patent Barroga impliedly admitted either the invalidity or insufficiency of Titulo Real No. 12479 issued in
the name of his predecessor in interest on July 22, 1894, but neither the allegation made in his answer that his aforesaid predecessor in interest was
the absolute owner of the property covered by said Titulo Real nor his implied admission of the latter's invalidity or insufficiency are grounds for the
annulment of the free patent and original certificate of title in question. Evidently, it was Barroga's privilege to rely or not to rely upon his claim of
private ownership in favor of his predecessor in interest and of whatever the latter's Titulo Real was worth. He decided not to rely upon them and to
consider that the property covered by the Titulo Real was still part of the public domain. Acting accordingly he applied for a free patent and was
successful. It must be borne in mind that the Titulo Real was not an indefeasible title and that its holder still had to prove that he had possessed the
land covered by it without interruption during a period of ten years by virtue of a good title and in good faith (Royal Decree of June 25,1880). We may
well presume that Barroga felt that he had no sufficient evidence to prove this, for which reason he decided to acquire the land as part of the public
domain.

In the case at bar, the facts alleged in the complaint, which are deemed hypothetically admitted upon the filing of the motion to dismiss, constitute a
sufficient cause of action against private respondents. Petitioners in their complaint in Civil Case No. U-2649 alleged, among others, that the disputed
area was formerly an abandoned river bed formed due to natural causes in 1920; that the riparian owners of the lands abutting said abandoned river
bed were the plaintiffs and/or their predecessors in interest; that since then and up to the present, they have been occupying and cultivating aliquot
portions of the said land proportionate to the respective lengths of their riparian lands; that they are the real and lawful owners of the said land as
decreed by Article 370 of the old Civil Code, the law then in force; that since the said area was a private land, the same could not have been the subject
matter of an application for free patent; and that all these facts were known to the private respondents and their predecessor in interest.

If the said averments are true, and the factual recitals thereon have been admitted in the stipulation of facts hereinbefore quoted, then the land in
question was and is of private ownership and, therefore, beyond the jurisdiction of the Director of Lands. The free patent and subsequent title issued
pursuant thereto are null and void. The indefeasibility and imprescriptibility of a Torrens title issued pursuant to a patent may be invoked only when
the land involved originally formed part of the public domain. If it was a private land, the patent and certificate of title issued upon the patent are a
nullity. 17

The rule on the incontrovertibility of a certificate of title upon the expiration of one year, after the entry of the decree, pursuant to the provisions of
the Land Registration Act, does not apply where an action for the cancellation of a patent and a certificate of title issued pursuant thereto is instituted
on the ground that they are null and void because the Bureau of Lands had no jurisdiction to issue them at all, the land in question having been
withdrawn from the public domain prior to the subsequent award of the patent and the grant of a certificate of title to another person. Such an action
is different from a review of the decree of title on the ground of fraud. 18

Although a period of one year has already expired from the time a certificate of title was issued pursuant to a public grant, said title does not become
incontrovertible but is null and void if the property covered thereby is originally of private ownership, and an action to annul the same does not
prescribe. 19 Moreover, since herein petitioners are in possession of the land in dispute, an action to quiet title is imprescriptible. 20 Their action for
reconveyance which, in effect, seeks to quiet title to property in one's possession is imprescriptible. Their undisturbed possession for a number of years
gave them a continuing right to seek the aid of a court of equity to determine the nature of the adverse claims of a third party and the effect on her
title. 21 As held in Caragay-Layno vs. Court of Appeals, et al., 22 an adverse claimant of a registered land, undisturbed in his possession thereof for a
period of more than fifty years and not knowing that the land he actually occupied had been registered in the name of another, is not precluded from
filing an action for reconveyance which, in effect, seeks to quiet title to property as against the registered owner who was relying upon a Torrens title
which could have been fraudulently acquired. To such adverse claimant, the remedy of an action to quiet title is imprescriptible. In actions for
reconveyance of property predicated on the fact that the conveyance complained of was void ab initio, a claim of prescription of the action would be
unavailing. 23

Property 206
The resolution of the other assigned errors hinges on the issue of who, as between the riparian owner presently in possession and the registered owner
by virtue of a free patent, has a better right over the abandoned river bed in dispute.

We rule in favor of petitioners.

The claim of ownership of herein petitioners is based on the old Civil Code, the law then in force, which provides:

The beds of rivers which remain abandoned because the course of the water has naturally changed belong to the owners of the riparian lands
throughout their respective lengths. If the abandoned bed divided estates belonging to different owners, the new dividing line shall run at equal
distance therefrom. 24

It is thus clear under this provision that once the river bed has been abandoned, the riparian owners become the owners of the abandoned bed to the
extent provided by this article. The acquisition of ownership is automatic. 25 There need be no act on the part of the riparian owners to subject the
accession to their ownership, as it is subject thereto ipso jure from the moment the mode of acquisition becomes evident, without the need of any
formal act of acquisition. 26 Such abandoned river bed had fallen to the private ownership of the owner of the riparian land even without any formal
act of his will and any unauthorized occupant thereof will be considered as a trespasser. The right in re to the principal is likewise a right in re to the
accessory, as it is a mode of acquisition provided by law, as the result of the right of accretion. Since the accessory follows the nature of the principal,
there need not be any tendency to the thing or manifestation of the purpose to subject it to our ownership, as it is subject thereto ipso jure from the
moment the mode of acquisition becomes evident. 27

The right of the owner of land to additions thereto by accretion has been said to rest in the law of nature, and to be analogous to the right of the owner
of a tree to its fruits, and the owner of flocks and herds to their natural increase. 28 Petitioners herein became owners of aliquot portions of said
abandoned river bed as early as 1920, when the Agno River changed its course, without the necessity of any action or exercise of possession on their
part, it being an admitted fact that the land in dispute, prior to its registration, was an abandoned bed of the Agno River and that petitioners are the
riparian owners of the lands adjoining the said bed.

The failure of herein petitioners to register the accretion in their names and declare it for purposes of taxation did not divest it of its character as a
private property. Although we take cognizance of the rule that an accretion to registered land is not automatically registered and therefore not entitled
or subject to the protection of imprescriptibility enjoyed by registered property under the Torrens system. 29 The said rule is not applicable to this case
since the title claimed by private respondents is not based on acquisitive prescription but is anchored on a public grant from the Government, which
presupposes that it was inceptively a public land. Ownership over the accession is governed by the Civil Code. Imprescriptibility of registered land is a
concern of the Land Registration Act.

Under the provisions of Act No. 2874 pursuant to which the title of private respondents' predecessor in interest was issued, the President of the
Philippines or his alter ego, the Director of Lands, has no authority to grant a free patent for land that has ceased to be a public land and has passed to
private ownership, and a title so issued is null and void. 30 The nullity arises, not from the fraud or deceit, but from the fact that the land is not under
the jurisdiction of the Bureau of Lands. 31 The jurisdiction of the Director of Lands is limited only to public lands and does not cover lands privately
owned. 32 The purpose of the Legislature in adopting the former Public Land Act, Act No. 2874, was and is to limit its application to lands of the public
domain, and lands held in private ownership are not included therein and are not affected in any manner whatsoever thereby. Land held in freehold or
fee title, or of private ownership, constitute no part of the public domain and cannot possibly come within the purview of said Act No. 2874, inasmuch
as the "subject" of such freehold or private land is not embraced in any manner in the title of the Act 33 and the same are excluded from the provisions
or text thereof.

We reiterate that private ownership of land is not affected by the issuance of a free patent over the same land because the Public Land Act applies only
to lands of the public domain. 34 Only public land may be disposed of by the Director of Lands. 35 Since as early as 1920, the land in dispute was
already under the private ownership of herein petitioners and no longer a part of the lands of the public domain, the same could not have been the
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subject matter of a free patent. The patentee and his successors in interest acquired no right or title to the said land. Necessarily, Free Patent No.
23263 issued to Herminigildo Agpoon is null and void and the subsequent titles issued pursuant thereto cannot become final and indefeasible. Hence,
we ruled in Director of Lands vs. Sisican, et al. 36 that if at the time the free patents were issued in 1953 the land covered therein were already private
property of another and, therefore, not part of the disposable land of the public domain, then applicants patentees acquired no right or title to the
land.

Now, a certificate of title fraudulently secured is null and void ab initio if the fraud consisted in misrepresenting that the land is part of the public
domain, although it is not. As earlier stated, the nullity arises, not from the fraud or deceit but, from the fact that the land is not under the jurisdiction
of the Bureau of Lands. 37 Being null and void, the free patent granted and the subsequent titles produce no legal effects whatsoever. Quod nullum est,
nullum producit effectum. 38

A free patent which purports to convey land to which the Government did not have any title at the time of its issuance does not vest any title in the
patentee as against the true owner. 39 The Court has previously held that the Land Registration Act and the Cadastral Act do not give anybody who
resorts to the provisions thereof a better title than what he really and lawfully has.

. . . The Land Registration Act as well as the Cadastral Act protects only the holders of a title in good faith and does not permit its provisions to be used
as a shield for the commission of fraud, or that one should enrich himself at the expense of another (Gustilo vs. Maravilla, 48 Phil. 838). The above-
stated Acts do not give anybody, who resorts to the provisions thereof, a better title than he really and lawfully has. If he happened to obtain it by
mistake or to secure, to the prejudice of his neighbor, more land than he really owns, with or without bad faith on his part, the certificate of title, which
may have been issued to him under the circumstances, may and should be cancelled or corrected (Legarda and Prieto vs. Saleeby, 31 Phil., 590). . . . 40

We have, therefore, to arrive at the unavoidable conclusion that the title of herein petitioners over the land in dispute is superior to the title of the
registered owner which is a total nullity. The long and continued possession of petitioners under a valid claim of title cannot be defeated by the claim of
a registered owner whose title is defective from the beginning.

The quality of conclusiveness of a Torrens title is not available for use to perpetrate fraud and chicanery. To paraphrase from Angeles vs. Samia, supra,
the Land Registration Act does not create or vest title. It only confirms and records title already existing and vested. It does not protect a usurper from
the true owner. It cannot be a shield for the commission of fraud. It does not permit one to enrich himself at the expense of another. Stated elsewise,
the Torrens system was not established as a means for the acquisition of title to private land. It is intended merely to confirm and register the title
which one may already have on the land. Where the applicant possesses no title or ownership over the parcel of land, he cannot acquire one under the
Torrens system of registration. 41 Resort to the provisions of the Land Registration Act does not give one a better title than he really and lawfully has.
42 Registration does not vest title. It is not a mode of acquiring property. It is merely evidence of such title over a particular property. It does not give
the holder any better title than what he actually has, especially if the registration was done in bad faith. The effect is that it is as if no registration was
made at all. 43

Moreover, the failure of herein private respondents to assert their claim over the disputed property for almost thirty 30 years constitute laches 44 and
bars an action to recover the same. 45 The registered owners' right to recover possession of the property and title thereto from petitioners has, by long
inaction or inexcusable neglect, been converted into a stale demand. 46

Considering that petitioners were well within their rights in taking possession of the lot in question, the findings of respondent court that herein
petitioners took advantage of the infirmities and weakness of the preceding claimant, Herminigildo Agpoon, in taking possession of said land during the
Japanese occupation is neither tenable in law nor sustained by preponderant evidence in fact.

Where the evidence show that the plaintiff is the true owner of the land subject of the free patent and title granted to another and that the defendant
and his predecessor in interest were never in possession thereof, the Court, in the exercise of its equity jurisdiction and without ordering the
cancellation of said title issued upon the patent, may direct the defendant registered owner to reconvey the property to the plaintiff. 47 Further, if the
Property 208
determinative facts are before the Court and it is in a position to finally resolve the dispute, the expeditious administration of justice will be subserved
by such a resolution and thereby obviate the needless protracted proceedings consequent to the remand of the case of the trial court. 48 On these
considerations, as well as the fact that these cases have been pending for a long period of time, we see no need for remanding Civil Case No. 2649 for
further proceedings, and we hold that the facts and the ends of justice in this case require the reconveyance by private respondents to petitioners of
the disputed lot.

WHEREFORE, the assailed decision of respondent court in its AC-G.R. CV No. 60388-R and the questioned order of dismissal of the trial court in its Civil
Case No. 2649 are hereby REVERSED and SET ASIDE and judgment is hereby rendered ORDERING private respondents to reconvey the aforesaid parcel
of land to petitioners.

SO ORDERED.

EULOGIO AGUSTIN, HEIRS OF BALDOMERO LANGCAY, ARTURO BALISI & JUAN LANGCAY, petitioners, vs. INTERMEDIATE APPELLATE COURT, MARIA
MELAD, TIMOTEO MELAD, PABLO BINAYUG & GERONIMA UBINA, respondents. Antonio N. Laggui for petitioners. Pedro R. Perez, Jr. for private
respondents. G.R. Nos. L-66075-76 July 5, 1990 GRIÑO-AQUINO, J.:

The Cagayan River separates the towns of Solana on the west and Tuguegarao on the east in the province of Cagayan. According to the unrebutted
testimony of Romeo Rigor, Geodetic Engineer of the Bureau of Lands, in 1919 the lands east of the river were covered by the Tuguegarao Cadastre.
In 1925, Original Certificate of Title No. 5472 was issued for land east of the Cagayan River owned by defendant- petitioner Eulogio Agustin (Exh. 2-
Agustin).

As the years went by, the Cagayan River moved gradually eastward, depositing silt on the western bank. The shifting of the river and the siltation
continued until 1968.

In 1950, all lands west of the river were included in the Solana Cadastre. Among these occupying lands covered by the Solana Cadastre were plaintiffs-
private respondents, namely, Pablo Binayug, who has been in possession of Lots 3349, 7876, 7877, 7878, 7879, 7875, 7881, 7882, 7883, 7884, 7885,
7891 and 7892, and Maria Melad, who owns Lot 3351 (Exh. 3-Binayug; Exh. B-Melad). Pablo Binayug began his possession in 1947. An area of eight
(8) hectares was planted to tobacco and corn while 12 hectares were overgrown with talahib (Exh. C-1 Binayug.) Binayug's Homestead Application
No. W-79055 over this land was approved in 1959 (Exh. B-Binayug). Binayug's possession was recognized in the decision in Civil Case No. 101 (Exh.
F-Binayug). On the other hand, as a result of Civil Case No. 343-T, Macario Melad, the predecessor-in-interest of Maria Melad and Timoteo Melad,
was issued Original Certificate of Title No. P-5026 for Lot 3351 of Cad. 293 on June 1, 1956.

Through the years, the Cagayan River eroded lands of the Tuguegarao Cadastre on its eastern bank among which was defendant-petitioner Eulogio
Agustin's Lot 8457 (Exh. E-Melad), depositing the alluvium as accretion on the land possessed by Pablo Binayug on the western bank.

However, in 1968, after a big flood, the Cagayan River changed its course, returned to its 1919 bed, and, in the process, cut across the lands of Maria
Melad, Timoteo Melad, and the spouses Pablo Binayug and Geronima Ubina whose lands were transferred on the eastern, or Tuguegarao, side of the
river. To cultivate those lots they had to cross the river.

Property 209
In April, 1969, while the private respondents and their tenants were planting corn on their lots located on the eastern side of the Cagayan River, the
petitioners, accompanied by the mayor and some policemen of Tuguegarao, claimed the same lands as their own and drove away the private
respondents from the premises.

On April 21, 1970, private respondents Maria Melad and Timoteo Melad filed a complaint (Civil Case No. 343-T) to recover Lot No. 3351 with an
area of 5 hectares and its 6.6-hectare accretion. On April 24, 1970, private respondent Pablo Binayug filed a separate complaint (Civil Case No. 344-T)
to recover his lots and their accretions.

On June 16, 1975, the trial court rendered a decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment

is hereby made:

In Civil Case No. 343-T, commanding Eulogio Agustin, Gregorio Tuliao, Jacinto Buquel and Octavio Bancud, or anybody acting
as their representative[s] or agents to vacate Lot No. 3351 of Solana Cadastre together with its accretion consisting of portions of
Lots 9463, 9462 and 9461 of Tuguegarao Cadastre and for these defendants to restore ownership in favor of Maria Melad and
Timoteo Melad who are the only interested heirs of Macario Melad.

In Civil Case No. 344-T, commanding defendants Justo Adduru, Andres Pastor, Teofilo Tagacay, Vicente Camilan, Nicanor Mora,
Baldomero Cagurangan, Domingo Quilang, Cesar Cabalza, Elias Macababbad, Titong Macababbad, Arturo Balisi, Jose Allabun,
Eulogio Agustin, Banong Aquino, Junior Cambri and Juan Langoay, or any of their agents or representatives to vacate the Lots
3349, 7876, 7877, 7878, 7879,

7875, 7881, 7882, 7883, 7884, 7885, 7891 and 7892, together with its accretion and to restore possession to plaintiffs Pablo
Binayug and Geronima Ubina. Without pronouncement as to damages which were not properly proven and to costs.

SO ORDERED. (As amended by the order dated August 15, 1975.) (pp. 24- 25, Rollo.)

Only defendant-petitioner Eulogio Agustin appealed in Civil Case No. 343-T, while in Civil Case No. 344-T, only defendants-petitioners Eulogio
Agustin, Baldomero Cagurangan (substituted by his heir), Arturo Balisi and Juan Langcay appealed. But upon motion of plaintiffs-private respondents,
the trial court ordered the execution pending appeal of the judgment in Civil Case No. 344-T against Cagurangan, Balisi and Langcay on the ground
that their appeal was dilatory as they had not presented evidence at the trial (Order dated August 15, 1975).

On November 29, 1983, the Intermediate Appellate Court rendered a decision affirming in toto the judgment of the trial court, with costs against the
defendants-appellants.

In their petition for review of that decision, the petitioners allege that the Court of Appeals erred:

1. in declaring that the land in question had become part of private respondents' estate as a result of accretion;

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 2. in declaring that the accretion to private respondents' estate which used to pertain to petitioners' estate cannot preclude the
private respondents from being the owners thereof; and
3. in declaring that the ownership of private respondents over the accretion is not affected by the sudden and abrupt change in
the course of the Cagayan River when it reverted to its old bed

The petition is unmeritorious and must be denied.

The finding of the Court of Appeals that there had been accretions to the lots of the private respondents who did not lose the ownership of such
accretions even after they were separated from the principal lots by the sudden change of course of the river, is a finding of fact which is conclusive on
this Court. That finding is supported by Art. 457 of the New Civil Code which provides:

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. (366)

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 (3) that the land where accretion takes place is adjacent to the bank of a river (Republic vs. CA, 132 SCRA
514).

All these requisites of accretion are present in this case for, as the trial court found:

. . . Cagayan River did move year by year from 1919 to 1968 or for a period of 49 years. Within this period, the alluvium (sic)
deposited on the other side has become greater in area than the original lands of the plaintiffs in both cases. Still the addition in
every year is imperceptible in nature, one could not discern it but can be measured after the lapse of a certain time. The testimonial
evidence in these cases that said Cagayan River moved eastward year by year is overwhelming as against the denial of defendant
Eulogio Agustin alone. Cesar Caronan, one time mayor of Solana, Cagayan, said so. Arturo Taguian said so. Timoteo Melad said
so. Francisco Ubina said so. Geodetic Engineer Rigor impliedly said so when he testified that when Solana Cadastre was executed
in 1950 it overlapped portions of Tuguegarao Cadastre executed in 1919. This could not have happened if that part of Tuguegarao
Cadastre was not eroded by the overflow of the Cagayan River. These testimonies cannot be destroyed by the denials of Vicente
Cauilan, Marcelo Agustin and Eulogio Agustin alone (p. 27, Rollo.)

The appellate court confirmed that the accretion on the western bank of the Cagayan River had been going on from 1919 up to 1968 or for a period of
49 years. It was gradual and imperceptible. Only when Lot No. 3351, with an original area of 5 hectares described in the free patent that was issued to
Macario Melad in June 1956, was resurveyed in 1968 did it become known that 6.6 hectares had been added to it. Lot No. 3351, covered by a
homestead patent issued in June, 1950 to Pablo Binayug, grew from its original area of 18 hectares, by an additional 50 hectares through alluvium as
the Cagayan River gradually moved to the east. These accretions belong to riparian owners upon whose lands the alluvial deposits were made (Roxas
vs. Tuason, 9 Phil. 408; Director of Lands vs. Rizal, 87 Phil. 806). The reason for this principle is because, if lands bordering on streams are exposed to
floods and other damage due to the destructive force of the waters, and if by virtue of law they are subject to encumbrances and various kinds of
easements, it is only just that such risks or dangers as may prejudice the owners thereof should in some way be compensated by the right of accretion
(Cortes vs. City of Manila, 10 Phil. 567).

Property 211
The private respondents' ownership of the accretion to their lands was not lost upon the sudden and abrupt change of the course of the Cagayan River
in 1968 or 1969 when it reverted to its old 1919

Property 212
bed, and separated or transferred said accretions to the other side (or eastern bank) of the river. Articles 459 and 463 of the New Civil Code apply
to this situation.

Art. 459. Whenever the current of a river, creek or torrent segregates from an estate on its bank a known portion of land and
transfers it to another estate, the owner of the land to which the segregated portion belonged retains the ownership of it, provided
that he removes the same within two years.

Art. 463. Whenever the current of a river divides itself into branches, leaving a piece of land or part thereof isolated, the owner
of the land retains his ownership. He also retains it if a portion of land is separated from the estate by the current. (Emphasis
supplied).

In the case at bar, the sudden change of course of the Cagayan River as a result of a strong typhoon in 1968 caused a portion of the lands of
the private respondents to be "separated from the estate by the current." The private respondents have retained the ownership of the portion
that was transferred by avulsion to the other side of the river.

WHEREFORE, the petition is denied for lack of merit. The decision of the Intermediate Appellate Court, now Court of Appeals, is hereby
affirmed. Costs against the petitioners.

SO ORDERED.

Property 213
ERNESTO V. RONQUILLO, petitioner, vs. HONORABLE COURT OF APPEALS AND ANTONIO P. SO, respondents. Gloria A. Fortun for petitioner. Roselino
Reyes Isler for respondents. G.R. No. L-55138 September 28, 1984 CUEVAS, J.:

This is a petition to review the Resolution dated June 30, 1980 of the then Court of Appeals (now the Intermediate Appellate Court) in CA-G.R. No.
SP-10573, entitled "Ernesto V. Ronquillo versus the Hon. Florellana Castro-Bartolome, etc." and the Order of said court dated August 20, 1980,
denying petitioner's motion for reconsideration of the above resolution.

Petitioner Ernesto V. Ronquillo was one of four (4) defendants in Civil Case No. 33958 of the then Court of First Instance of Rizal (now the Regional
Trial Court), Branch XV filed by private respondent Antonio P. So, on July 23, 1979, for the collection of the sum of P17,498.98 plus attorney's fees
and costs. The other defendants were Offshore Catertrade Inc., Johnny Tan and Pilar Tan. The amount of P117,498.98 sought to be collected represents
the value of the checks issued by said defendants in payment for foodstuffs delivered to and received by them. The said checks were dishonored by the
drawee bank.

On December 13, 1979, the lower court rendered its Decision 1 based on the compromise agreement submitted by the parties, the pertinent
portion of which reads as follows:

1. Plaintiff agrees to reduce its total claim of P117,498-95 to only P11,000 .00 and defendants agree to acknowledge the
validity of such claim and further bind themselves to initially pay out of the total indebtedness of P10,000.00 the amount of
P55,000.00 on or before December 24, 1979, the balance of P55,000.00, defendants individually and jointly agree to pay within
a period of six months from January 1980, or before June 30, 1980; (Emphasis supplied)

xxx xxx xxx

4. That both parties agree that failure on the part of either party to comply with the foregoing terms and conditions, the innocent
party will be entitled to an execution of the decision based on this compromise agreement and the defaulting party agrees

Property 214
 and hold themselves to reimburse the innocent party for attorney's fees, execution fees and other fees related with the execution.

xxx xxx xxx

On December 26, 1979, herein private respondent (then plaintiff filed a Motion for Execution on the ground that defendants failed to make the initial
payment of P55,000.00 on or before December 24, 1979 as provided in the Decision. Said motion for execution was opposed by herein petitioner (as
one of the defendants) contending that his inability to make the payment was due to private respondent's own act of making himself scarce and
inaccessible on December 24, 1979. Petitioner then prayed that private respondent be ordered to accept his payment in the amount of P13,750.00. 2

During the hearing of the Motion for Execution and the Opposition thereto on January 16, 1980, petitioner, as one of the four defendants, tendered the
amount of P13,750.00, as his prorata share in the P55,000.00 initial payment. Another defendant, Pilar P. Tan, offered to pay the same amount.

Because private respondent refused to accept their payments, demanding from them the full initial installment of P 55,000.00, petitioner and Pilar Tan
instead deposited the said amount with the Clerk of Court. The amount deposited was subsequently withdrawn by private respondent. 3

On the same day, January 16, 1980, the lower court ordered the issuance of a writ of execution for the balance of the initial amount payable, against
the other two defendants, Offshore Catertrade Inc. and Johnny Tan 4 who did not pay their shares.

On January 22, 1980, private respondent moved for the reconsideration and/or modification of the aforesaid Order of execution and prayed instead for
the "execution of the decision in its entirety against all defendants, jointly and severally." 5 Petitioner opposed the said motion arguing that under the
decision of the lower court being executed which has already become final, the liability of the four (4) defendants was not expressly declared to be
solidary, consequently each defendant is obliged to pay only his own pro-rata or 1/4 of the amount due and payable.

On March 17, 1980, the lower court issued an Order reading as follows: ORDER

Regardless of whatever the compromise agreement has intended the payment whether jointly or individually, or jointly and
severally, the fact is that only P27,500.00 has been paid. There appears to be a non-payment in accordance with the compromise
agreement of the amount of P27,500.00 on or before December 24, 1979. The parties are reminded that the payment is condition
sine qua non to the lifting of the preliminary attachment and the execution of an affidavit of desistance.

WHEREFORE, let writ of execution issue as prayed for

On March 17, 1980, petitioner moved for the reconsideration of the above order, and the same was set for hearing on March 25,1980.

Meanwhile, or more specifically on March 19, 1980, a writ of execution was issued for the satisfaction of the sum of P82,500.00 as against
the properties of the defendants (including petitioner), "singly or jointly hable." 6

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On March 20, 1980, Special Sheriff Eulogio C. Juanson of Rizal, issued a notice of sheriff's sale, for the sale of certain furnitures and appliances
found in petitioner's residence to satisfy the sum of P82,500.00. The public sale was scheduled for April 2, 1980 at 10:00 a.m. 7

Petitioner's motion for reconsideration of the Order of Execution dated March 17, 1980 which was set for hearing on March 25, 1980, was upon
motion of private respondent reset to April 2, 1980 at 8:30 a.m. Realizing the actual threat to property rights poised by the re-setting of the hearing of s
motion for reconsideration for April 2, 1980 at 8:30 a.m. such that if his motion for reconsideration would be denied he would have no more time to
obtain a writ from the appellate court to stop the scheduled public sale of his personal properties at 10:00 a.m. of the same day, April 2, 1980,
petitioner filed on March 26, 1980 a petition for certiorari and prohibition with the then Court of Appeals (CA-G.R. No. SP-10573), praying at the
same time for the issuance of a restraining order to stop the public sale. He raised the question of the validity of the order of execution, the writ of
execution and the notice of public sale of his properties to satisfy fully the entire unpaid obligation payable by all of the four (4) defendants, when the
lower court's decision based on the compromise agreement did not specifically state the liability of the four (4) defendants to be solidary.

On April 2, 1980, the lower court denied petitioner's motion for reconsideration but the scheduled public sale in that same day did not proceed in
view of the pendency of a certiorari proceeding before the then Court of Appeals.

On June 30, 1980, the said court issued a Resolution, the pertinent portion of which reads as follows:

This Court, however, finds the present petition to have been filed prematurely. The rule is that before a petition for certiorari can
be brought against an order of a lower court, all remedies available in that court must first be exhausted. In the case at bar, herein
petitioner filed a petition without waiting for a resolution of the Court on the motion for reconsideration, which could have been
favorable to the petitioner. The fact that the hearing of the motion for reconsideration had been reset on the same day the public
sale was to take place is of no moment since the motion for reconsideration of the Order of March 17, 1980 having been
seasonably filed, the scheduled public sale should be suspended. Moreover, when the defendants, including herein petitioner,
defaulted in their obligation based on the compromise agreement, private respondent had become entitled to move for an
execution of the decision based on the said agreement.

WHEREFORE, the instant petition for certiorari and prohibition with preliminary injunction is hereby denied due course. The
restraining order issued in our resolution dated April 9, 1980 is hereby lifted without pronouncement as to costs.

SO ORDERED.

Petitioner moved to reconsider the aforesaid Resolution alleging that on April 2, 1980, the lower court had already denied the motion referred to
and consequently, the legal issues being raised in the petition were already "ripe" for determination. 8 The said motion was however denied by the
Court of Appeals in its Resolution dated August 20, 1980.

Hence, this petition for review, petitioner contending that the Court of Appeals erred in

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(a) declaring as premature, and in denying due course to the petition to restrain implementation of a writ of execution issued at variance with the
final decision of the lower court filed barely four (4) days before the scheduled public sale of the attached movable properties;

(b) denying reconsideration of the Resolution of June 30, 1980, which declared as premature the filing of the petition, although there is proof on
record that as of April 2, 1980, the motion referred to was already denied by the lower court and there was no more motion pending therein;

(c) failing to resolve the legal issues raised in the petition and in not declaring the liabilities of the defendants, under the final decision of the
lower court, to be only joint;

(d) not holding the lower court's order of execution dated March 17, 1980, the writ of execution and the notice of sheriff's sale, executing the
lower court's decision against "all defendants, singly and jointly", to be at variance with the lower court's final decision which did not provide for
solidary obligation; and

(e) not declaring as invalid and unlawful the threatened execution, as against the properties of petitioner who had paid his pro-rata share of
the adjudged obligation, of the total unpaid amount payable by his joint co-defendants.

The foregoing assigned errors maybe synthesized into the more important issues of —

1. Was the filing of a petition for certiorari before the then Court of Appeals against the Order of Execution issued by the lower court, dated
March 17, 1980, proper, despite the pendency of a motion for reconsideration of the same questioned Order?

2. What is the nature of the liability of the defendants (including petitioner), was it merely joint, or was it several or solidary?

Anent the first issue raised, suffice it to state that while as a general rule, a motion for reconsideration should precede recourse to certiorari in order
to give the trial court an opportunity to correct the error that it may have committed, the said rule is not absolutes 9 and may be dispensed with in
instances where the filing of a motion for reconsideration would serve no useful purpose, such as when the motion for reconsideration would raise
the same point stated in the motion 10 or where the error is patent for the order is void 11 or where the relief is extremely urgent, as in cases where
execution had already been ordered 12 where the issue raised is one purely of law. 13

In the case at bar, the records show that not only was a writ of execution issued but petitioner's properties were already scheduled to be sold at public
auction on April 2, 1980 at 10:00 a.m. The records likewise show that petitioner's motion for reconsideration of the questioned Order of Execution was
filed on March 17, 1980 and was set for hearing on March 25, 1980 at 8:30 a.m., but upon motion of private respondent, the hearing was reset to April
2, 1980 at 8:30 a.m., the very same clay when petitioner's properties were to be sold at public auction. Needless to state that under the circumstances,
petitioner was faced with imminent danger of his properties being immediately sold the moment his motion for reconsideration is denied. Plainly,
urgency prompted recourse to the Court of Appeals and the adequate and speedy remedy for petitioner under the situation was to file a petition for
certiorari with prayer for restraining order to stop the sale. For him to wait until after the hearing of the motion for reconsideration on April 2, 1980
before taking recourse to the appellate court may already be too late since without a restraining order, the public sale can proceed at 10:00 that

Property 217
morning. In fact, the said motion was already denied by the lower court in its order dated April 2, 1980 and were it not for the pendency of the petition
with the Court of

Property 218
Appeals and the restraining order issued thereafter, the public sale scheduled that very same morning could have proceeded.

The other issue raised refers to the nature of the liability of petitioner, as one of the defendants in Civil Case No. 33958, that is whether or not he is
liable jointly or solidarily.

In this regard, Article 1207 and 1208 of the Civil Code provides —

Art. 1207. The concurrence of two or more debtors in one and the same obligation does not imply that each one of the former has a
right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. Then is a solidary liability
only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.

Art. 1208. If from the law,or the nature or the wording of the obligation to which the preceding article refers the contrary does
not appear, the credit or debt shall be presumed to be divided into as many equal shares as there are creditors and debtors, the
credits or debts being considered distinct from one another, subject to the Rules of Court governing the multiplicity of quits.

The decision of the lower court based on the parties' compromise agreement, provides:

1. Plaintiff agrees to reduce its total claim of P117,498.95 to only P110,000.00 and defendants agree to acknowledge the
validity of such claim and further bind themselves to initially pay out of the total indebtedness of P110,000.00, the amount of
P5,000.00 on or before December 24, 1979, the balance of P55,000.00, defendants individually and jointly agree to pay within
a period of six months from January 1980 or before June 30, 1980. (Emphasis supply)

Clearly then, by the express term of the compromise agreement and the decision based upon it, the defendants obligated themselves to pay their
obligation "individually and jointly".

The term "individually" has the same meaning as "collectively", "separately", "distinctively", respectively or "severally". An agreement to be
"individually liable" undoubtedly creates a several obligation, 14 and a "several obligation is one by which one individual binds himself to
perform the whole obligation. 15

In the case of Parot vs. Gemora 16 We therein ruled that "the phrase juntos or separadamente or in the promissory note is an express statement
making each of the persons who signed it individually liable for the payment of the fun amount of the obligation contained therein." Likewise in Un
Pak Leung vs. Negorra 17 We held that "in the absence of a finding of facts that the defendants made themselves individually hable for the debt
incurred they are each liable only for one-half of said amount

The obligation in the case at bar being described as "individually and jointly", the same is therefore enforceable against one of the numerous
obligors.
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IN VIEW OF THE FOREGOING CONSIDERATIONS, the instant petition is hereby DISMISSED. Cost against petitioner.

SO ORDERED.

Property 220
G.R. No. 77294 December 12, 1988

ANGELICA VIAJAR and CELSO VIAJAR, plaintiffs-appellants, vs.COURT OF APPEALS, LEONOR P.

ADRIDO, LOURDES LADRIDO IGNACIO, EUGENIO P.LADRIDO and L P. LADRIDO, defendants-
appellees.Ramon A. Gonzales for petitioner. Miraflores Law Offices for respondents. MEDIALDEA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals dated December 29, 1986, in CA-G.R. CV No. 69942 entitled,
"ANGELICA VIAJAR, et. al., Plaintiffs-Appellants, versus LEONOR LADRIDO, et. al., Defendants-Appellees," affirming the decision of the Court of First
Instance (now Regional Trial Court) of Iloilo dated December 10, 1981.

The antecedent facts in the instant case are as follows: The spouses Ricardo Y. Ladrido and Leonor

P. Ladrido were the owners of Lot No. 7511 of the Cadastral Survey of Pototan situated in barangay Cawayan, Pototan, Iloilo. This lot contained an area
of 154,267 square meters and was registered in the names of the spouses under Transfer Certificate of Title No. T-21940 of the Register of Deeds of
Iloilo.

Spouses Rosendo H. Te and Ana Te were also the registered owners of a parcel of land described in their title as Lot No. 7340 of the Cadastral
Survey of Pototan.

On September 6, 1973, Rosendo H. Te, with the conformity of Ana Te, sold this lot to Angelica F. Viajar and Celso F. Viajar for P5,000. A Torrens
title was later issued in the names of Angelica F. Viajar and Celso F. Viajar.

Later, Angelica F. Viajar had Lot No. 7340 relocated and found out that the property was in the possession of Ricardo Y. Ladrido.
Consequently, she demanded its return but Ladrido refused.

On February 15, 1974, Angelica F. Viajar and Celso F. Viajar instituted a civil action for recovery of possession and damages against Ricardo Y.
Ladrido. This case was docketed as Civil Case No.

9660 of the Court of First Instance of Iloilo. Summoned to plead, defendant Ladrido filed his answer with a counterclaim. Plaintiffs filed their reply
to the answer.

Subsequently, the complaint was amended to implead Rosendo H. Te as another defendant. Plaintiffs sought the annulment of the deed of sale and the
restitution of the purchase price with interest in the event the possession of defendant Ladrido is sustained. Defendant Te filed his answer to the
amended complaint and he counter claimed for damages. Plaintiffs answered the counterclaim.

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During the pendency of the case, plaintiff Celso F. Viajar sold his rights over Lot No. 7340 to his mother and co-plaintiff, Angelica F. Viajar. For this
reason, plaintiff Angelica F. Viajar now appears to be the sole registered owner of this lot.

On May 25, 1978, defendant Ladrido died. He was substituted in the civil action by his wife, Leonor

P. Ladrido, and children, namely: Lourdes Ladrido-Ignacio, Eugenio P. Ladrido and Manuel P. Ladrido, as parties defendants.

The facts admitted by the parties during the pre-trial show that the piece of real property which used to be Lot No. 7340 of the Cadastral Survey of
Pototan was located in barangay Guibuanogan Pototan, Iloilo; that it consisted of 20,089 square meters; that at the time of the cadastral survey in 1926,
Lot No. 7511 and Lot No. 7340 were separated by the Suague River; that the area of 11,819 square meters of what was Lot No. 7340 has been in the
possession of the defendants; that the area of 14,036 square meters, which was formerly the river bed of the Suague River per cadastral survey of 1926,
has also been in the possession of the defendants; and that the plaintiffs have never been in actual physical possession of Lot No. 7340.

After trial on the merits, a second amended complaint which included damages was admitted. The plaintiffs raised the following issues to be

resolved:

1. Whether the change in the course of the Suague River was sudden as claimed by the plaintiffs or gradual as
contended by the defendants;

2. Assuming arguendo it was gradual, whether or not the plaintiffs are still entitled to Lot "B' appearing in
Exhibit "4" and to one-half (½) of Lot "A," also indicated in Exhibit "4;" and

3. Damages (pp. 12-13, Rollo).

On December 10, 1981, the trial court rendered its decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiffs:

1. Dismissing the complaint of plaintiffs Angelica F. Viajar and Celso

F. Viajar with costs against them;

2. Declaring defendants Leonor P. Ladrido, Lourdes Ladrido-Ignacio, Eugenio P. Ladrido and Manuel P.
Ladrido as owner of the parcel of land indicated as Lots A and B in the sketch plan (Exhs. 'C' as well as '4,' '4-B'
and '4-C') situated in barangays Cawayan and Guibuanogan Pototan, Iloilo, and containing an area of 25,855
Property 222
 square meters, more or less; and

3. Pronouncing that as owners of the land described in the preceding paragraph, the defendants are entitled
to the possession thereof.

Defendants' claim for moral damages and attorney's fees are dismissed.

Property 223
 SO ORDERED (p. 36, Rollo).

Not satisfied with the decision, the plaintiffs appealed to the Court of Appeals and assigned the following errors:

I.

THE LOWER COURT ERRED IN NOT HOLDING THAT PLAINTIFFS ARE ENTITLED TO LOT B APPEARING IN
EXHIBIT "4" AND TO ONE-HALF (½) OF LOT A IN THE SAID EXHIBIT "4."

II

THE LOWER COURT ERRED IN NOT AWARDING DAMAGES TO PLAINTIFFS (p.

42, Rollo).

As earlier stated, the Court of Appeals affirmed the decision of the court a quo. Plaintiffs (the petitioners herein) now come to Us claiming that the
Court of Appeals palpably erred in affirming the decision of the trial court on the ground that the change in the course of the Suague River was gradual
and not sudden.

In the decision appealed from, the Court of Appeals held: This appeal is not impressed with

merit.

Article 457 of the New Civil Code provides that:

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.

The presumption is that the change in the course of the river was gradual and caused by accretion and erosion (Martinez Canas vs.
Tuason, 5 Phil. 668; Payatas Estate Improvement Co. vs. Tuason, 53 Phil. 55; C.H. Hodges vs. Garcia, 109 Phil. 133). In the case
at bar, the lower court correctly found that the evidence introduced by the plaintiff to show that the change in the course of the
Suague River was sudden or that it occurred through avulsion is not clear and convincing.

Contrariwise, the lower court found that:

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... the defendants have sufficiently established that for many years after 1926 a gradual accretion on the eastern side of Lot No.
7511 took place by action of the current of the Suague River so that in 1979 an alluvial deposit of 29,912 square meters (2.9912
hectares), more or less, had been added to Lot No. 7511. (Exhs. '1' as well as Exhs. 'C' and '4'). Apropos it should be observed
that the accretion consisted of Lot A with an area of 14,036 square meters; Lot B, 11,819 square meters; and Lot C, 4,057 square
meters. (Exhs. '4-B,' '4-C' and '4-D'). Only Lot C is not involved in this litigation. (See Pre-trial Order, supra)

The established facts indicate that the eastern boundary of Lot No. 7511 was the Suague River based on the cadastral plan.
For a period of more than 40 years

Property 225
 (before 1940 to 1980) the Suague River overflowed its banks yearly and the property of the defendant gradually received deposits
of soil from the effects of the current of the river. The consequent increase in the area of Lot No. 7511 due to alluvion or accretion
was possessed by the defendants whose tenants plowed and planted the same with coin and tobacco.

The quondam river bed had been filled by accretion through the years. The land is already plain and there is no indication on the
ground of any abandoned river bed. The river bed is definitely no longer discernible now.

What used to be the old river bed (Lot A) is in level with Lot No. 7511. So are the two other areas to the East. (Lots B and C) Lots
A, B and C are still being cultivated.

Under the law, accretion which the banks or rivers may gradually receive from the effects of the current of the waters becomes
the property of the owners of the lands adjoining the banks. (Art. 366, Old Civil Code; Art. 457, New Civil Code which took
effect on August 30, 1950 [Lara v. Del Rosario, 94 Phil. 778]. Therefore, the accretion to Lot No. 7511 which consists of Lots A
and B (see Exhs. 'C' and '4') belongs to the defendants (pp. 34-35, Record on Appeal).

We find no cogent reason to disturb the foregoing finding and conclusion of the lower court.

The second assignment of error is a mere offshoot of the first assignment of error and does not warrant further discussion (pp.
4244, Rollo).

The petition is without merit.

The petitioners contend that the first issue raised during the trial of the case on the merits in the Court of First Instance, that is, "whether the change in
the course of the Suague River was sudden as claimed by the plaintiffs or gradual as contended by the defendants," was abandoned and never raised by
them in their appeal to the Court of Appeals. Hence, the Court of Appeals, in holding that the appeal is without merit, because of the change of the
Suague River was gradual and not sudden, disposed of the appeal on an issue that was never raised and, accordingly, its decision is void. In support of
its contention, petitioners cite the following authorities:

It is a well-known principle in procedure that courts of justice have no jurisdiction or power to decide a question not in issue
(Lim Toco vs. Go Fay, 80 Phil. 166).

A judgment going outside the issues and purporting to adjudicate something upon which the parties were not heard, is not merely
irregular, but extra-judicial and invalid ( Salvante vs. Cruz, 88 Phil. 236-244; Lazo vs. Republic Surety & Insurance Co., Inc., 31
SCRA 329, 334).

The pivotal issue in the petitioners' appeal was whether the change in the course of the Suague River was gradual or sudden because the trial court
below resolved the same in its decision thus subjecting the same to review by respondent appellate court. By simply abandoning this issue, the

Property 226
petitioners cannot hope that the affirmance of the decision wherein this issue was resolved makes the decision of the Court of Appeals void. In effect,
the petitioners are expounding a new procedural theory that to render a questioned decision void, all that has to be done is to simply abandon on
appeal the pivotal issue as resolved by the lower court and when its decision is affirmed on appeal, attack the decision of the appellate court as void on
the principle that a court of justice has no

Property 227
jurisdiction or power to decide the question not in issue. This is not correct. Even the authorities cited by the petitioners, more specifically the Salvante
and Lazo cases, supra, do not support their contention. They were heard in the trial court and they cannot complain that the proceeding below was
irregular and hence, invalid.

The trial court found that the change in the course of the Suague River was gradual and this finding was affirmed by the respondent Court of Appeals.
We do not find any valid reason to disturb this finding of fact.

Article 457 of the New Civil Code (reproduced from Article 366 of the Old), the law applied by the courts a quoprovides:

Art. 457. To the owners of the lands adjoining the banks of rivers belong the accretion which they gradually receive from the
effects of the current of the waters.

Petitioners contend that this article must be read together with Sections 45 an 46 of Act No. 496 which provides:

SEC. 45. 1 The obtaining of a decree of registration and the entry of a certificate of title shall be regarded as an agreement
running with the land, and binding upon the applicant and all successors in title that the land shall be and always remain
registered land, and subject to the provisions of this Act and all Acts amendatory thereof.

SEC. 46. 2 No title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse
possession.

As a result, petitioners contend, Article 457 of the New Civil Code must be construed to limit the accretion mentioned therein as accretion of
unregistered land to the riparian owner, and should not extend to registered land. Thus, the lot in question having remained the registered land of the
petitioners, then the private respondents cannot acquire title there in derogation to that of the petitioners, by accretion, for that will defeat the
indefeasibility of a Torrens Title.

The rule that registration under the Torrens System does not protect the riparian owner against the diminution of the area of his registered land through
gradual changes in the course of an adjoining stream is well settled. In Payatas Estate Improvement Co. vs. Tuason, 53 Phil. 55, We ruled:

The controversy in the present cases seems to be due to the erroneous conception that Art. 366 of the Civil Code does not apply to
Torrens registered land. That article provides that "any accretions which the banks of rivers may gradually receive from the effects
of the current belong to the owners of the estates bordering thereon." Accretions of that character are natural incidents to land
bordering on running streams and are not affected by the registration laws. It follows that registration does not protect the riparian
owner against diminution of the area of his land through gradual changes in the course of the adjoining stream.

In C.N. Hodges vs. Garcia, 109 Phil. 133, We also ruled:

Property 228
It clearly appearing that the land in question has become part of defendant's estate as a result of accretion, it follows that said land
now belongs to him. The fact that the accretion to his land used to pertain to plaintiffs estate, which is covered by a Torrens

Property 229
 Certificate of Title, cannot preclude him (defendant) from being the owner thereof. Registration does not protect the riparian owner
against the diminution of the area of his land through gradual changes in the course of the adjoining stream. Accretions which the
banks of rivers may gradually receive from the effect of the current become the property of the owners of the banks (Art. 366 of the
Old Civil Code; Art. 457 of the New). Such accretions are natural incidents to land bordering on running streams and the provisions
of the Civil Code in that respect are not affected by the Registration Act.

We find no valid reason to review and abandon the aforecited rulings.

As the private respondents are the owners of the premises in question, no damages are recoverable from them.

ACCORDINGLY, the petition is DISMISSED for lack of merit without pronouncement as to costs. SO ORDERED.

Property 230
G.R. No. 92161 March 18, 1991

SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR MACUTAY, DOMINGO ROSALES, GREGORIO ARGONZA, EUSTAQUIO BAUA, FLORENTINO
ROSALES, TEODORO MABBORANG, PATRICIO MABBORANG and FULGENCIO MORA, petitionersvs.GUILLERMO MANALO and COURT OF
APPEALS, respondents.Josefin De Alban Law Office for Petitioners. FELICIANO, J.:

The late Judge Taccad originally owned a parcel of land situated in Tumauini, Isabela having an estimated area of twenty (20) hectares. The western
portion of this land bordering on the Cagayan River has an elevation lower than that of the eastern portion which borders on the national road.

Through the years, the western portion would periodically go under the waters of the Cagayan River as those waters swelled with the coming of the
rains. The submerged portion, however, would re- appear during the dry season from January to August. It would remain under water for the rest of the
year, that is, from September to December during the rainy season.

The ownership of the landholding eventually moved from one person to another. On 9 May 1959, respondent Guillermo Manalo acquired 8.65
hectares thereof from Faustina Taccad, daughter of Judge Juan Taccad. The land sold was described in the Deed of Absolute Sale1 as follows:

. . . a parcel of agricultural land in Balug, Tumauini, Isabela, containing an area of 8.6500 hectares, more or less; bounded on the North by
Francisco Forto on the East by National Road; on South by Julian Tumolva and on the West by Cagayan River; declared for taxation under
Tax Declaration No. 12681 in the name of Faustina Taccad, and assessed at P

750.00. . . .

Later in 1964, respondent Manalo purchased another 1.80 hectares from Gregorio Taguba who had earlier acquired the same from Judge Juan Taccad.
The second purchase brought the total acquisition of respondent Manalo to 10.45 hectares. The second piece of property was more particularly
described as follows:

. . . a piece of agricultural land consisting of tobacco land, and containing an area of 18,000 square meters, more or less, bounded on the
North by Balug Creek; on the South, by Faustina Taccad (now Guillermo R. Manalo); on the East, by a Provincial Road; and on the West,
by Cagayan River assessed at P 440.00, as tax Declaration No. 3152. ..................................................... 2

During the cadastral survey conducted at Balug, Tumauini, Isabela on 21 October 1969, the two (2) parcels of land belonging to respondent Manalo
were surveyed and consolidated into one lot, designated as Lot No. 307, Pls-964. Lot 307 which contains 4.6489 hectares includes: (a) the whole of the
1.80 hectares acquired from Gregorio Taguba; and (b) 2.8489 hectares out of the 8.65 hectares purchased from Faustina Taccad. As the survey was
conducted on a rainy month, a portion

Property 231
of the land bought from Faustina Taccad then under water was left unsurveyed and was not included in Lot 307.

The Sketch Plan3 submitted during the trial of this case and which was identified by respondent Manalo shows that the Cagayan River running from
south to north, forks at a certain point to form two (2) branches—the western and the eastern branches—and then unites at the other end, further north,
to form a narrow strip of land. The eastern branch of the river cuts through the land of respondent Manalo and is inundated with water only during the
rainy season. The bed of the eastern branch is the submerged or the unsurveyed portion of the land belonging to respondent Manalo. For about eight (8)
months of the year when the level of water at the point where the Cagayan River forks is at its ordinary depth, river water does not flow into the eastern
branch. While this condition persists, the eastern bed is dry and is susceptible to cultivation.

Considering that water flowed through the eastern branch of the Cagayan River when the cadastral survey was conducted, the elongated strip of land
formed by the western and the eastern branches of the Cagayan River looked very much like an island. This strip of land was surveyed on 12
December 1969.4

It was found to have a total area of 22.7209 hectares and was designated as Lot 821 and Lot 822. The area of Lot 822 is 10.8122 hectares while Lot
821 has an area of 11.9087 hectares. Lot 821 is located directly opposite Lot 307 and is separated from the latter only by the eastern branch of the
Cagayan River during the rainy season and, during the dry season, by the exposed, dry river bed, being a portion of the land bought from Faustina
Taccad. Respondent Manalo claims that Lot 821 also belongs to him by way of accretion to the submerged portion of the property to which it is
adjacent.

Petitioners who are in possession of Lot 821, upon the other hand, insist that they own Lot 821. They occupy the outer edges of Lot 821 along the river
banks, i.e., the fertile portions on which they plant tobacco and other agricultural products. They also cultivate the western strip of the unsurveyed
portion during summer.5 This situation compelled respondent Manalo to file a case for forcible entry against petitioners on 20 May 1969. The case was
dismissed by the Municipal Court of Tumauini, Isabela for failure of both parties to appear. On 15 December 1972, respondent Manalo again filed a
case for forcible entry against petitioners. The latter case was similarly dismissed for lack of jurisdiction by the Municipal Court of Tumauini, Isabela.

On 24 July 1974, respondent Manalo filed a complaints 6 before the then Court of First Instance of Isabela, Branch 3 for quieting of title,
possession and damages against petitioners. He alleged ownership of the two (2) parcels of land he bought separately from Faustina Taccad and
Gregorio Taguba for which reason he prayed that judgment be entered ordering petitioners to vacate the western strip of the unsurveyed portion.
Respondent Manalo likewise prayed that judgment be entered declaring him as owner of Lot 821 on which he had laid his claim during the survey.

Petitioners filed their answer denying the material allegations of the complaint. The case was then set for trial for failure of the parties to reach an
amicable agreement or to enter into a stipulation of facts.7 On 10 November 1982, the trial court rendered a decision with the following dispositive
portion:

WHEREFORE, in the light of the foregoing premises, the Court renders judgment against the defendants and in favor of the plaintiff and
orders:

Property 232
 1. That plaintiff, Guillermo Manalo, is declared the lawful owner of the land in question, Lot No. 821, Pls-964 of Tumauini Cadastre, and
which is more particularly described in paragraph 2-b of the Complaint;

2. That the defendants are hereby ordered to vacate the premises of the land in question, Lot No. 821, Pls-964 of Tumauini Cadastre, and
which is more particularly described in paragraph 2-b of the Complaint;

3. That the defendants are being restrained from entering the premises of the land in question, Lot No. 821, Pls-964 of Tumauini
Cadastre, and which is more particularly described in paragraph 2-b of the Complaint; and

4. That there is no pronouncement as to attorney's fees and costs.

SO ORDERED.8

Petitioners appealed to the Court of Appeals which, however, affirmed the decision of the trial court. They filed a motion for reconsideration, without
success.

While petitioners insist that Lot 821 is part of an island surrounded by the two (2) branches of the Cagayan River, the Court of Appeals found
otherwise. The Court of Appeals concurred with the finding of the trial court that Lot 821 cannot be considered separate and distinct from Lot 307
since the eastern branch of the Cagayan River substantially dries up for the most part of the year such that when this happens, Lot 821 becomes
physically (i.e., by land) connected with the dried up bed owned by respondent Manalo. Both courts below in effect rejected the assertion of petitioners
that the depression on the earth's surface which separates Lot 307 and Lot 821 is, during part of the year, the bed of the eastern branch of the Cagayan
River.

It is a familiar rule that the findings of facts of the trial court are entitled to great respect, and that they carry even more weight when affirmed by the
Court of Appeals.9 This is in recognition of the peculiar advantage on the part of the trial court of being able to observe first-hand the deportment of
the witnesses while testifying. Jurisprudence is likewise settled that the Court of Appeals is the final arbiter of questions of fact.10 But whether a
conclusion drawn from such findings of facts is correct, is a question of law cognizable by this Court.11

In the instant case, the conclusion reached by both courts below apparently collides with their findings that periodically at the onset of and during
the rainy season, river water flows through the eastern bed of the Cagayan River. The trial court held:

The Court believes that the land in controversy is of the nature and character of alluvion (Accretion), for it appears that during the dry
season, the body of water separating the same land in controversy (Lot No. 821, Pls-964) and the two (2) parcels of land which the plaintiff
purchased from Gregorio Taguba and Justina Taccad Cayaba becomes a marshy land and is only six (6) inches deep and twelve (12) meters
in width at its widest in the northern tip (Exhs. "W", "W-l", "W-2", "W-3" and "W-4"), It has been held by our Supreme Court that "the
owner of the riparian land which receives the gradual deposits of alluvion, does not have to make an express act of possession. The law does
not require it, and the deposit created by the current of the water becomes manifest" (Roxas vs. Tuazon, 6 Phil. 408). 12

Property 233
The Court of Appeals adhered substantially to the conclusion reached by the trial court, thus:

Property 234
 As found by the trial court, the disputed property is not an island in the strict sense of the word since the eastern portion of the said property
claimed by appellants to be part of the Cagayan River dries up during summer. Admittedly, it is the action of the heavy rains which comes
during rainy season especially from September to November which increases the water level of the Cagayan river. As the river becomes
swollen due to heavy rains, the lower portion of the said strip of land located at its southernmost point would be inundated with water. This is
where the water of the Cagayan river gains its entry. Consequently, if the water level is high the whole strip of land would be under water.

In Government of the Philippine Islands vs. Colegio de San Jose, it was held that —

According to the foregoing definition of the words "ordinary" and "extra-ordinary," the highest depth of the waters of Laguna de Bay during
the dry season is the ordinary one, and the highest depth they attain during the extra-ordinary one (sic); inasmuch as the former is the one
which is regular, common, natural, which occurs always or most of the time during the year, while the latter is uncommon, transcends the
general rule, order and measure, and goes beyond that which is the ordinary depth. If according to the definition given by Article 74 of the
Law of Waters quoted above, the natural bed or basin of the lakes is the ground covered by their waters when at their highest ordinary depth,
the natural bed or basin of Laguna de Bay is the ground covered by its waters when at their highest depth during the dry season, that is up to
the northeastern boundary of the two parcels of land in question.

We find the foregoing ruling to be analogous to the case at bar. The highest ordinary level of the waters of the Cagayan River is that attained during
the dry season which is confined only on the west side of Lot [821] and Lot [822]. This is the natural Cagayan river itself. The small residual of water
between Lot [821] and 307 is part of the small stream already in existence when the whole of the late Judge Juan Taccad's property was still
susceptible to cultivation and uneroded.13

The Court is unable to agree with the Court of Appeals that Government of the Philippine Islands vs. Colegio de San Jose 14 is applicable to the
present case. That case involved Laguna de Bay; since Laguna de Bay is a lake, the Court applied the legal provisions governing the ownership and
use of lakes and their beds and shores, in order to determine the character and ownership of the disputed property. Specifically, the Court applied the
definition of the natural bed or basin of lakes found in Article 74 of the Law of Waters of 3 August 1866. Upon the other hand, what is involved in
the instant case is the eastern bed of the Cagayan River.

We believe and so hold that Article 70 of the Law of Waters of 3 August 1866 is the law applicable to the case at bar:

Art. 70. The natural bed or channel of a creek or river is the ground covered by its waters during the highest floods. (Emphasis
supplied)

We note that Article 70 defines the natural bed or channel of a creek or river as the ground covered by its waters during the highest floods. The highest
floods in the eastern branch of the Cagayan River occur with the annual coming of the rains as the river waters in their onward course cover the entire
depressed portion. Though the eastern bed substantially dries up for the most part of the year (i.e., from January to August), we cannot ignore the
periodical swelling of the waters ( i.e., from September to December) causing the eastern bed to be covered with flowing river waters.

The conclusion of this Court that the depressed portion is a river bed rests upon evidence of record. Firstly, respondent Manalo admitted in open
court that the entire area he bought from Gregorio Taguba was included in Lot 307. 15 If the 1.80 hectares purchased from Gregorio Taguba

Property 235
was included in Lot 307, then the Cagayan River referred to as the western boundary in the Deed of Sale transferring the land from Gregorio Taguba
to respondent Manalo as well as the Deed of Sale signed by Faustina Taccad, must refer to the dried up bed (during the dry months) or the eastern
branch of the river (during the rainy months). In the Sketch Plan attached to the records of the case, Lot 307 is separated from the western branch of
the Cagayan River by a large tract of land which includes not only Lot 821 but also what this Court characterizes as the eastern branch of the Cagayan
River.

Secondly, the pictures identified by respondent Manalo during his direct examination depict the depressed portion as a river bed. The pictures, marked
as Exhibits "W" to "W-4", were taken in July 1973 or at a time when the eastern bed becomes visible.16 Thus, Exhibit "W-2" which according to
respondent Manalo was taken facing the east and Exhibit "W-3" which was taken facing the west both show that the visible, dried up portion has a
markedly lower elevation than Lot 307 and Lot 821. It has dike-like slopes on both sides connecting it to Lot 307 and Lot 821 that are vertical upward
and very prominent. This topographic feature is compatible with the fact that a huge volume of water passes through the eastern bed regularly during
the rainy season. In addition, petitioner Ponciano Gannaban testified that one had to go down what he called a "cliff" from the surveyed portion of the
land of respondent Manalo to the depressed portion. The cliff, as related by petitioner Gannaban, has a height of eight (8) meters.17

The records do not show when the Cagayan River began to carve its eastern channel on the surface of the earth. However, Exhibit "E"18 for the
prosecution which was the Declaration of Real Property standing in the name of Faustina Taccad indicates that the eastern bed already existed even
before the sale to respondent Manalo. The words "old bed" enclosed in parentheses—perhaps written to make legitimate the claim of private ownership
over the submerged portion—is an implied admission of the existence of the river bed. In the Declaration of Real Property made by respondent
Manalo, the depressed portion assumed the name Rio Muerte de Cagayan. Indeed, the steep dike-like slopes on either side of the eastern bed could
have been formed only after a prolonged period of time.

Now, then, pursuant to Article 420 of the Civil Code, respondent Manalo did not acquire private ownership of the bed of the eastern branch of the
river even if it was included in the deeds of absolute sale executed by Gregorio Taguba and Faustina Taccad in his favor. These vendors could not
have validly sold land that constituted property of public dominion. Article 420 of the Civil Code states:

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)

Although Article 420 speaks only of rivers and banks, "rivers" is a composite term which includes: (1) the running waters, (2) the bed, and (3) the
banks.19 Manresa, in commenting upon Article 339 of the Spanish Civil Code of 1889 from which Article 420 of the Philippine Civil Code was taken,
stressed the public ownership of river beds:

La naturaleza especial de los rios, en punto a su disfrute general, hace que sea necesario considerar en su relacion de dominio algo mas que
sus aguas corrientes. En efecto en todo

Property 236
 rio es preciso distinguir 1. esta agua corriente; 2. el alveo o cauce, y 3. las riberas. Ahora bien: son estas dos ultimas cosas siempre de
dominio publico, como las aguas?

Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al decir el Codigo civil que los rios son de dominio publico, parece
que debe ir implicito el dominio publico de aquellos tres elementos que integran el rio. Por otra parte, en cuanto a los alveos o cauces
tenemos la declaracion del art. 407, num 1, donde dice: son de dominion publico . .

. los rios y sus cauces naturales; declaracion que concuerda con lo que dispone el art. 34 de la ley de [Aguas], segun el cual, son de
dominion publico: 1. los alveos o cauces de los arroyos que no se hallen comprendidos en el art. 33, y 2. los alveos o cauces naturales de los
rios en la extension que cubran sus aguas en las mayores crecidas

ordinarias.20 (Emphasis supplied)

The claim of ownership of respondent Manalo over the submerged portion is bereft of basis even if it were alleged and proved that the Cagayan River
first began to encroach on his property after the purchase from Gregorio Taguba and Faustina Taccad. Article 462 of the Civil Code would then apply
divesting, by operation of law, respondent Manalo of private ownership over the new river bed. The intrusion of the eastern branch of the Cagayan
River into his landholding obviously prejudiced respondent Manalo but this is a common occurrence since estates bordering on rivers are exposed to
floods and other evils produced by the destructive force of the waters. That loss is compensated by, inter alia, the right of accretion acknowledged by
Article 457 of the Civil Code.21 It so happened that instead of increasing the size of Lot 307, the eastern branch of the Cagayan River had carved a
channel on it.

We turn next to the issue of accretion. After examining the records of the case, the Court considers that there was no evidence to prove that Lot 821 is
an increment to Lot 307 and the bed of the eastern branch of the river. Accretion as a mode of acquiring property under Article 457 of the Civil Code
requires the concurrence of three (3) requisites: (a) that the deposition of soil or sediment be gradual and imperceptible; (b) that it be the result of the
action of the waters of the river (or sea); and

(c) that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast).22 The Court notes that the parcels of land
bought by respondent Manalo border on the eastern branch of the Cagayan River. Any accretion formed by this eastern branch which respondent
Manalo may claim must be deposited on or attached to Lot 307. As it is, the claimed

accretion (Lot 821) lies on the bank of the river not adjacent to Lot 307 but directly opposite Lot 307 across the river.

Assuming (arguendo only) that the Cagayan River referred to in the Deeds of Sale transferring ownership of the land to respondent Manalo is the
western branch, the decision of the Court of Appeals and of the trial court are bare of factual findings to the effect that the land purchased by
respondent Manalo received alluvium from the action of the aver in a slow and gradual manner. On the contrary, the decision of the lower court made
mention of several floods that caused the land to reappear making it susceptible to cultivation. A sudden and forceful action like that of flooding is
hardly the alluvial process contemplated under Article 457 of the Civil Code. It is the slow and hardly perceptible accumulation of soil deposits that
the law grants to the riparian owner.

Besides, it is important to note that Lot 821 has an area of 11.91 hectares. Lot 821 is the northern portion of the strip of land having a total area of
22.72 hectares. We find it difficult to suppose that such a sizable area as Lot 821 resulted from slow accretion to another lot of almost equal size. The
total landholding purchased by respondent Manalo is 10.45 hectares (8.65 hectares from Faustina Taccad and 1.80 hectares from Gregorio Taguba in
1959 and 1964, respectively), in fact even smaller than Lot 821 which he claims by way of accretion. The cadastral survey showing that Lot 821 has
an area of 11.91 hectares was conducted in 1969. If respondent Manalo's contention were

Property 237
accepted, it would mean that in a span of only ten (10) years, he had more than doubled his landholding by what the Court of Appeals and the trial
court considered as accretion. As already noted, there are steep vertical dike-like slopes separating the depressed portion or river bed and Lot 821 and
Lot 307. This topography of the land, among other things, precludes a reasonable conclusion that Lot 821 is an increment to the depressed portion by
reason of the slow and constant action of the waters of either the western or the eastern branches of the Cagayan River.

We turn finally to the issue of ownership of Lot 821. Respondent Manalo's claim over Lot 821 rests on accretion coupled with alleged prior
possession. He alleged that the parcels of land he bought separately from Gregorio Taguba and Faustina Taccad were formerly owned by Judge Juan
Taccad who was in possession thereof through his (Judge Taccad's) tenants. When ownership was transferred to him, respondent Manalo took over the
cultivation of the property and had it declared for taxation purposes in his name. When petitioners forcibly entered into his property, he twice instituted
the appropriate action before the Municipal Trial Court of Tumauini, Isabela. Against respondent Manalo's allegation of prior possession, petitioners
presented tax declarations standing in their respective names. They claimed lawful, peaceful and adverse possession of Lot 821 since 1955.

If respondent Manalo had proved prior possession, it was limited physically to Lot 307 and the depressed portion or the eastern river bed. The
testimony of Dominga Malana who was a tenant for Justina Taccad did not indicate that she was also cultivating Lot 821. In fact, the complaints for
forcible entry lodged before the Municipal Trial Court of Tumauini, Isabela pertained only to Lot 307 and the depressed portion or river bed and not to
Lot 821. In the same manner, the tax declarations presented by petitioners conflict with those of respondent Manalo. Under Article 477 of the Civil
Code, the plaintiff in an action for quieting of title must at least have equitable title to or interest in the real property which is the subject matter of the
action. The evidence of record on this point is less than satisfactory and the Court feels compelled to refrain from determining the ownership and
possession of Lot 821, adjudging neither petitioners nor respondent Manalo as owner(s) thereof.

WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-GR CV No. 04892 are hereby SET ASIDE. Respondent Manalo is hereby
declared the owner of Lot 307. The regularly submerged portion or the eastern bed of the Cagayan River is hereby DECLARED to be property of
public dominion. The ownership of Lot 821 shall be determined in an appropriate action that may be instituted by the interested parties inter se. No
pronouncement as to costs.

SO ORDERED.

Property 238
G.R. No. 95907 April 8, 1992

JOSE REYNANTE, petitioner, vs.

THE HONORABLE COURT OF APPEALS, THE HON. VALENTIN CRUZ, as Presiding Judge,Regional Trial Court of Bulacan, Branch VIII,
and the HEIRS OF LEONCIO CARLOS and DOLORES A. CARLOS, and HEIRS OF GORGONIO CARLOS and CONCEPCION

CARLOS, respondents.PARAS, J.:

This is a petition for review on certiorari which seeks the reversal of: a) decision 1 of the Court of Appeals dated February 28, 1990 in CA-G.R.
No. 1917 entitled "JOSE REYNANTE versus HON. VALENTIN CRUZ, Judge, RTC of Malolos, Bulacan, and HEIRS OF LEONCIO AND
DOLORES CARLOS, et al.", affirming the decision 2 of the Regional Trial Court

of Malolos, Bulacan, Branch 8, Third Judicial Region which reversed the decision 3 of the Municipal Trial Court of Meycauayan, Bulacan, Branch 1,
Third Judicial Region in Civil Case No. 1526 entitled "HEIRS OF LEONCIO CARLOS & DOLORES A. CARLOS and HEIRS OF GORGONIO A.
CARLOS

& CONCEPCION CARLOS versus JOSE REYNANTE: and b) the resolution denying the motion for reconsideration.

The facts as culled from the records of the case are as follows:

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

Property 239
heirs of Don Cosme Carlos and surrendered all his rights therein as caretaker or "bantay-kasama at tagapamahala" (Rollo, p. 77).

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.

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.

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.

Private respondents appealed to the Regional Trial Court and on August 8, 1989 it rendered its decision, the dispositive portion of which reads
as follows:

WHEREFORE, this Court renders judgment in favor of the plaintiffs and against defendant and hereby reverses the decision of the
Court a quo. Accordingly, the defendant is ordered to restore possession of that piece of land particularly described and defined as
Lots 1 & 2 of the land survey conducted by Geodetic Engineer Restituto Buan on March 2, 1983, together with the sasa or nipa
palms planted thereon. No pronouncement as to attorney's fees. Each party shall bear their respective costs of the suit.

SO ORDERED. (Rollo, p. 55; Decision, p. 4).

From said decision, petitioner filed with the Court of Appeals a petition for review (Rollo, p. 30; Annex "A"). On February 28, 1990, the Court of
Appeals rendered its decision, the dispositive portion of which reads as follows:

WHEREFORE, the decision of the court a quo, being consistent with law and jurisprudence, is hereby AFFIRMED in toto. The
instant petition seeking to issue a restraining order is hereby denied.

SO ORDERED. (Rollo, p. 30; Decision, p. 3).

Property 240
On November 5, 1990, the Court of Appeals denied the motion for reconsideration filed by petitioner (Rollo, p. 35; Annex "B").

Hence, this petition.

Property 241
In its resolution dated May 6, 1991, the Second Division of this court gave due course to the petition and required both parties to file their respective
memoranda (Rollo, p. 93).

The main issues to be resolved in this case are: a) who between the petitioner and private respondents has prior physical possession of lots 1 and 2;
and b) whether or not the disputed lots belong to private respondents as a result of accretion.

An action for forcible entry is merely a quieting process and actual title to the property is never determined. A party who can prove prior possession
can recover such possession even against the owner himself. Whatever may be the character of his prior possession, if he has in his favor priority in
time, he has the security that entitles him to remain on the property until he is lawfully ejected by a person having a better right by accion publiciana or
accion reivindicatoria (German Management & Services, Inc. v. Court of Appeals, G.R. No. 76216, September 14, 1989, 177 SCRA 495, 498, 499).
On the other hand, if a plaintiff cannot prove prior physical possession, he has no right of action for forcible entry and detainer even if he should be the
owner of the property (Lizo v. Carandang, 73 Phil. 469 [1942]).

Hence, the Court of Appeals could not legally restore private respondents' possession over lots 1 and 2 simply because petitioner has clearly proven
that he had prior possession over lots 1 and 2.

The evidence on record shows that petitioner was in possession of the questioned lots for more than 50 years. It is undisputed that he was the caretaker
of the fishpond owned by the late Don Cosme Carlos for more than 50 years and that he constructed a nipa hut adjacent to the fishpond and planted
nipa palms therein. This fact is bolstered by the "SINUMPAANG SALAYSAY" executed by Epifanio Lucero (Records, p. 66), Apolonio D. Morte
(Records, p. 101) and Carling Dumalay (Records, p. 103), all of whom are disinterested parties with no motive to falsify that can be attributed to them,
except their desire to tell the truth.

Moreover, an ocular inspection was conducted by the trial court dated December 2, 1988 which was attended by the parties and their respective
counsels and the court observed the following:

The Court viewed the location and the distance of the constructed nipa hut and the subject "sasahan" which appears exists (sic)
long ago, planted and stands (sic) adjacent to the fishpond and the dikes which serves (sic) as passage way of water river of lot 1
and lot 2. During the course of the hearing, both counsel observed muniment of title embedded on the ground which is located at
the inner side of the "pilapil" separating the fishpond from the subject "sasa" plant with a height of 20 to 25 feet from water
level and during the ocular inspection it was judicially observed that the controversial premises is beyond the titled property of
the plaintiffs but situated along the Liputan, Meycauayan River it being a part of the public domain. (Rollo, p. 51; Decision, p.
12).

On the other hand, private respondents based their claim of possession over lots 1 and 2 simply on the written agreement signed by petitioner
whereby the latter surrendered his rights over the fishpond.

Evidently, the trial court did not err when it ruled that:

Property 242
An examination of the document signed by the defendant (Exhibit "B"), shows that what was surrendered to the plaintiffs was the
fishpond and not the "sasahan" or the land on which he constructed his hut where he now lives. That is a completely different
agreement in which a tenant would return a farm or a fishpond to his

Property 243
 landlord in return for the amount that the landlord would pay to him as a disturbance compensation. There is nothing that
indicates that the tenant was giving other matters not mentioned in a document like Exhibit "B". Moreover, when the plaintiffs
leased the fishpond to Mr. Carlos de La Cruz there was no mention that the lease included the hut constructed by the defendant
and the nipa palms planted by him (Exhibit "1"), a circumstance that gives the impression that the nipa hut and the nipa palms
were not included in the lease to Mr. de la Cruz, which may not belong to the plaintiffs. (Rollo, p. 49; Decision, p. 9).

With regard to the second issue, it must be noted that the disputed lots involved in this case are not included in Transfer Certificate of Title No.
25618 as per verification made by the Forest

Management Bureau, Department of Environment and Natural Resources. That tract of land situated at Barrio Liputan, Meycauayan, Bulacan
containing an area of 1.1107 hectares as described in the plan prepared and surveyed by Geodetic Engineer Restituto Buan for Jose Reynante falls
within Alienable and Disposable Land (for fishpond development) under Project No. 15 per B.F.L.C. Map No. 3122 dated May 8, 1987 (Rollo, p. 31;
Decision, p. 2).

The respondent Court of Appeals ruled that lots 1 and 2 were created by alluvial formation and hence the property of private respondents
pursuant to Article 457 of the New Civil Code, to wit:

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.

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 (Republic v. Court of Appeals,

G.R. No. L-61647, October 12, 1984, 132 SCRA 514, cited in Agustin v. Intermediate Appellate Court, G.R. Nos. 66075-76, July 5, 1990, 187
SCRA 218).

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 beenprovided.

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.
Property 244
It is undisputed that petitioner has been in possession of the subject lots for more than fifty (50) years and unless private respondents can show a
better title over the subject lots, petitioner's possession over the property must be respected.

PREMISES CONSIDERED, the decision of the respondent Court of Appeals dated February 28, 1990 is REVERSED and SET ASIDE and the
decision of the Municipal Trial Court of Meycauayan, Bulacan, Branch I, is hereby REINSTATED.

SO ORDERED.

Property 245
 ARTICLE 476

G.R. No. L-48268 October 30, 1978

HEIRS OF SEGUNDO UBERAS, namely: Nieves Uberas, Florencia Uberas, Manuel Uberas, Rolando Uberas, Ester Uberas, Jose Uberas, Jr., Zenaida
Uberas, Yolanda Uberas, Cecilia Uberas, Henry Uberas, Paulita Uberas, Josephine Uberas, William Uberas, Ramon Uberas, Virgie Palomar, Alicia
Palomar, Corazon Palomar Antonio Palomar, and Roque Palomar, HEIRS OF ALBINO UBERAS, namely: Delfin Uberas, Vivencio Uberas, Juan
Uberas, Milagros Uberas, Jardenico Uberas, Lilia Uberas, Hergondeo Uberas, Anecito Uberas, Antonio Uberas, Rodolfo Uberas, Reymundo
Uberas, Adrimedes Uberas and Nathaniel Uberas, petitioners,vs. COURT OF FIRST INSTANCE OF NEGROS OCCIDENTAL, BRANCH II, presided by THE
HON. OSCAR R. VICTORIANO, and ALEJANDRA UBERAS, SOLEDAD RAPIZ U ERAS, MILAGROS UBERAS, ROLANDO UBERAS, WILFREDO UBERAS, SELMA
UBERAS, and PEDRO UBERAS,JR., all of the City of Bacolod, Negros Occidental, respondents. Rodriguez O. Abligacion for petitioners. (i) Alex A.
Abastillas for respondents the Uberas. Jorge A. Dolorfino for private respondents.TEEHANKEE, J.:

The Court sets aside respondent court's order dismissing the complaint below on the ground of prescription and remands the case for trial and
determination on the merits, in the light of factual averments in the complaint which if duly established at the trial would clearly rule out the defense
of prescription and of other material averments that have to be inquired into and resolved on the basis of evidence adduced by the parties which in
turn will determine the legal precepts that should be applied in law and equity.

Petitioners as plaintiffs below had filed on November 3, 1977 a verified complaint against respondents as defendants in the Negros Occidental Court
of First Instance for "quieting of title, recovery of possession and ownership, partition, (and) reconveyance with damages" of the property subject-
matter of the suit. Their complaint was summarized by respondent court in the appealed order of February 15, 1978 dismissing the complaint on the
ground of prescription, as follows:

Defendants seek to dismiss the present complaint on the ground that the action is barred by prescription.

Plaintiffs maintain that the action is imprescriptible because it is one for partition and to quiet title to the property in question,
declaring the declaration of heirship and deed of sale executed by defendants to be null and void ab initio.

Property 246
On the basis of the allegations of the complaint, it is averred that upon the death of the spouses Juan Uberas and Dominga
Mendoza in 1929 and 1930, respectively, they were survived by five (5) legitimate children, namely, Segundo, Albino, Francisca,
Pedro and Alejandra, all surnamed Uberas, the first four (4) already deceased but in turn survived or succeeded by their children
and grandchildren, leaving a parcel of land with an area of 922 square meters situated in Bacolod City, covered by Transfer
Certificate of Title No. RT-1976 (156) issued on March 16, 1917 in the name of aforesaid Juan Uberas, married to Dominga
Mendoza.

The plaintiffs are the children and successors in interest of Segundo

Uberas and Albino Uberas, while the defendants are the surviving spouse, Soledad Rapiz, and the children of Pedro Uberas, as
well as Alejandra Uberas who is impleaded as an unwilling co-plaintiff. Plaintiffs claim that they and the defendants as well as
their predecessors in interest are co-owners of the property in question which they acquired by right of inheritance upon the death
of the spouses Juan Uberas and Dominga Mendoza; that sometime in 1964 Pedro Uberas, when still alive, together with his wife,
defendant Soledad Rapiz, add their children, by means of fraud and deceit, persuaded his sister, Alejandra Uberas, to join them in
signing a declaration of heirship, stating falsely that Pedro Uberas and Alejandra Uberas were the only heirs of the deceased
spouses Juan Uberas and Dominga Mendoza and adjudicating unto themselves the whole property in question to the prejudice and
exclusion of their two (2) brothers, Segundo Uberas and Albino Uberas as well as their sister Francisca Uberas, the latter having
died without issue (paragraph 9, complaint); that as a result of the execution of this declaration of heirship Transfer Certificate of
Title No. RT-1976 (156) in the name of Juan Uberas, married to Dominga Mendoza, was cancelled and Transfer Certificate of Title
No. T-31151 issued on December 2, 1966 was issued in the names of the deceased defendant. Pedro Uberas and the defendant
Alejandra Uberas, one-half (½) share for each; that as part of their continuing malicious and illegal scheme, Pedro uberas and
Soledad Rapiz, as well as their children caused Alejandra Uberas to sign a deed of absolute sale of her undivided one-half (½)
portion of the lot in question in favor of Pedro Uberas, married to Soledad Rapiz, dated November 29, 1966 for Five Thousand
Pesos (P5,000.00), and as a consequence Transfer Certificate of Title No. T-31151 was cancelled and Transfer Certificate of Title
No. 31315 was issued solely in the name of pedro Uberas, married to Soledad Rapiz, on January 7, 1967; that thereafter pedro
uberas and Soledad Rapiz maliciously induced their sister Alejandra Uberas to sign a general power of attorney in favor of their
son, Wilfredo Uberas, with authority to sell or encumber the property dated December 6, 1973; that aforesaid Alejandra Uberas
signed the declaration of heirship, the deed of sale and the general power of attorney by reason of fraud, deceit, misrepresentation
and undue influence exerted upon her by Pedro Uberas and Soledad Rapiz, and that by reason of aforesaid fraudulent acts and
malicious scheme the complusory heirs of Juan Uberas and Dominga Mendoza were therefore deprived of their legitimate shares in
the property, namely; and one- fourth (¼) share for the heirs of Albino Uberas, claiming that Transfer Certificate of Title No.
31151, the deed of sale and the general power of attorney are null and void ab initio and asking that defendant be ordered to
reconvey the share corresponding to the heirs of Segundo Uberas and Albino uberas (paragraphs 11, 12, 13, 14, 15, 17, 18, and 19,
complaint). Finally, it is claimed that plaintiffs learned for the first time of the malicions and illegal acts of the defendants only in
the year 1977 after Soledad Rapiz and her children had claimed sole ownership and possession of the entire property, and upon
verification from the office of the Register of Deeds that the declaration of heirship was annotated on the certificate of title.

Property 247
 At the back of Transfer Certificate of Title No. RT-1976 (156), which is Annex "A" of the complaint, the execution of the
declaration of heirship appears annotated as Entry No. 34845 by Pedro Uberas and Alejandra Uberas to the effect that both
declared themselves as the only heirs of the deceased spouses Juan Uberas and Dominga Mendoza, who both died leaving no
debts and oblihgations, adjudicating unto themselves the property in question. the declaration of heirship is dated April 7, 1964
and registered on December 2, 1966.

As already indicated, respondent court in its questioned order, dismissed the complaint on the ground that it was barred by prescription "as more than
ten (10) years had elapsed counted from the registration of the extrajudicial declaratio of heirship on December 2, 1966 and the issuance of Transfer
Certificate of Title No. T-31151 solely in the names of Pedro Uberas and Alejandra Uberas issued on the same date, the present complaint having been
filed only on November 3, 1977." Respondent court reasoned out the dismissal, as follows:

While it is true the complaint is entitled as one for 'Quieting of Title, Recovery of Ownership, Partition and Reconveyance with
Damages', there is no doubt that essentially the cause of action is one for reconveyance based upon a contructive or implied trust
resulting from fraud. It cannot be considered as an action for partition among co-heirs which does not prescribe. A true action for
partition indeed does not prescribe as long as none of the co-heirs repudiate the co-ownership and claim the entire property under
an adverse title. (cordova vs. cordova, L-9936; Jan. 14, 1948). In the instant case, plaintiffs aver that Pedro Uberas and Alejandra
Uberas executed the declaration of heirship with malice and bad faith, by means of fraud and deceit to deprive the compulsory
heirs, thereby excluding the plaintiffs from the estate of the deceased and setting up title adverse to them. Hence, the present action
is primarily to annul the declaration of heirship and the deed of sale on the ground of fraud. For this same reason, the doctrine that
an aciton of partition among-co-heirs does not prescribe finds no application. Nor can the present action be considered really as
one to quiet title as there is nothing in the allegations of the complaint to show that the titles of the predecessros in interest of the
plaintiffs were ever under a cloud.

Even granting that the aciton is one to remove a cloud over the title, the same is not imprescriptible because to clear up the cloud
and recover the title to the property which is the ultimate objective of the plaintiffs, it is essential that 'they must need first travel
the road of relief on the ground of fraud.' (See Mauricio vs. villanueva, et al.,

G.r. No. L-11072, Sept. 24 1956). The extrajudicial declaration as well as the deed of sale and the Certificate of Title No.

T-31315 arenot void ab initio, for they do not fall under any of the void and inexistent contracts enumerated under Article 1409,
Civil Coide, Unquestionably, those documents are invalid insofar as they affect the legitimate shares pertaining to the heirs of
Segundo Uberas and albino Uberas in the property in question. That they are fraudulent there can be no question Hence, it is
necessary to maintain an action to set them aside on the ground of fraud.

But the action is barred by prescription. For when land passes by succession to any person and he causes the legal title to be put in
the name of another, a trust is established by implication of law for the benefit of the true owner. (Art. 1451, New Civil Code).
Also if properties are acquired thru mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied
trust for the benefit of the person from whom the property comes. (Art. 1456, New Civil Code). The acts attributed to the
deceased Pedro Uberas and defendant Alejandro Uberas in having executed the extrajudicial declaration of heirship, falsely
representing therein that they were the sole heirs of the deceased Juan Uberas and Dominga Mendoza and

Property 248
 adjudicating unto themselves the entire property for which a separate certificate of title was issued in their names, which cancelled
the transfer certificate of title originally issued in the name of Juan Uberas, thereby excluding plaintiffs from their share in the
property, constituted a breach of an implied trust resulting from fraud. The subsequent execution of the deed of absolute sale by
Alejandra Uberas in favor of Pedro Uberas conveying her one-half (½) portion over the property with consequent issuance of
Transfer Certificate of Title No. 31315 solely in the name of Pedro Uberas, and the general power of attorney extended by
Alejandra Uberas in favor of Wilfredo Uberas, son of Pedro Uberas and Soledad Rapiz, with authority to sell or encumber the
entire property, are parts of a continuing breach of trust allegedly committed by defendants for they merely confirmed the
fraudulent execution of the declaration of heirship and the cancellation of Transfer Certificate of Title No. RT 1975 (156) in the
name of Juan Uberas. Therefore, plaintiffs' cause of action for reconveyance based on breach of trust resulting from fraud must be
deemed to have accrued when the declaration of heirship dated April 7, 1964 was annotated on Transfer Certificate of Title No.
RT-1976 (156) on December 2, 1966 because the discovery of the fraud is deemed to have taken place when the instrument is filed
with the Register of Deeds and a new title issued in the name of the trustee as where a ceed of extrajudicial settlement executed in
fraud of some heirs is duly registered which then serves as constructive notice to the whole world. (Diaz vs. Gorricho L-11229,
March 29, 1958; J. M. Tuason & Co., Inc. vs.

Magdangal, L-15539, Jan. 30, 1962).

Reconsideration of the dismissal order having been denied by respondent court, petitioners filed the present petition for review, and upon receipt of
respondents' comment, the Court resolved to declare the case submitted for decision in view of the clear issues raised which require the remand of the
case for trial and determination on the merits.

Respondent court manifestly failed to take into account the averments of petitioners' complaint that they "and defendants are co-owners and
possessors of the property" and that "the malicious and illegal acts committed by defendants were known to the plaintiffs only during this year 1977,

after Soledad Rapiz and her children were already claiming full ownership and possession of the whole of the property," as set forth specifically
in paragraph 20 of their complaint

below. 1 Respondent court could not peremptorily disregard this averment without trial and receiving the parties' proofs. It is obvious that if such
averment be duly established at the trial by petitioners- plaintiffs, the period for prescription, even under respondent court's theory of the case in its
order, would only have commenced in 1977 and prescription could not lie.

The teaching of Faja vs. Court of Appeals 2 that an action to quiet title to property in the possession of plaintiff is imprescriptible and that where
there are material facts to be inquired into and resolved on the basis of evidence adduced by the parties which will determine the legal precepts to be
applied, as in this case, the complaining party should be given full opportunity to prove his case is fully applicable here, mutatis mutandis although in
Faja the court peremptorily dismissed the complaint by summary judgment, while respondent court herein likewise summarily dismissed the
complaint on the alleged ground of prescription notwithstanding contrary factual averments in the complaint which would clearly rule out
prescription.

As stressed therein by the Court "(T)he demands of a fair, impartial, and wise administration of justice call for a faithful adherence to legal precepts
on procedure which ensure to litigants the opportunity to present their evidence and secure a ruling on all the issues presented in the respective
pleadings. 'Shortcuts' in judicial processes are to be avoided where they impede rather than promote a judicious dispensation of justice." 3

Property 249
Respondent court issued its dismissal order based on prescription on the basis of its theory that "essentially the cause of action is one for reconveyance
based upon a constructive or implied trust resulting from fraud." Without any evidence in the record, the Court cannot put its imprimatur on such a
peremptory dismissal in the light of the pleas of the petitioners-plaintiffs to justly share in the inheritance and partition of their common predecessor's
estate and respondent court's observation in its questioned order that "Unquestionably, those documents [the extrajudicial declaration whereby the two
brothers succeeded by petitioners were deprived by their own brother and sister (succeeded by respondents) of one-half of their just inheritance] are
invalid insofar as they affect the legitimate shares pertaining to the heirs of Segundo Uberas and Albino Uberas in the property in question.

That they are fraudulent, there can be no question." Considering that petitioners have sought redress from the courts also in equity, it is but fair
and just that without any prejudgment of the issues, the parties be allowed to prove their respective contentions in a full blown trial and the
manner and extent of the fraud allegedly inflicted upon petitioners be allowed to be fully proven therein, since equity does not permit that
manifest wrong and injustice be inflicted upon innocent parties. 4

ACCORDINGLY, respondent court's order of dismissal is hereby set aside and the case is remanded to respondent court for trial and determination
on the merits. With costs against private respondents jointly and severally.

Makasiar, Muñoz Palma, Fernandez and Guerrero, JJ., concur.

Property 250
G.R. No. 167232 July 31, 2009

D.B.T. MAR-BAY CONSTRUCTION, INCORPORATED, Petitioner, vs.RICAREDO PANES, ANGELITO PANES,

SALVADOR CEA, ABOGADO MAUTIN, DONARDO PACLIBAR, ZOSIMO PERALTA and HILARION MANONGDO,
Respondents.D E C I S I O N NACHURA, J.:

1
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Court of Appeals (CA)
2 3
Decision dated October 25, 2004 which reversed and set aside the Order of the Regional Trial Court (RTC) of Quezon City, Branch 216, dated
November 8, 2001.

The Facts

4
Subject of this controversy is a parcel of land identified as Lot Plan Psu-123169, containing an area of Two Hundred Forty Thousand, One Hundred
Forty-Six (240,146) square meters, and situated at Barangay (Brgy.) Pasong Putik, Novaliches, Quezon City (subject property). The property is
5
included in Transfer Certificate of Title (TCT) No. 200519, entered on July 19, 1974 and issued in favor of

B.C. Regalado & Co. (B.C. Regalado). It was conveyed by B.C. Regalado to petitioner D.B.T. Mar- Bay Construction, Inc. (DBT) through a dacion
6
en pago for services rendered by the latter to the former.

On June 24, 1992, respondents Ricaredo P. Panes (Ricaredo), his son Angelito P. Panes (Angelito), Salvador Cea, Abogado Mautin, Donardo Paclibar,
7
Zosimo P. Peralta, and Hilarion Manongdo (herein collectively referred to as respondents) filed a Complaint for "Quieting of Title with Cancellation
of TCT No. 200519 and all Titles derived thereat (sic), Damages, with Petition for the Issuance of Injunction with Prayer for the Issuance of
Restraining Order Ex-Parte, Etc." against B.C. Regalado, Mar-Bay Realty, Inc., Spouses Gereno Brioso and Criselda M. Brioso, Spouses Ciriaco and
Nellie Mariano, Avelino C. Perdido and Florentina Allado, Eufrocina A. Maborang and Fe Maborang, Spouses Jaime and Rosario Tabangcura,
8
Spouses Oscar Ikalina and the Register of Deeds (RD) of Quezon City. Subsequently, respondents filed an Amended Complaint and a Second
9
Amended Complaint particularly impleading DBT as one of the defendants.

In the Complaints, Ricaredo alleged that he is the lawful owner and claimant of the subject property which he had declared for taxation purposes in
his name, and assessed in the amount of

10
₱2,602,190.00 by the City Assessor of Quezon City as of the year 1985. Respondents alleged that per Certification of the Department of
Environment and Natural Resources (DENR) National Capital Region (NCR) dated May 7, 1992, Lot Plan Psu-123169 was verified to be correct and
on file in said office, and approved on July 23, 1948.

Property 251
Respondents also claimed that Ricaredo, his immediate family members, and the other respondents had been, and still are, in actual possession of the
portions of the subject property, and their possession preceded the Second World War. To perfect his title in accordance with Act No. 496 (The Land
Registration Act) as amended by Presidential Decree (P.D.) No. 1529 (The Property Registration Decree), Ricaredo filed with the RTC of Quezon
11
City, Branch 82 a case docketed as LRC Case No. Q-91-011, with LRC Rec. No. N-62563.

Respondents averred that in the process of complying with the publication requirements for the Notice of Initial Hearing with the Land
Registration Authority (LRA), it was discovered by the Mapping Services of the LRA that there existed an overlapping of portions of the land
subject of Ricaredo’s application, with the subdivision plan of B.C. Regalado. The said portion had, by then, already been conveyed by B.C.
Regalado to DBT.

Ricaredo asseverated that upon verification with the LRA, he found that the subdivision plan of B.C. Regalado was deliberately drawn to cover
portions of the subject property. Respondents claimed that the title used by B.C. Regalado in the preparation of the subdivision plan did not actually
12 13 14
cover the subject property. They asserted that from the records of B.C. Regalado, they gathered that TCT Nos. 211081, 211095 and 211132,
which allegedly included portions of the subject property, were derived from TCT No. 200519. However, TCT No. 200519 only covered Lot 503 of
the Tala Estate with an area of Twenty-Two Thousand Six Hundred Fifteen (22,615) square meters, and was different from those mentioned in TCT
Nos. 211081, 211095 and 211132. According to respondents, an examination of TCT No. 200519 would show that it was derived from TCT Nos.

15 16 17
14814, 14827, 14815 and T-28.

In essence, respondents alleged that B.C. Regalado and DBT used the derivative titles which covered properties located far from Pasong Putik,
Novaliches, Quezon City where the subject property is located, and B.C. Regalado and DBT then offered the same for sale to the public.
Respondents thus submitted that B.C Regalado and DBT through their deliberate scheme, in collusion with others, used (LRC) Pcs-18345 as
shown in the consolidation-subdivision plan to include the subject property covered by Lot Plan Psu-123169.

18
In his Answer dated July 24, 1992, the RD of Quezon City interposed the defense that at the time of registration, he found all documents to be in
19
order. Subsequently, on December 5, 1994, in his Motion for Leave to Admit Amended Answer, with the Amended Answer attached, he admitted
that he committed a grave mistake when he earlier said that TCT No. 200519 covered only one lot, i.e. Lot 503. He averred that upon careful
examination, he discovered that TCT No. 200519 is composed of 17 pages, and actually covered 54 lots, namely: Lots 503, 506, 507, 508, 509, 582,
586, 655, 659,

686, 434, 495, 497, 299, 498, 499, 500, 501, 502, 493, 692, 776, 496, 785, 777, 786, 780, 783, 505,

654, 660, 661, 663, 664, 665, 668, 693, 694, 713, 716, 781, 779, 784, 782, 787, 893, 1115, 1114,

778, 669 and 788, all of the Tala Estate. Other lots included therein are Lot 890-B of Psd 36854, Lot 2 of (LRC) Pcs 12892 and Lot 3 of (LRC) Pcs
12892. Thus, respondents' allegation that Lots 661, 664, 665, 693 and 694 of the Tala Estate were not included in TCT No. 200519 was not true.

20
On December 28, 1993, then defendants Spouses Jaime and Rosario Tabangcura (Spouses Tabangcura) filed their Answer with Counterclaim,
claiming that they were buyers in good faith and for value when they bought a house and lot covered by TCT No. 211095 from B.C. Regalado, the
latter being a subdivision developer and registered owner thereof, on June 30, 1986. When respondent Abogado Mautin entered and occupied the
21
property, Spouses Tabangcura filed a case for Recovery of Property before the RTC, Quezon City, Branch 97 which rendered a decision in their
favor.

Property 252
On its part, DBT, traversing the complaint, alleged that it is the legitimate owner and occupant of the subject property pursuant to a dacion en pago
executed by B.C. Regalado in the former’s favor; that respondents were not real parties-in-interests because Ricaredo was a mere claimant whose
rights over the property had yet to be determined by the RTC where he filed his application for registration; that the other respondents did not allege
matters or invoke rights which would entitle them to the relief

22
prayed for in their complaint; that the complaint was premature; and that the action inflicted a chilling effect on the lot buyers of DBT.

The RTC's Rulings

23
On June 15, 2000, the RTC through Judge Marciano I. Bacalla (Judge Bacalla), rendered a Decision in favor of the respondents. The RTC held that
the testimony of Ricaredo that he occupied the subject property since 1936 when he was only 16 years old had not been rebutted; that Ricaredo's
occupation and cultivation of the subject property for more than thirty (30) years in the concept of an owner vested in him equitable ownership over the
24
same by virtue of an approved plan, Psu 123169; that the subject property was declared under the name of Ricaredo for taxation purposes; and that
the subject property per survey should not have been included in TCT No.

200519, registered in the name of B.C. Regalado and ceded to DBT. The RTC further held that Spouses Tabangcura failed to present satisfactory
evidence to prove their claim. Thus, the RTC disposed of the case in this wise:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered declaring Certificate of Title No. 200519 and all titles derived
thereat as null and void insofar as the same embrace the land covered by Plan PSU-123169 with an area of 240,146 square meters in the name of
Ricaredo Panes; ordering defendant DBT Marbay Realty, Inc. to pay plaintiff Ricaredo Panes the sum of TWENTY THOUSAND (₱20,000) pesos as
attorney’s fees plus costs of suit.

SO ORDERED.

25
On September 12, 2000, DBT filed a Motion for Reconsideration, based on the grounds of prescription and laches. DBT also disputed Ricaredo’s
claim of open, adverse, and continuous possession of the subject property for more than thirty (30) years, and asserted that the subject property could
not be acquired by prescription or adverse possession because it is covered by TCT No. 200519.

While the said Motion for Reconsideration was pending, Judge Bacalla passed away.

26
Meanwhile, on January 2, 2001, a Motion for Intervention and a Complaint in Intervention were filed by Atty. Andres B. Pulumbarit (Atty.
Pulumbarit), representing the Don Pedro/Don Jose de Ocampo Estate. The intervenor alleged that the subject property formed part of the vast tract of
land with an area of 117,000 hectares, covered by Original Certificate of Title (OCT) No. 779 issued by the Honorable Norberto Romualdez on March
27
14, 1913 under Decree No. 10139, which belongs to the Estate of Don Pedro/Don Jose de Ocampo. Thus, the Complaint in Intervention prayed that
the RTC’s Decision be reconsidered; that the legitimacy and superiority of OCT 779 be upheld; and that the subject property be declared as belonging
to the Estate of Don Pedro/Don Jose de Ocampo.

Property 253
 28
In its Order dated March 13, 2001, the RTC, through Acting Judge Modesto C. Juanson (Judge Juanson), denied Atty. Pulumbarit’s Motion for
29
Intervention because a judgment had already been rendered pursuant to Section 2, Rule 19 of the 1997 Rules of Civil Procedure.

Property 254
 30
On April 10, 2001, the RTC issued an Order stating that there appeared to be a need for a clarificatory hearing before it could act on DBT's Motion
31
for Reconsideration. Thus, a hearing was held on May 17, 2001. Thereafter, supplemental memoranda were required of the parties. Both parties
32
complied. However, having found that the original copy of TCT No. 200519 was not submitted to it for comparison with the photocopy thereof on
33
file, the RTC directed DBT to present the original or certified true copy of the TCT on August 21, 2001. Respondents moved to reconsider the said
34 35
directive but the same was denied. DBT, on the other hand, manifested that a copy of TCT No. 200519, consisting of 17 pages, had already been
admitted in evidence; and that because of the fire in the Office of the RD in Quezon City sometime in 1988, DBT, despite diligent effort, could not
36
secure an original or certified true copy of said TCT. Instead, DBT submitted a certified true copy of Consolidated Subdivision Plan Pcs 18345.

37
On November 8, 2001, the RTC, through Judge Juanson, issued an Order reversing the earlier RTC Decision and dismissing the Complaint for
lack of merit. The RTC held that prescription does not run against registered land; hence, a title once registered cannot be defeated even by adverse,
open or notorious possession. Moreover, the RTC opined that even if the subject property could be acquired by prescription, respondents' action was
already barred by prescription and/or laches because they never asserted their rights when B.C. Regalado registered the subject property in 1974; and
later developed, subdivided and sold the same to individual lot buyers.

38 39
On December 18, 2001, respondents filed a Motion for Reconsideration which the RTC denied in its Order dated June 17, 2002. Aggrieved,
40
respondents appealed to the CA.

The CA's Ruling

On October 25, 2004, the CA reversed and set aside the RTC Orders dated November 8, 2001 and June 17, 2002 and reinstated the RTC Decision
dated June 15, 2000. The CA held that the properties described and included in TCT No. 200519 are located in San Francisco del Monte, San Juan del
Monte, Rizal and Cubao, Quezon City while the subject property is located in Brgy. Pasong Putik, Novaliches, Quezon City. Furthermore, the CA held
that Engr. Vertudazo's testimony that there is a gap of around 1,250 meters between Lot 503 and Psu 123169 was not disproved or refuted. The CA
found that Judge Juanson committed a procedural infraction when he entertained issues and admitted evidence presented by DBT in its Motion for
Reconsideration which were never raised in the pleadings and proceedings prior to the rendition of the RTC Decision. The CA opined that DBT's
claims of laches and prescription clearly appeared to be an afterthought. Lastly, the CA held that DBT's Motion for Reconsideration was not based on
41
grounds enumerated in the Rules of Procedure.

42 43
Petitioner filed a Motion for Reconsideration, which was, however, denied by the CA in its Resolution dated February 22, 2005.

Hence, this Petition.

The Issues

Petitioner raises the following as grounds for this Petition: I.

PETITIONER'S FAILURE TO ALLEGE PRESCRIPTION IN ITS ANSWER IS NOT A WAIVER OF SUCH DEFENSE.
Property 255
 II.

IT IS NOT ERRONEOUS TO REQUIRE THE PRODUCTION OF A CERTIFIED TRUE COPY OF TCT NO. 200519 AFTER THE DECISION ON
THE MERITS HAS BEEN RENDERED BUT BEFORE IT BECAME FINAL.

III.

A REGISTERED LAND CAN NOT BE ACQUIRED BY ACQUISITIVE PRESCRIPTION.

IV.

THE TESTIMONY OF ENGR. VERTUDAZO ON THE BASIS OF THE TECHNICAL DESCRIPTION OF LOT 503 IN AN INCOMPLETE
DOCUMENT IS UNRELIABLE.

V.

MR. PANES HAS NEVER BEEN IN OPEN, ADVERSE AND CONTINUOUS POSSESSION OF THE SUBJECT PROPERTY FOR MORE THAN
44
THIRTY (30) YEARS.

Distilled from the petition and the responsive pleadings, and culled from the arguments of the parties, the issues may be reduced to two
questions, namely:

1) Did the RTC err in upholding DBT's defenses of prescription and laches as raised in the latter's Motion for Reconsideration?

2) Which between DBT and the respondents have a better right over the subject property?

Our Ruling We answer the first

question in the affirmative.

45
It is true that in Dino v. Court of Appeals we ruled:

Property 256
(T)rial courts have authority and discretion to dismiss an action on the ground of prescription when the parties' pleadings or other facts on record show
it to be indeed time-barred; (Francisco v. Robles, Feb. 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v.

Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v. Sorongan, 136 SCRA 408); and it may do so on the basis of a
motion to dismiss (Sec. 1, [f] Rule 16, Rules of Court), or an answer which sets up such ground as an affirmative defense (Sec. 5, Rule 16), or even if
the ground is alleged after judgment on the merits, as in a motion for reconsideration (Ferrer v.

Ericta, 84 SCRA 705); or even if the defense has not been asserted at all, as where no statement thereof is found in the pleadings (Garcia v. Mathis,
100 SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil. 821); or where a defendant has been
declared in default (PNB v. Perez; 16 SCRA 270). What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive period
be otherwise sufficiently and satisfactorily apparent on the record; either in the averments of the plaintiff's complaint, or otherwise established by the
evidence. (Emphasis supplied)

Indeed, one of the inherent powers of courts is to amend and control its processes so as to make them conformable to law and justice. This includes
the right to reverse itself, especially when in its

Property 257
 46
opinion it has committed an error or mistake in judgment, and adherence to its decision would cause injustice. Thus, the RTC in its Order dated
November 8, 2001 could validly entertain the defenses of prescription and laches in DBT's motion for reconsideration.

However, the conclusion reached by the RTC in its assailed Order was erroneous. The RTC failed to consider that the action filed before it was not
simply for reconveyance but an action for quieting of title which is imprescriptible.

Verily, an action for reconveyance can be barred by prescription. When an action for reconveyance is based on fraud, it must be filed within four (4)
years from discovery of the fraud, and such discovery is deemed to have taken place from the issuance of the original certificate of title. On the other
hand, an action for reconveyance based on an implied or constructive trust prescribes in ten

(10) years from the date of the issuance of the original certificate of title or transfer certificate of title. The rule is that the registration of an
instrument in the Office of the RD constitutes constructive notice to the whole world and therefore the discovery of the fraud is deemed to have
47
taken place at the time of registration.

However, the prescriptive period applies only if there is an actual need to reconvey the property as when the plaintiff is not in possession of the
property. If the plaintiff, as the real owner of the property also remains in possession of the property, the prescriptive period to recover title and
possession of the property does not run against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for
48 49
quieting of title, an action that is imprescriptible. Thus, in Vda. de Gualberto v. Go, this Court held:

[A]n 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, but this rule applies only when the plaintiff or the person
enforcing the trust is not in possession of the property, since if a person claiming to be the owner thereof is in actual possession of the property, as the
defendants are in the instant case, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The reason for
this is that one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the
aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be
claimed only by one who is in possession.

Insofar as Ricaredo and his son, Angelito, are concerned, they established in their testimonies that, for some time, they possessed the subject property
50
and that Angelito bought a house within the subject property in 1987. Thus, the respondents are proper parties to bring an action for quieting of title
because persons having legal, as well as equitable, title to or interest in a real property may bring such action, and "title" here does not necessarily
51
denote a certificate of title issued in favor of the person filing the suit.

Although prescription and laches are distinct concepts, we have held, nonetheless, that in some instances, the doctrine of laches is inapplicable where
the action was filed within the prescriptive period provided by law. Therefore, laches will not apply to this case, because respondents' possession of the
subject property has rendered their right to bring an action for quieting of title imprescriptible and, hence, not barred by laches. Moreover, since laches
is a creation of equity, acts or conduct alleged to constitute the same must be intentional and unequivocal so as to avoid injustice. Laches will operate
not really to penalize neglect or sleeping on one's rights, but rather to avoid recognizing a right when to do so would result in a clearly inequitable
52
situation.

Property 258
Albeit the conclusion of the RTC in its Order dated November 8, 2001, which dismissed respondents' complaint on grounds of prescription and laches,
may have been erroneous, we, nevertheless, resolve the second question in favor of DBT.

It is a well-entrenched rule in this jurisdiction that no title to registered land in derogation of the rights of the registered owner shall be acquired by
53
prescription or adverse possession.

54 55 56
Article 1126 of the Civil Code in connection with Section 46 of Act No. 496 (The Land Registration Act), as amended by Section 47 of P.D.
No. 1529 (The Property Registration Decree), clearly supports this rule. Prescription is unavailing not only against the registered owner but also
against his hereditary successors. Possession is a mere consequence of ownership where land has been registered under the Torrens system, the
efficacy and integrity of which must be protected.

Prescription is rightly regarded as a statute of repose whose objective is to suppress fraudulent and stale claims from springing up at great distances of
time and surprising the parties or their representatives when the facts have become obscure from the lapse of time or the defective memory or death or
57
removal of witnesses.

Thus, respondents' claim of acquisitive prescription over the subject property is baseless. Under Article 1126 of the Civil Code, acquisitive
prescription of ownership of lands registered under the Land Registration Act shall be governed by special laws. Correlatively, Act No. 496, as
amended by PD No. 1529, provides that no title to registered land in derogation of that of the registered owner shall be acquired by adverse
58
possession. Consequently, in the instant case, proof of possession by the respondents is immaterial and inconsequential.

Moreover, it may be stressed that there was no ample proof that DBT participated in the alleged fraud. While factual issues are admittedly not within
the province of this Court, as it is not a trier of facts and is not required to re-examine or contrast the oral and documentary evidence anew, we have the
authority to review and, in proper cases, reverse the factual findings of lower courts when the findings of fact of the trial court are in conflict with those
59
of the appellate court. In this regard, we reviewed the records of this case and found no clear evidence that DBT participated in the fraudulent
60
scheme. In Republic v. Court of Appeals, this Court gave due importance to the fact that the private respondent therein did not participate in the
fraud averred. We accord the same benefit to DBT in this case. To add, DBT is an innocent purchaser for value and good faith which, through a dacion
en pago duly entered into with B.C. Regalado, acquired

61
ownership over the subject property, and whose rights must be protected under Section 32 of P.D. No. 1529.

Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of
the obligation. It is a special mode of payment where the debtor offers another thing to the creditor, who accepts it as an equivalent of the payment of
an outstanding debt. In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing
offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as
62
the purchase price.

It must also be noted that portions of the subject property had already been sold to third persons who, like DBT, are innocent purchasers in good faith
and for value, relying on the certificates of title shown to them, and who had no knowledge of any defect in the title of the vendor, or of facts sufficient
63
to induce a reasonably prudent man to inquire into the status of the subject property. To disregard these circumstances simply on the basis of alleged
continuous and adverse possession of

Property 259
respondents would not only be inimical to the rights of the aforementioned titleholders, but would ultimately wreak havoc on the stability of the
Torrens system of registration.

A final note.

While the Torrens system is not a mode of acquiring title, but merely a system of registration of titles to lands, justice and equity demand that the
titleholder should not be made to bear the unfavorable effect of the mistake or negligence of the State's agents, in the absence of proof of his complicity
in a fraud or of manifest damage to third persons. The real purpose of the Torrens system is to quiet title to land and put a stop forever to any question
as to the legality of the title, except claims that were noted in the certificate at the time of the registration or that may arise subsequent thereto.

Otherwise, the integrity of the Torrens system would forever be sullied by the ineptitude and inefficiency of land registration officials, who are
64
ordinarily presumed to have regularly performed their duties. Thus, where innocent third persons, relying on the correctness of the certificate of title
thus issued, acquire rights over the property, the court cannot disregard those rights and order the cancellation of the certificate. The effect of such
outright cancellation will be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be preserved; otherwise,
everyone dealing with the property registered under the system will have to inquire in every instance on whether the title had been regularly or
irregularly issued, contrary to the evident purpose of the law. Every person dealing with the registered land may safely rely on the correctness of the
65
certificate of title issued therefor, and the law will in no way oblige him to go behind the certificate to determine the condition of the property.

WHEREFORE, the instant Petition is GRANTED and the assailed Court of Appeals Decision dated October 25, 2004 is hereby REVERSED and
SET ASIDE. A new judgment is hereby entered DISMISSING the Complaint filed by the respondents for lack of merit.

SO ORDERED.

Property 260
G.R. No. 154645 July 13, 2004

MILAGROS JOAQUINO a.k.a. MILAGROS J. REYES, petitioner,vs.LOURDES REYES, MERCEDES, MANUEL, MIRIAM and RODOLFO JR. -- all surnamed

REYES, respondents.D E C I S I O N PANGANIBAN, J.:

Though registered in the paramour’s name, property acquired with the salaries and earnings of a husband belongs to his conjugal partnership with the
legal spouse. The filiation of the paramour’s children must be settled in a probate or special proceeding instituted for the purpose, not in an action for
recovery of property.

The Case

Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to nullify the February 4, 2002 Decision 2 and the August 14,
2002 Resolution3 of the Court of Appeals (CA) in CA- GR CV No. 45883. The CA disposed as follows:

"WHEREFORE, premises considered, the appeal is hereby partially DENIED and

the Decision dated May 30, 1994, of the Regional Trial Court of Pasay City, Branch 111 in Civil Case No. 9722-P is MODIFIED to read, as
follows:

"WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the defendant as follows:

‘a. Declaring the house and lot registered under Transfer Certificate of Title No. 90293 (26627-A) of the Registry of Deeds of
Metro Manila, District IV as conjugal partnership property of the late Spouses Rodolfo and Lourdes Reyes;

Property 261
 ‘b. Ordering the [petitioner] to surrender possession of said subject property, pursuant to the applicable law on succession, to the
respective estates of the late Rodolfo Reyes and Lourdes Reyes and to pay a reasonable rental of P10,000.00 a month, to the same
juridical entities, upon their failure to do so until possession of the property is delivered; and

‘c. To pay [respondents] attorney’s fees in the sum of P20,000.00 and to pay the costs.’"4

The questioned Resolution, on the other hand, denied petitioner’s Motion for Reconsideration.

The Facts

The CA narrated the facts as follows:

"[Respondents] filed a Complaint for reconveyance and damages, dated January 23, 1982, before the Court of First Instance of Rizal,
containing the following allegations:

‘x x x The complaint alleges that [respondent] Lourdes P. Reyes is the widow of Rodolfo A. Reyes who died on September 12,
1981; that [respondents] Mercedes, Manuel, Miriam and Rodolfo, Jr. are the legitimate children of [respondent] Lourdes

P. Reyes and the deceased Rodolfo A. Reyes; that for years before his death, Rodolfo A. Reyes had illicit relations with
[petitioner] Milagros B. Joaquino; that before his death, x x x Rodolfo A. Reyes was Vice President and Comptroller of
Warner Barnes and Company with an income of P15,000.00 a month and, after retirement on September 30, 1980, received
from said company benefits and emoluments in the amount of P315,0[1]1.79; that [respondent] wife was not the recipient of
any portion of the said amount.

‘The complaint further alleges that on July 12, 1979, a [D]eed of [S]ale of a property consisting of a house and lot at BF Homes,
Parañaque, Metro Manila was executed by the spouses Ramiro Golez and Corazon Golez in favor of [petitioner] Milagros B.
Joaquino for which Transfer Certificate of Title No. 90293 of the Register of Deeds of Metro Manila, District IV was issued in the
name of [petitioner] Milagros B. Joaquino; that the funds used to purchase this property were conjugal funds and earnings of the
deceased Rodolfo A. Reyes as executive of Warner Barnes and Company as [petitioner] Joaquino was without the means to pay
for the same; that [petitioner] executed a Special Power of Attorney in favor of Rodolfo A. Reyes to mortgage the property to
Commonwealth Insurance Corporation in order to pay the balance of the purchase price; that said Rodolfo A. Reyes executed a
mortgage in favor of Commonwealth Insurance Corporation for P140,000.00 and to guaranty payment thereof, he secured a life
insurance [policy] with Philam Life Insurance Corporation for the said amount, assigning the proceeds thereof to Commonwealth
Insurance Corporation; that the monthly amortizations of the mortgage were paid by said Rodolfo A. Reyes before his death and at
the time of his death, the outstanding balance of P110,000.00 was to be paid out of his Philam Life Insurance [p]olicy.

‘The complaint finally alleges that the deceased had two cars in [petitioner’s] possession and that the real and personal properties
in [petitioner’s] possession are conjugal partnership propert[ies] of the spouses Lourdes P. Reyes and Rodolfo A. Reyes and one-
half belongs exclusively to [respondent] Lourdes P. Reyes and the other half to the estate of Rodolfo A. Reyes to be apportioned
among the [other

Property 262
 respondents] as his forced heirs. [Respondents] therefore, pray that the property covered by T.C.T. No. 90293 be declared
conjugal property of the spouses Lourdes

P. Reyes and Rodolfo A. Reyes and that [petitioner] be ordered to reconvey the property in [respondents’] favor; that the two cars
in [petitioner’s] possession be delivered to [respondents] and that [petitioner] be made to pay actual, compensatory and moral
damages to [respondents] as well as attorney’s fees.’

xxx xxx xxx

"[Petitioner] eventually filed her Answer, dated August 1, 1982, the allegations of which have been summarized by the trial court in the
following manner:

‘In her Answer, [petitioner] Milagros B. Joaquino alleges that she purchased the real property in question with her own exclusive
funds and it was only for convenience that the late Rodolfo Reyes facilitated the mortgage over the same; that although the late
Rodolfo Reyes paid the monthly amortization of the mortgage as attorney-in-fact of [petitioner], the money came exclusively from
[her].

‘[Petitioner] further alleges in her answer, by way of special and affirmative defenses, that during all the nineteen (19) years that
[she] lived with Rodolfo Reyes from 1962 continuously up to September 12, 1981 when the latter died, [petitioner] never had
knowledge whatsoever that he was married to someone else, much less to [respondent] Lourdes P. Reyes; that [petitioner] was
never the beneficiary of the emoluments or other pecuniary benefits of the late Rodolfo Reyes during his lifetime or after his death
because [she] had the financial capacity to support herself and her children begotten with the late Rodolfo Reyes. [Petitioner] prays
for a judgment dismissing [respondents’] complaint and for the latter to pay unto [petitioner] moral and exemplary damages in such
amounts as may be determined during the trial, including atto[r]ney’s fees and the costs of the suit. x x x.’

xxx xxx xxx

"On February 2, 1993, [respondent] Lourdes Reyes died.

"Subsequently, the trial court granted the complaint based on the following factual findings:

‘Lourdes Reyes was legally married to Rodolfo Reyes on January 3, 1947 in Manila. They have four children, namely: Mercedes,
Manuel, Miriam and Rodolfo Jr., all surnamed Reyes and co-[respondents] in this case. Rodolfo Reyes died on September 12,
1981. At the time of his death, Rodolfo Reyes was living with his common-law wife, Milagros Joaquino, x x x with whom she
begot three (3) children namely: Jose Romillo, Imelda May and Charina, all surnamed Reyes.

‘During his lifetime, Rodolfo Reyes worked with Marsman and Company and later transferred to Warner Barnes & Co., where he
assumed the position of Vice- President [Comptroller] until he retired on September 30, 1980. His monthly salary at Warner
Barnes & Co. was P15,000.00 x x x and upon his separation or retirement from said company, Rodolfo Reyes received a lump sum
of P315,011.79 in full payment and settlement of his separation and retirement benefits.

Property 263
‘During the common-law relationship of Rodolfo Reyes and [petitioner] Milagros Joaquino and while living together, they
decided to buy the house and lot situated at

Property 264
 No. 12 Baghdad Street, Phase 3, BF Homes, Parañaque, Metro Manila. A Deed of Absolute Sale dated July 12, 1979 was
executed in favor of [petitioner] Milagros Joaquino and Transfer Certificate of Title No. S-90293 covering the said property was
issued in the name of [petitioner only] on July 20, 1979.

‘To secure the finances with which to pay the purchase price of the property in the amount of P140,000.00, [petitioner] executed on
July 20, 1979, a Special Power of Attorney in favor of Rodolfo A. Reyes for the latter, as attorney-in-fact, to secure a loan from the
Commonwealth Insurance Company. An application for mortgage loan was filed by Rodolfo Reyes with the Commonwealth
Insurance Company and a Real Estate Mortgage Contract was executed as collateral to the mortgage loan. The loan was payable in
ten (10) years with a monthly amortization of P1,166.67. The monthly amortizations were paid by Rodolfo Reyes and after his
death, the balance

of P109,797.64 was paid in full to the Commonwealth Insurance by the Philam Life Insurance Co. as insurer of the deceased
Rodolfo A. Reyes.’"5

On appeal to the CA, petitioner questioned the following findings of the trial court: 1) that the house and lot had been paid in full from the proceeds of
the loan that Rodolfo Reyes obtained from the Commonwealth Insurance Company; 2) that his salaries and earnings, which were his and Lourdes’
conjugal funds, paid for the loan and, hence, the disputed property was conjugal; and 3) that petitioner’s illegitimate children, not having been
recognized or acknowledged by him in any of the ways provided by law, acquired no successional rights to his estate.

Ruling of the Court of Appeals

Affirming the RTC, the CA held that the property had been paid out of the conjugal funds of Rodolfo and Lourdes because the monthly amortizations
for the loan, as well as the premiums for the life insurance policy that paid for the balance thereof, came from his salaries and earnings. Like the trial
court, it found no sufficient proof that petitioner was financially capable of buying the disputed property, or that she had actually contributed her own
exclusive funds to pay for it. Hence, it ordered her to surrender possession of the property to the respective estates of the spouses.

The appellate court, however, held that the trial court should not have resolved the issue of the filiation and the successional rights of petitioner’s
children. Such issues, it said, were not properly cognizable in an ordinary civil action for reconveyance and damages and were better ventilated in a
probate or special proceeding instituted for the purpose.

Hence, this Petition.6

Issues

Petitioner submits the following issues for the Court’s consideration:

"I.

Property 265
Whether or not it has been indubitably established in a court of law and trier of facts, the Regional Trial Court, that petitioner’s three
[3] illegitimate children are x x x indeed the children of the late Rodolfo Reyes.

"II.

Property 266
 Whether or not it is legally permissible for [respondents] to make a mockery of the law by denying [the] filiations of their [two] 2 illegitimate
sisters and one [1] illegitimate brother when in fact the very complaint filed by their mother, the lawful wife, Lourdes[,] shows that her
husband Rodolfo had illicit relations with the petitioner Milagros and had lived with her in a house and lot at Baghdad Street.

"III.

Whether or not the fact that the Court of Appeals made a finding that the house and lot at Baghdad Street are conjugal property of lawfully
wedded Rodolfo and Lourdes including the insurance proceeds which was used to pay the final bill for the house and lot, this will prevail
over Articles 19 and 21 of the Civil Code.

"IV.

Whether or not the Supreme Court should enforce the rule that the parties to a lawsuit should only tell the truth at the trial and in
[their] pleadings x x x.

"V.

Whether or not the legitimate children of the late Rodolfo Reyes should respect their father’s desire that his illegitimate children should have
a home or a roof over their heads in consonance with his duty to love, care and provide for his children even after his death."7

The issues boil down to the following: 1) the nature of the house and lot on Baghdad Street (BF Homes Parañaque, Metro Manila); and 2) the
propriety of ruling on the filiation and the successional rights of petitioner’s children.

The Court’s Ruling

The Petition is devoid of merit.

First Issue:

The Conjugal Nature of the Disputed Property

Before tackling the merits, we must first point out some undisputed facts and guiding principles.

Property 267
As to the facts, it is undisputed that the deceased Rodolfo Reyes was legally married to Respondent Lourdes Reyes on January 3, 1947.8 It is also
admitted that for 19 years or so, and while their marriage was subsisting, he was actually living with petitioner. It was during this time, in 1979, that
the disputed house and lot was purchased and registered in petitioner’s name.

Plainly, therefore, the applicable law is the Civil Code of the Philippines. Under Article 145 thereof, a conjugal partnership of gains (CPG) is created
upon marriage9 and lasts until the legal union is dissolved by death, annulment, legal separation or judicial separation of property.10 Conjugal
properties are by law owned in common by the husband and wife.11 As to what constitutes such properties are laid out in Article 153 of the Code,
which we quote:

"(1) That which is acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the
partnership, or for only one of the spouses;

Property 268
 (2) That which is obtained by the industry, or work, or as salary of the spouses, or of either of them;

(3) The fruits, rents or interests received or due during the marriage, coming from the common property or from the exclusive
property of each spouse."

Moreover, under Article 160 of the Code, all properties of the marriage, unless proven to pertain to the husband or the wife exclusively, are presumed
to belong to the CPG. For the rebuttable presumption to arise, however, the properties must first be proven to have been acquired during the existence
of the marriage.12

The law places the burden of proof13 on the plaintiffs (respondents herein) to establish their claim by a preponderance of evidence14 -- evidence that has
greater weight or is more convincing than that which is offered to oppose it.15

On the other hand, Article 14416 of the Civil Code mandates a co-ownership between a man and a woman who are living together but are not legally
married. Prevailing jurisprudence holds, though, that for Article 144 to apply, the couple must not be incapacitated to contract marriage.17 It has been
held that the Article is inapplicable to common-law relations amounting to adultery or concubinage, as in this case. The reason therefor is the
absurdity of creating a co-ownership in cases in which there exists a prior conjugal partnership between the man and his lawful wife. 18

In default of Article 144 of the Civil Code, Article 148 of the Family Code has been applied. 19 The latter Article provides:

"Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their
actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In
the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption
shall apply to joint deposits of money and evidence of credit.

"If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or conjugal
partnership existing in such valid marriage. If the party which acted in bad faith is not validly married to another, his or her share shall be
forfeited in the manner provided in the last paragraph of the preceding Article.

"The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith."

Thus, when a common-law couple have a legal impediment to marriage, only the property acquired by them -- through their actual joint contribution
of money, property or industry -- shall be owned by them in common and in proportion to their respective contributions.

With these facts and principles firmly settled, we now proceed to the merits of the first issue.

Property 269
The present controversy hinges on the source of the funds paid for the house and lot in question. Upon the resolution of this issue depends the
determination of whether the property is conjugal (owned by Rodolfo and Lourdes) or exclusive (owned by Milagros) or co-owned by Rodolfo
and Milagros.

Property 270
The above issue, which is clearly factual, has been passed upon by both the trial and the appellate courts, with similar results in favor of respondents.
Such finding is generally conclusive; it is not the function of this Court to review questions of fact. 20

Moreover, it is well-settled that only errors of law and not of facts are reviewable by this Court in cases brought to it from the Court of Appeals or
under Rule 45 of the Rules of Court.21 This principle applies with greater force herein, because the CA came up with the same factual findings as
those of the RTC.

Even then, heeding petitioner’s plea, we have gone through the pleadings and the evidence presented by the parties to find out if there is any
circumstance that might warrant a reversal of the factual findings. Unfortunately for petitioner, we have found none.

Indeed, a preponderance of evidence has duly established that the disputed house and lot was paid by Rodolfo Reyes, using his salaries and earnings.
By substantial evidence, respondents showed the following facts: 1) that Rodolfo was gainfully employed as comptroller at Warner, Barnes and Co.,
Inc. until his retirement on September 30, 1980, upon which he received a sizeable retirement package;22 2) that at exactly the same time the property
was allegedly purchased,23 he applied for a mortgage loan24 -- intended for "housing"25 -- from the Commonwealth Insurance Company; 3) that he
secured the loan with a real estate mortgage26 over the same property; 4) that he paid the monthly amortizations for the loan27 as well as the semi-
annual premiums28 for a Philam Life insurance policy, which he was required to take as additional security; and 5) that with the proceeds of his life
insurance policy, the balance of the loan was paid to Commonwealth by Philam Life Insurance Company.29

All told, respondents have shown that the property was bought during the marriage of Rodolfo and Lourdes, a fact that gives rise to the presumption that
it is conjugal. More important, they have established that the proceeds of the loan obtained by Rodolfo were used to pay for the property; and that the loan
was, in turn, paid from his salaries and earnings, which were conjugal funds under the Civil Code.

In contrast, petitioner has failed to substantiate either of her claims -- that she was financially capable of buying the house and lot, or that she
actually contributed to the payments therefor.

Indeed, it does not appear that she was gainfully employed at any time after 1961 30 when the property was purchased. Hearsay are the Affidavits31
and the undated Certification32 she had presented to prove that she borrowed money from her siblings and had earnings from a jewelry business.
Respondents had not been given any opportunity to cross-examine the affiants, who had not testified on these matters. Based on the rules of evidence,
the Affidavits and the Certification have to be rejected. In fact, they have no probative value. 33 The CA was also correct in disregarding petitioner’s
allegation that part of the purchase money had come from the sale of a drugstore 34 four years earlier.

Under the circumstances, therefore, the purchase and the subsequent registration of the realty in petitioner’s name was tantamount to a donation by
Rodolfo to Milagros. By express provision of Article 739(1) of the Civil Code, such donation was void, because it was "made between persons
who were guilty of adultery or concubinage at the time of the donation."

The prohibition against donations between spouses35 must likewise apply to donations between persons living together in illicit relations;
otherwise, the latter would be better situated than the former.36 Article 87 of the Family Code now expressly provides thus:

Property 271
 "Art. 87. Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void,
except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The prohibition shall also apply
to persons living together as husband and wife without a valid marriage." (Italics supplied)

Regarding the registration of the property in petitioner’s name, it is enough to stress that a certificate of title under the Torrens system aims to protect
dominion; it cannot be used as an instrument for the deprivation of ownership. 37 It has been held that property is conjugal if acquired in a common-law
relationship during the subsistence of a preexisting legal marriage, even if it is titled in the name of the common-law wife.38 In this case, a constructive
trust is deemed created under Article 1456 of the Civil Code, which we quote:

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

The registration of the property in petitioner’s name was clearly designed to deprive Rodolfo’s legal spouse and compulsory heirs of ownership. By
operation of law, petitioner is deemed to hold the property in trust for them. Therefore, she cannot rely on the registration in repudiation of the trust, for
this case is a well-known exception to the principle of conclusiveness of a certificate of title. 39

Second Issue:

Ruling on Illegitimate Filiation Not Proper

It is petitioner’s alternative submission that her children are entitled to a share in the disputed property, because they were voluntarily acknowledged
by Rodolfo as his children. Claiming that the issue of her children’s illegitimate filiation was duly established in the trial court, she faults the CA for
ruling that the issue was improper in the instant case.

Her position is untenable.

Indeed, it has been ruled that matters relating to the rights of filiation and heirship must be ventilated in the proper probate court in a special proceeding
instituted precisely for the purpose of determining such rights. 40 Sustaining the appellate court in Agapay v. Palang,41 this Court held that the status of
an illegitimate child who claimed to be an heir to a decedent’s estate could not be adjudicated in an ordinary civil action which, as in this case, was for
the recovery of property.

Considerations of due process should have likewise deterred the RTC from ruling on the status of petitioner’s children. It is evident from the pleadings
of the parties that this issue was not presented in either the original42 or the Supplemental Complaint43 for reconveyance of property and damages;
that it was not pleaded and specifically prayed for by petitioner in her Answers 44 thereto; and that it was not traversed by respondents’ Reply to the
Supplemental Complaint.45 Neither did petitioner’s Memorandum,46 which was submitted to the trial court, raise and discuss this issue. In view
thereof, the illegitimate filiation of her children could not have been duly established by the proceedings as required by Article 887 of the Civil
Code.47

Property 272
In view of the foregoing reasons, the CA cannot be faulted for tackling the propriety of the RTC’s ruling on the status of the children of petitioner,
though she did not assign this matter as an error. The general rule -- that only errors assigned may be passed upon by an appellate court – admits of
exceptions. Even unassigned errors may be taken up by such court if the consideration of those errors would be necessary for arriving at a just
decision or for serving the interest of justice.48

Property 273
 The invocation by petitioner of Articles 1949 and 2150 of the Civil Code is also unmeritorious. Clearly, the illegitimate filiation of her children was
not the subject of inquiry and was in fact not duly established in this case. Thus, she could not have shown that respondents had acted in bad faith or
with intent to prejudice her children. These are conditions necessary to show that an act constitutes an abuse of rights under Article 19.51 She also
failed to show that respondents -- in violation of the provisions of Article 21 of the Civil Code -- had acted in a manner contrary to morals, good
customs or public policy.

Moreover, we note that the issue concerning the applicability of Articles 19 and 21 was not raised by petitioner in the trial court or even in the CA.
Hence, she should not be permitted to raise it now.

Basic is the rule that parties may not bring up on appeal issues that have not been raised on trial.52

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution of the Court of Appeals AFFIRMED. Costs against
petitioner.

SO ORDERED.

Property 274
G.R. No. 95748 November 21, 1996

ANASTACIA VDA. DE AVILES, ET AL., petitioners,vs.COURT OF APPEALS and CAMILO AVILES, respondents.PANGANIBAN, J.:

Is the special civil action of Quieting of Title under Rule 64 the proper remedy for settling a boundary dispute? Did the respondent Court 1 commit a
reversible error when it did not declare the respective rights of the parties over the disputed property in said action?

These are the key issues raised in this petition to review on certiorari the Decision 2 of the respondent Court promulgated on September 28, 1990
in CA-G.R. CV No. 18155, which affirmed the decision dated December 29, 1987 of the Regional Trial Court, Branch 38, 3 Lingayen, Pangasinan,
dismissing a complaint for quieting of title.

The Facts

In an action for quieting of title commenced before the aforementioned trial court, the following facts, "stripped of unnecessary verbiage", were
established by the respondent Court: 4

PLAINTIFFS aver that they are the actual possessors of a parcel of land situated in Malawa, Lingayen, Pangasinan, more
particularly described as fishpond, cogonal, unirrigated rice and residential land, bounded on the N by Camilo Aviles; on the E by
Malawa River, on the S by Anastacio Aviles and on the W by Juana and Apolonio Joaquin, with an area of 18,900 square meters
and declared under Tax Declaration No. 31446. This property is the share of their father, Eduardo Aviles and brother of the
defendant, in the estate of their deceased parents, Ireneo Aviles and Anastacia Salazar.

SINCE 1957, Eduardo Aviles was in actual possession of the afore-described property. In fact, the latter mortgaged the same
with the Rural Bank and Philippine National Bank branch in Lingayen. When the property was inspected by a bank
representative, Eduardo Aviles, in the presence of the boundary owners, namely, defendant Camilo Aviles, Anastacio Aviles
and Juana and Apolonio Joaquin(,) pointed to the inspector the existing earthen dikes as the boundary limits of the property and
nobody objected. When the real estate mortgage was foreclosed, the property was sold at public auction but this was redeemed
by plaintiffs' mother and the land was subsequently transferred and declared in her name.

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 ON March 23, 1983, defendant Camilo Aviles asserted a color of title over the northern portion of the property with an area of
approximately 1,200 square meters by constructing a bamboo fence (thereon) and moving the earthen dikes, thereby molesting
and disturbing the peaceful possession of the plaintiffs over said portion.

UPON the other hand, defendant Camilo Aviles admitted the agreement of partition (Exh. "1") executed by him and his brothers,
Anastacio and Eduardo. In accordance therewith, the total area of the property of their parents which they divided is 46,795 square
meters and the area alloted (sic) to Eduardo Aviles is 16,111 square meters more or less, to Anastacio Aviles is 16,214 square
meters more or less, while the area alloted to defendant Camilo Aviles is 14,470 square meters more or less. The respective area(s)
alloted to them was agreed and measured before the execution of the agreement but he was not present when the measurement was
made. Defendant agreed to have a smaller area because his brother Eduardo asked him that he wanted a bigger share because he has
several children to support. The portion in litigation however is part of the share given to him in the agreement of partition. At
present, he is only occupying an area of 12,686 square meters which is smaller than his actual share of 14,470 square meters. Tax
Declarations Nos. 23575, 481 and 379 covering his property from 1958 (Exhs. "7", "8" and "9") show that the area of his property
is 14,470 square meters. The riceland portion of his land is 13,290 square meters, the fishpond portion is 500 square meters and the
residential portion is 680 square meters, or a total of 14,470 square meters. That the topography of his land is not the same, hence,
the height of his pilapils are likewise not the same.

In its decision dated December 29, 1987, the trial court disposed of the case thus: 5

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering the parties to employ the services of a Land Surveyor of the Bureau of Lands, Region I, San Fernando, La Union, to
relocate and determine the extent and the boundary limit of the land of the defendant on its southern side in order that the
fourteen thousand four hundred seventy (14,470) square meters which is the actual area given to the defendant be
determined;

2. Ordering the complaint dismissed for lack of basis and merits;

3. Ordering the plaintiffs to pay the defendant the sum of two thousand (P2,000.00) pesos as attorney's fees and to further
pay the costs of the proceedings;

4. All other claims are denied for lack of basis.

Dissatisfied with the trial court's decision, petitioners appealed to the respondent appellate Court. In its now-assailed Decision, the Court of Appeals
affirmed in part the decision of the trial court, reasoning that a special civil action for quieting of title is not the proper remedy for settling a boundary
dispute, and that petitioners should have instituted an ejectment suit instead. The dispositive portion of the impugned Decision reads as follows:

WHEREFORE, in view of the foregoing, the decision dated December 29, 1987 dismissing the complaint is hereby AFFIRMED
but without necessarily agreeing with the ration d'etre (sic) proferred by the Court a quo. The portion thereof ordering the parties
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to employ the service of a land surveyor to relocate and determine the extent and boundary limit of the land of the defendant on its
southern portion in order that

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 the fourteen thousand four hundred seventy (14,470) square meters which is the actual area given to the defendant be
determined is hereby REVERSED and SET ASIDE. Costs against plaintiffs-appellants.

The Issues

Disagreeing with the respondent Court, petitioners now raise the following issues: 6

a. Whether or not the Hon. Court of Appeals is correct when it opined that the . . . complaint for quieting of title instituted by
the petitioners against private respondent before the court a quo is not the proper remedy but rather, it should be a case for
eejectment (sic).

b. Whether or not the Hon. Court of Appeals is correct in rendering a decision, now subject of the instant petition, without
fully determining the respective rights of the herein parties.

Petitioners deem to be "without basis" the respondent Court's holding that quieting of title is not the proper remedy in the case a quo. They assert that
private respondent is occupying the disputed lot because he claimed it to be part of his share in the partitioned property of his parents, whereas
petitioners are claiming the said lot as part and parcel of the land allotted to Eduardo Aviles, petitioners' predecessor-in-interest. They contend that
they have been occupying the aforesaid land as heirs of Eduardo Aviles in "open, actual, continuous, peaceful, public and adversed (sic) (possession)
against the whole world." Further, they argue that, if indeed the disputed lot belonged to private respondent, why then did it take him "almost 26 long
years from June 27, 1957 or until March 27, 1983" to assert his ownership; why did he not "assert his ownership" over the property when Eduardo
Aviles was still alive; and why did he not take any "action" when the mortgage over the disputed property was foreclosed? 7

Private respondent corrects the petitioners' claim in regard to the date when he had the bamboo fence constructed. He alleges that the petitioners
maliciously concocted the story that private respondent had purportedly encroached some 1,200 meters on their property when, in fact, "he was merely
repairing the old bamboo fence existing where it had always been since 1957." 8

The Court's Ruling

First Issue: Quieting of Title Not Proper Remedy For Settling Boundary Dispute

We agree with respondent Court. The facts presented unmistakably constitute a clear case of boundary dispute, which is not cognizable in a
special civil action to quiet title.

Quieting of title is a common law remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real property. 9

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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

Property 279
 unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon a title to real property or any interest therein.

In fine, to avail of the remedy of quieting of title, a plaintiff must show that there is an instrument, record, claim, encumbrance or proceeding which
constitutes or casts a cloud, doubt, question or shadow upon the owner's title to or interest in real property. Thus, petitioners have wholly
misapprehended the import of the foregoing rule by claiming that respondent Court erred in holding that there was "no . . . evidence of any muniment
of title, proceeding, written contract, . . .", and that there were, as a matter of fact, two such contracts, viz., (i) the Agreement of Partition executed by
private respondent and his brothers (including the petitioners' father and predecessor-in-interest), in which their respective shares in the inherited
property were agreed upon, and (ii) the Deed of Sale evidencing the redemption by petitioner Anastacia Vda. de Aviles of the subject property in a
foreclosure sale. However, these documents in no way constitute a cloud or cast a doubt upon the title of petitioners. Rather, the uncertainty arises
from the parties' failure to situate and fix the boundary between their respective properties.

As correctly held by the respondent Court, "(i)n fact, both plaintiffs and defendant admitted the existence of the agreement of partition dated June 8,
1957 and in accordance therewith, a fixed area was allotted (sic) to them and that the only controversy is whether these lands were properly measured.
There is no adverse claim by the defendant "which is apparently valid, but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable" and
which constitutes a cloud thereon.

Corollarily, and equally as clear, the construction of the bamboo fence enclosing the disputed property and the moving of earthen dikes are not the
"clouds" or "doubts" which can be removed in an action for quieting of title.

An action to quiet title or to remove cloud may not be brought for the purpose of settling a boundary dispute. The precedent on this matter cited by
the respondent Court in its Decision is herewith reproduced in full: 10

In Ashurst v. McKenzie (1890) 92 Ala. 484, 9 So. 262, where the complainants' predecessor in title and the defendant had, during
their occupancy, destroyed and obliterated the boundary line between their adjoining tracts of land, and there was now a
dispute as to its location, it was held that a bill did not lie to remove a cloud on the complainants' title. The court said: "There is
no allegation or evidence of any muniment of title, proceeding, written contract, or paper showing any color of title in the
defendant, which could cast a shadow on the title of complainants to any part of the land; there is no overlapping of description
in the muniments held by either. The land of complainants and defendant join. The line which separates them is in dispute and is
to be determined by evidence aliunde. Each admits that the other has title up to his line wherever it may be, and the title papers
of neither fix its precise

location. So that there is no paper the existence of which clouds the title of either party, and nothing could be delivered up and
canceled under the decree of the court undertaking to remove a cloud.

Another similarly instructive precedent reported in the same reference is also quoted below:

In Kilgannon v. Jenkinson (1883) 51 Mich. 240, 16 N.W. 390, the court, dismissing a bill to quiet title, said: "The fundamental
dispute is about the correct position of the

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 line between lots 3 and 7. The case is not one where a complainant in possession of a specific piece of land, and a defendant out
of possession, but claiming some right or title, are contending as to which one has the better right to that same parcel; but it is a
case where the titles are not opposed, and the basis and existence of all right and claim depend simply upon where the original
line runs. When that is once settled, there can remain no semblance of claim or cloud to be passed on, and the issue on that
particular question is one regularly triable at law. . . 11

Second Issue: Should Partie's Rights Have Been Declared?

Petitioners also chide the respondent Court (and the trial court) for not declaring the respective rights of the parties with respect to the land in question,
arguing that "when one is disturbed in any form in his rights of property over an immovable by the unfounded claims of others, he has the right to ask
from the competent courts: . . . that their respective rights be determined . . . ". As support for their thesis, petitioners cite the ancient case of Bautista
vs.

Exconde. 12

Rule 64 of the Rules of Court, dealing with actions for declaratory relief, specifies in Section 1 thereof the grounds, conditions precedent or requisites
for bringing such petitions. 13 This Court has previously held that —

Under this rule, only a person who is interested "under a deed, will, contract or other written instrument, and whose rights are
affected by a statute or ordinance, may bring an action to determine any question of construction or validity arising under the
instrument or statute and for a declaration of his rights or duties thereunder." This means that the subject matter must refer to a
deed, will, contract or other written instrument, or to a statute or ordinance, to warrant declaratory relief. Any other matter not
mentioned therein is deemed excluded. This is under the principle

of expressio unius est exclussio alterius. 14

Inasmuch as the enumeration of the causes, grounds or conditions precedent in the first paragraph of said Sec. 1 is exclusive, by parity of rea-soning, it
follows that similar remedies provided for in the second paragraph of the same section would also be marked with the same exclusivity as to bar any
other cause possibly clouding one's title as a ground for such petitions. Thus, even

assuming arguendo that the action to quiet title had been brought under Rule 64, the same would still not have prospered, the subject matter thereof
not referring to "a deed, will, contract or other written instrument, or to a statute or ordinance," but to a boundary dispute, and therefore not
warranting the grant of declaratory relief.

From another perspective, we hold that the trial court (and likewise the respondent Court) cannot, in an action for quieting of title, order the
determination of the boundaries of the claimed property, as that would be tantamount to awarding to one or some of the parties the disputed property in
an action where the sole issue is limited to whether the instrument, record, claim, encumbrance or proceeding involved constitutes a cloud upon the
petitioners' interest or title in and to said property. Such determination of boundaries is appropriate in adversarial proceedings where possession or
ownership may properly be considered and where evidence aliunde, other than the "instrument, record, claim, encumbrance or proceeding" itself, may
be introduced. An action for forcible entry, whenever warranted by the period prescribed in Rule 70, or for recovery of possession de facto, also within
the prescribed period, may be availed of by the petitioners, in which proceeding the boundary dispute may be fully threshed out.

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WHEREFORE, in view of the foregoing considerations, the instant petition is hereby DENIED and the Decision appealed from is AFFIRMED.
Costs against petitioners.

SO ORDERED.

Property 282
G.R. No. L-36359 January 31, 1974

FELIX BUCTON AND NICANORA GABAR BUCTON, petitioners,vs.ZOSIMO GABAR, JOSEFINA LLAMOSO GABAR AND THE HONORABLE COURT OF

APPEALS, respondents.Rizalindo V. Diaz for petitioners. Alfredo Ber. Pallarca for respondents.ANTONIO, J.:

Appeal from the decision of the Court of Appeals in CA-G.R. No. 49091-R, dated January 10, 1973, reversing the judgment of the trial court
and dismissing the complaint filed by herein petitioners, and from said appellate court's resolution, dated February 5, 1973, denying
petitioners' motion for reconsideration.

The facts of the case, as found by the trial court, which have not been disturbed by respondent Court of Appeals, are as follows:

Plaintiff Nicanora Gabar Bucton (wife of her co-plaintiff Felix Bucton) is the sister of defendant Zosimo Gabar, husband of
his co-defendant Josefina Llamoso Gabar.

This action for specific performance prays, inter-alia, that defendants-spouses be ordered to execute in favor of plaintiffs a
deed of sale of the western half of a parcel of land having an area of 728 sq. m. covered by TCT No. II (from OCT No. 6337) of
the office of the Register of Deeds of Misamis Oriental.

Plaintiffs' evidence tends to show that sometime in 1946 defendant Josefina Llamoso Gabar bought the above-mentioned
land from the spouses Villarin on installment basis, to wit, P500 down, the balance payable in installments.

Josefina entered into a verbal agreement with her sister-in-law, plaintiff Nicanora Gabar Bucton, that the latter would pay
one-half of the price (P3,000) and would then own one-half of the land. Pursuant to this understanding Nicanora on January
19, 1946 gave her sister-in-law Josefina the initial amount of P1,000, for which the latter signed a receipt marked as Exhibit A.

Subsequently, on May 2, 1948 Nicanora gave Josefina P400. She later signed a receipt marked as Exhibit B.

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On July 30, 1951 plaintiffs gave defendants P1,000 in concept of loan, for which defendant Zosimo Gabar signed a
receipt marked as Exhibit E.

Meanwhile, after Josefina had received in January, 1946 the initial amount of P1,000 as above stated, plaintiffs took
possession of the portion of the land indicated to them by defendants and built a modest nipa house therein. About two
years later plaintiffs built behind the nipa house another house for rent.

And, subsequently, plaintiffs demolished the nipa house and in its place constructed a house of strong materials, with three
apartments in the lower portion for rental purposes. Plaintiffs occupied the upper portion of this house as their residence,
until July, 1969 when they moved to another house, converting and leasing the upper portion as a dormitory.

In January, 1947 the spouses Villarin executed the deed of sale of the land abovementioned in favor of defendant Josefina
Llamoso Gabar, Exhibit I, to whom was issued on June 20, 1947 TCT No. II, cancelling OCT No. 6337.

Exhibit D.

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

Plaintiffs continued enjoying their portion of the land, planting fruit trees and receiving the rentals of their buildings. In 1953,
with the consent of defendants (who were living on their portion), plaintiffs had the entire land surveyed and subdivided
preparatory to obtaining their separate title to their portion. After the survey and the planting of the concrete monuments
defendants erected a fence from point 2 to point 4 of the plan, Exhibit I, which is the dividing line between the portion
pertaining to defendants, Exhibit I-1, and that pertaining to plaintiffs, Exhibit I-2.

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

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

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

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Received from Mrs. Nicanora Gabar the sum of one thousand (P1,000) pesos, victory currency, as part payment of the one
thousand five hundred (P1,500.00)

Property 285
 pesos, which sum is one-half of the purchase value of Lot No. 337, under Torrens Certificate of Title No. 6337, sold to me by
Mrs. Carmen Roa Villarin.

"(Sgd.) Josefina Ll. Gabar".

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

WHEREFORE, judgment is hereby rendered for plaintiffs:

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

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

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

SO ORDERED.

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

Appellees' alleged right of action was based on the receipt (Exh. A) which was executed way back on January 19, 1946. An
action arising from a written contract does not prescribe until after the lapse of ten (10) years from the date of action
accrued. This period of ten (10) years is expressly provided for in Article 1144 of the Civil Code.

From January 19, 1946 to February 15, 1968, when the complaint was filed in this case, twenty-two (22) years and twenty-
six (26) days had elapsed.

Property 286
Therefore, the plaintiffs' action to enforce the alleged written contract (Exh. A) was not brought within the prescriptive
period of ten (10) years from the time the cause of action accrued.

The land in question is admittedly covered by a torrens title in the name of Josefina Llamoso Gabar so that the alleged
possession of the land by the plaintiffs since 1947 is immaterial because ownership over registered realty may not be
acquired by prescription or adverse possession (Section 40 of Act 496).

Property 287
 It is not without reluctance that in this case we are constrained to sustain the defense of prescription, for we think that
plaintiffs really paid for a portion of the lot in question pursuant to their agreement with the defendants that they would
then own one-half of the land. But we cannot apply ethical principles in lieu of express statutory provisions. It is by law
provided that:

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

1. Upon a written contract;

2. Upon an obligation created by law;

3. Upon a judgment."

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

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

We hold that the present appeal is meritorious.

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

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2. The error of respondent Court of Appeals in holding that petitioners' right of action had already prescribed stems from its belief that the
action of petitioners is based on the receipt Exh. "A" which was executed way back on January 19, 1946, and, therefore, in the view of said
appellate court, since petitioners' action was filed on February 15, 1968, or after the

Property 289
lapse of twenty-two (22) years and twenty-six (26) days from, the date of said document, the same is already barred according to the provisions
of Article 1144 of the New Civil Code. The aforecited document (Exh. "A"), as well as the other documents of similar import (Exh. "B" and Exh.
"E"), are the receipts issued by private respondents to petitioners, evidencing payments by the latter of the purchase price of one-half of the lot.

The real and ultimate basis of petitioners' action is their ownership of one-half of the lot coupled with their possession thereof, which entitles
them to a conveyance of the property. In Sapto, et al. v. Fabiana,3 this Court, speaking thru Mr. Justice J.B.L. Reyes, explained that, under the
circumstances no enforcement of the contract is needed, since the delivery of possession of the land sold had consummated the sale and transferred
title to the purchaser, and that, actually, the action for conveyance is one to quiet title, i.e., to remove the cloud upon the appellee's ownership by
the refusal of the appellants to recognize the sale made by their predecessors. We held therein that "... it is an established rule of American
jurisprudence (made applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to property in the possession of the
plaintiff are imprescriptible (44 Am. Jur. p. 47; Cooper vs. Rhea, 20 L.R.A. 930; Inland Empire Land Co. vs.

Grant County, 138 Wash. 439, 245 Pac. 14).

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse
claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners
thereof, the reason for this rule being that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse
claim, he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and its effect on
his title, or to assert any superior equity in his favor. He may wait until his possession is disturbed or his title in attacked before
taking steps to vindicate his right. But the rule that the statute of limitations is not available as a defense to an action to remove a
cloud from title can only be invoked by a complainant when he is in possession. One who claims property which is in the
possession of another must, it seems, invoke remedy within the statutory period. (44 Am. Jur., p. 47)

The doctrine was reiterated recently in Gallar v. Husain, et al.,4 where We ruled that by the delivery of the possession of the land, the sale was
consummated and title was transferred to the appellee, that the action is actually not for specific performance, since all it seeks is to quiet title, to
remove the cloud cast upon appellee's ownership as a result of appellant's refusal to recognize the sale made by his predecessor, and that as plaintiff-
appellee is in possession of the land, the action is imprescriptible. Considering that the foregoing circumstances obtain in the present case, We hold that
petitioners' action has not prescribed.

WHEREFORE, the decision and resolution of respondent Court of Appeals appealed from are hereby reversed, and the judgment of the Court of
First Instance of Misamis Oriental, Branch IV, in its Civil Case No. 3004, is revived. Costs against private respondents.

Property 290
G.R. No. 154415. July 28, 2005

GASPAR CALACALA, BALTAZAR CALACALA, MELCHOR CALACALA, SOLOMON CALACALA, FELICIDAD CALACALA, PETRONILA CALACALA and
SALOMECALACALA, Petitioners, vs.REPUBLIC OF THE PHILIPPINES, represented by the Solicitor General, and SHERIFF JUAN C.
MARQUEZ,Respondents.D E C I S I O N GARCIA, J.:

In this appeal by way of a petition for review on certiorari under Rule 45 of the Rules of Court, petitioners urge us to annul and set aside the
resolution dated 31 October 2001 and the order dated 2 July 2002 of the Regional Trial Court at Rosales, Pangasinan which respectively dismissed
petitioners’ complaint in Civil Case No. 1239-R and denied their motion for reconsideration.

The material facts are not at all disputed:

The spouses Camilo Calacala and Conchita Calacala, predecessors-in-interest of the herein petitioners, are the registered owners of a parcel of
land situated at Barangay Balincanaway, Rosales, Pangasinan and covered by Transfer Certificate of Title No. T-21204 of the Registry of Deeds
of Pangasinan.

To secure the provisional release of an accused in a criminal case then pending before the then Court of First Instance (CFI) of Pangasinan, the
spouses offered their aforementioned parcel of land as a property bond in said case. For failure of the accused to appear at his scheduled arraignment
on 4 November 1981, the CFI ordered the bond forfeited in favor of the government, and, following the bondman’s failure to produce in court the
1
body of the accused, rendered judgment against the bond in the amount of ₱3,500.00. Thereafter, the court issued a Writ of Execution directing the
provincial sheriff to effect a levy on the subject parcel of land and to sell the same at a public auction to satisfy the amount of the bond. In compliance
2
with the writ, the deputy provincial sheriff issued on 26 July 1982 a Notice of Levy addressed to the Register of Deeds of Pangasinan who, on 19
August 1982, caused the annotation thereof on TCT No. T-21204 as Entry No. 83188.

Not long thereafter, a public auction of the subject parcel of land was held on 24 September 1982, at which respondent Republic submitted its bid for
3
₱3,500, which is the amount of the judgment on the bond. Hence, on that same day, a Sheriff’s Certificate of Sale was issued in favor of the Republic as
the winning bidder.

On 5 October 1982, the same Certificate of Sale was registered and annotated on TCT No. T-21204 as Entry No. 83793, thereby giving the spouses
Calacala a period of one (1) year therefrom within which to redeem their property. Unfortunately, they never did up to the time of their respective
deaths on 13 January 1988 and 8 January 1994.

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Claiming ownership of the same land as legal heirs of the deceased spouses, petitioners filed with the Regional Trial Court at Rosales, Pangasinan a
4
complaint for Quieting of Title and Cancellation of Encumbrance on TCT No. T-21204 against respondents Republic and Sheriff Juan C. Marquez.
In their complaint, docketed as Civil Case No. 1239-R and raffled to Branch 53 of the court, petitioners prayed, inter alia, for the cancellation of
Entries No. 83188 and 83793 on TCT No. T- 21204 or the declaration of said entries as null and void.

5
To the complaint, respondent Republic interposed a Motion to Dismiss grounded on the (1) complaint’s failure to state a cause of action and
(2) prescription of petitioners’ right to redeem.

6
In their Opposition, petitioners contend that when respondent Republic moved to dismiss the complaint for failure to state a cause of action, it
thereby hypothetically admitted all the allegations therein, specifically the averment that despite the lapse of nineteen (19) years, respondent did not
secure the necessary Certificate of Final Sale and Writ of Possession and failed to execute an Affidavit of Consolidation of Ownership. Petitioners
thus submit that the Republic’s rights over the land in question had either prescribed, been abandoned or waived. They add that by filing a motion to
dismiss, respondent Republic likewise admitted the allegation in the same complaint that petitioners and their predecessors-in-interest have been in
continuous possession of the subject land and paying the realty taxes thereon.

7
In the herein assailed resolution dated 31 October 2001, the trial court granted the Republic’s motion to dismiss and accordingly dismissed
8
petitioners’ complaint. Petitioners moved for a reconsideration but their motion was denied by the same court in its equally challenged order of 2
July 2002.

Hence, petitioners’ present recourse, it being their contentions that - I.

THE INSTANT COMPLAINT FOR QUIETING OF TITLE AND CANCELLATION OF ENCUMBRANCE ON TCT NO. T-21204, FILED
BEFORE THE TRIAL COURT, RGIONAL [sic] TRIAL COURT, BRANCH 53, ROSALES, PANGASINAN WAS THE PROPER
REMEDY.

II.

THE COMPLAINT STATES SUFFICIENT CAUSE OF ACTION. III.

THE CASE FOR QUIETING OF TITLE HAS NOT PRESCRIBED. IV.

AND THE RESPONDENT REPUBLIC OF THE PHILIPPINES HAS NOT PERFECTED ITS TITLE TO THE LAND IN QUESTION.

In the main, it is petitioners’ submission that their complaint a quo sufficiently states a cause of action because they are still the owners of the subject
parcel of land despite their failure to redeem it within the 1-year redemption period. They premise their argument on the Republic’s failure to secure
the Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership and obtain a writ of possession over the same property within ten
(10) years from the registration of the Certificate of

Property 292
Sale on 5 October 1982. Prescinding therefrom, they thus argue that the Republic’s right over the property in question has already prescribed or has
been abandoned and waived, citing, in support thereof, Article 1142 of the Civil Code. In short, it is petitioners’ thesis that respondent Republic
failed to perfect its title.

On the other hand, it is respondent’s posture that its rights and title as owner of the same property are already perfected by the mere failure of
petitioners and/or their predecessors-in-interest to redeem the same within one (1) year from the registration/annotation of the Sheriff’s Certificate
of Sale on TCT No. T-21204, in accordance with Section 33, Rule 39 of the 1997 Rules of Civil Procedure.

As we see it, the only question which commends itself for our resolution is whether the trial court’s dismissal of petitioners’ complaint for Quieting of
Title was proper. It thus behooves us to determine if, in the first place, petitioners have a cause of action in their complaint.

We rule for respondent Republic.

To begin with, it bears emphasis that an action for quieting of title is essentially a common law remedy grounded on equity. As we held in
9
Baricuatro, Jr. vs. CA:

Regarding the nature of the action filed before the trial court, quieting of title is a common law remedy for the removal of any cloud upon or doubt or
uncertainty with respect to title to real property. Originating in equity jurisprudence, its purpose is to secure ‘x x x an adjudication that a claim of title
to or an interest in property, adverse to that of the complainant, is invalid, so that the complainant and those claiming under him may be forever
afterward free from any danger of hostile claim.’ In an action for quieting of title, the competent court is tasked to determine the respective rights of
the complainant and other claimants, ‘x x x not only to place things in their proper place, to make the one who has no rights to said immovable
respect and not disturb the other, but also for the benefit of both, so that he who has the right would see every cloud of doubt over the property
dissipated, and he could afterwards without fear introduce the improvements he may desire, to use, and even to abuse the property as he deems best
xxx (Italics supplied).

Under Article 476 of the New Civil Code, the remedy may be availed of only when, by reason of any instrument, record, claim, encumbrance or
proceeding, which appears valid but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is thereby casts on the complainant’s title to
real property or any interest therein. The codal provision reads:

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 the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.

In turn, Article 477 of the same Code identifies the party who may bring an action to quiet title, thus:

Property 293
Article 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the subject-matter of the action. He need not be
in possession of said property.

Property 294
It can thus be seen that for an action for quieting of title to prosper, the plaintiff must first have a legal, or, at least, an equitable title on the real
10
property subject of the action and that the alleged cloud on his title must be shown to be in fact invalid. So it is that in Robles, et al. vs. CA, we
ruled:

It is essential for the plaintiff or complainant to have a legal title or an equitable title to or interest in the real property which is the subject matter of
the action. Also, the deed, claim, encumbrance or proceeding that is being alleged as a cloud on plaintiff’s title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity or legal efficacy.

Verily, for an action to quiet title to prosper, two (2) indispensable requisites must concur, namely:

(1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima

facie appearance of validity or legal efficacy.

Unfortunately, the foregoing requisites are wanting in this case.

To start with, petitioners base their claim of legal title not on the strength of any independent writing in their favor but simply and solely on
respondent Republic’s failure to secure the Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership and obtain a writ of
possession over the property in dispute within ten (10) years from the registration of the Certificate of Sale.

Petitioners’ reliance on the foregoing shortcomings or inactions of respondent Republic cannot stand.

For one, it bears stressing that petitioners’ predecessors-in-interest lost whatever right they had over land in question from the very moment they failed
to redeem it during the 1-year period of redemption. Certainly, the Republic’s failure to execute the acts referred to by the petitioners within ten (10)
years from the registration of the Certificate of Sale cannot, in any way, operate to restore whatever rights petitioners’ predecessors-in-interest had over
the same. For sure, petitioners have yet to cite any provision of law or rule of jurisprudence, and we are not aware of any, to the effect that the failure
of a buyer in a foreclosure sale to secure a Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership and obtain a writ of possession
over the property thus acquired, within ten (10) years from the registration of the Certificate of Sale will operate to bring ownership back to him whose
property has been previously foreclosed and sold. As correctly observed by the trial court, the Republic’s failure to do anything within ten (10) years or
more following the registration of the Sheriff’s Certificate of Sale cannot give rise to a presumption that it has thereby waived or abandoned its right of
ownership or that it has prescribed, "for prescription does not lie against the government", nor could it "be bound or estopped by the negligence or
mistakes of its officials and employees".

11
Quite the contrary, Section 33, Rule 39 of the 1997 Rules of Civil Procedure explicitly provides that "[u]pon the expiration of the right of
redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the
property as of the time of the levy".

Concededly, the 1997 Rules of Civil Procedure was yet inexistent when the facts of this case transpired. Even then, the application thereof
12
to this case is justified by our pronouncement in Lascano vs. Universal Steel Smelting Co., Inc., et al., to wit:

Property 295
Procedural laws are construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that
sense and to that extent. As a general rule, the

Property 296
retroactive application of procedural laws cannot be considered violative of any personal rights because no vested right may attach to nor arise
therefrom.

Moreover, with the rule that the expiration of the 1-year redemption period forecloses the obligor’s right to redeem and that the sale thereby becomes
absolute, the issuance thereafter of a final deed of sale is at best a mere formality and mere confirmation of the title that is already vested in the
13
purchaser. As this Court has said in Manuel vs. Philippine National Bank, et al.:

Note must be taken of the fact that under the Rules of Court the expiration of that one-year period forecloses the owner’s right to redeem, thus
making the sheriff’s sale absolute. The issuance thereafter of a final deed of sale becomes a mere formality, an act merely confirmatory of the
title that is already in the purchaser and constituting official evidence of that fact. (Emphasis supplied)

With the reality that petitioners are not holders of any legal title over the property subject of this case and are bereft of any equitable claim thereon, the
very first requisite of an action to quiet

title, i.e., that the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject matter of the action, is
miserably wanting in this case.

For another, and worse, petitioners never put in issue, as in fact they admit in their pleadings, the validity of the Sheriff’s Certificate of Sale duly
registered on 5 October 1982. On this score, the second requisite of an action to quiet title, namely, that the deed, claim, encumbrance or proceeding
alleged to cast cloud on a plaintiff's title is in fact invalid or inoperative despite its prima

facie appearance of validity or legal efficacy, is likewise absent herein.

WHEREFORE, the instant petition is DENIED and the assailed resolution and order of the trial court AFFIRMED.

Costs against petitioners.

SO ORDERED.

Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

11
"SECTION 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. – If no redemption be
made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of
the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has been made, and notice thereof given, and
the time for redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor

Property 297
shall have the entire period of one (1) year from the date of the registration of sale to redeem the property. The deed shall be executed by the
officer making the sale or by his successor in office, and in the latter case shall have the same validity as though the officer making the sale
had continued in office and executed it.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title,
interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the
purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor."
(Emphasis supplied).

Property 298
 [ GR No. 104813, Oct 21, 1993 ] HEIRS OF JOSE OLVIGA v.

CA + DECISION

G.R. No. 104813

GRIÑO-AQUINO, J.:

This is a petition to review the decision of the Court of Appeals in CA-G.R. CV No. 30542, affirming in toto the decision of the Regional
Trial Court of Calauag, Quezon ordering the

defendants, heirs of Jose Olviga (petitioners herein), to reconvey the land in dispute to the plaintiffs, heirs of Cornelia Glor (now private respondents),
and to pay attorney's fees and the costs of suit.

This case started as an action (Civil Case No. C883) filed in the Regional Trial Court of Calauag, Quezon by Angelita Glor and her children against the
heirs of Jose Olviga for reconveyance of a parcel of land, measuring 54,406 square meters (5.44 has), more or less, known as Lot 13, Pls-84 of the
Guinayangan Public Land Subdivision.

The court, after due trial, rendered judgment in favor of the private respondents, the dispositive portion of which reads:

"WHEREFORE, and considering the foregoing judgment is hereby rendered in favor of the PLAINTIFFS and against the defendants as heirs of Jose
Olviga to reconvey the land in dispute to the plaintiffs as heirs of Cornelio Glor Sr.; condemning the defendants jointly and severally to pay the
plaintiffs attorneys fees of P5,000.00 plus the costs of the suit. The counterclaim interposed by the defendants is dismissed." (p. 12, Rollo.)

The judgment was appealed to the Court of Appeals by the defendants who raised several factual issues regarding possession and fraud, as well as
legal issues involving prescription and purchaser in good faith, but the appellate court dismissed the appeal and affirmed in toto the decision of the
trial court.

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.

Property 299
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 onLot 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 pur- chasers 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.

From said findings and conclusions, the appellate court in its decision dated January 13, 1992, resolved the issues presented, thus:

"x x x whether or not plaintiffs' action is really one for quieting of title that does not prescribe; or assuming that their demand for the reconveyance of
the lot in question prescribes in ten years, being based on an implied trust, whether their cause of action should be counted from the date of the issuance
of the late Jose Olviga's title over said lot in 1967 and has, therefore, already prescribed, or whether the prescriptive period should be counted from the
date plaintiffs acquired knowledge of said title sometime in 1988.

"The first question should be answered in the affirmative. x x x. "xxx xxx xxx.

"But even assuming that plaintiffs' action for reconveyance, being based on an implied or constructive trust, prescribes in ten years, the lower court
again correctly ruled that their cause of action should be considered to have accrued not from the date of registration of the title of Jose Olviga,
defendants' predecessor-in-interest, over the lot in question in 1967,

but onlyfrom the time plaintiffs learned of such title in 1988. x x x. "xxx xxx xxx.

Property 300
"All in all, therefore, the court a quo did not err in holding that plaintiffs' action against defendants- appellants for the reconveyance of the lot in
question filed on April 10, 1989, or in less than a year after they learned of the issuance of a title over said lot to Jose Olviga, predecessor-in-
interest of defendants, has not yet prescribed.

"WHEREFORE, the decision appealed from herein is AFFIRMED in toto, with costs against defendants-appellants." (pp. 48-51, Rollo.)

Petitioners now seek a review of the above decision. They allege that: (1) the present action has already prescribed; (2) the Court of Appeals erred
when it ruled that the private respondents' cause of action accrued not in 1967 but in 1988; (3) that the Court of Appeals erred when it failed to
consider that private respondents as mere homestead transferees cannot maintain an action for reconveyance; (4) that the Faja and Caragay-Layno
cases have no bearing and direct application to the case at bar; and (5) that private respondents have not proven by preponderance of evidence their
ownership and possession of the disputed land.

With regard to the issue of prescription, 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
theproperty, since if a person claiming to be the owner thereof is in actual possession of the property,

the right to seek reconveyance, which ineffectseeks to quiet titleto the property, does not prescribe.

In Sapto vs. Fabiana, 103 Phil. 683, 686-687, appellants' predecessors sold to appellees in 1931 a parcel of land. The sale was approved by the
Provincial Governor of Davao but was never registered. Possession of the land was, however, transferred to Fabiana and the latter has been in
possession thereof from 1931 up to the present. The widow and children of Samuel Sapto filed an action to recover the land. This Court in affirming
the validity of the sale in favor of appellee (Fabiana) held:

"No enforcement of the contract is in fact needed, since the delivery of possession of the land sold had consummated the sale and transferred title to
the purchaser, registration of the contract not being indispensable as between the parties. Actually the action for conveyance was one to quiet title,
i.e., to remove the cloud cast upon appellee's ownership by the refusal of the appellants to recognize the sale made by their predecessors. This action
accrued only when appellants initiated their suit to recover the land in 1954. Furthermore, it is an established rule of American jurisprudence (made
applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to property in the possession of the plaintiff are
imprescriptible (44 Am. Jur. p. 47; Cooper vs. Rhea, 39 L.R.A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14)."

In Faja vs. Court of Appeals, 75 SCRA 441, 446, this Court likewise reiterated the ruling that:

"x x x. There is settled jurisprudence that one who is in actual possession of a piece of land claiming to be owner thereof may wait until his possession
is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own
title, which right can be claimed only by one who is in possession. No better situation can be conceived at the moment for Us to apply this rule on
equity than that of herein petitioners whose mother, Felipa Faja, was in possession of the litigated property for no less than 30 years and was suddenly
confronted with a claim that the land she had been occupying and cultivating all these years, was titled in the name of a third person. We hold that in
such a situation the right to quiet title to the property, to seek its reconveyance and annul any certificate of title covering it, accrued only from the time
the one in possession was made aware of a claim adverse to his own, and it is only then that the statutory period of prescription commences to run
against such possessor."

Property 301
In the case at bar, private respondents and their predecessors-in-interest were in actual possession of the property since 1950. Their undisturbed
possession gave them the continuing right to seek the aid of a court of equity to determine the nature of the adverse claim of petitioners, who in 1988
disturbed their possession.

The other issues raised in the petition are factual.

The Court of Appeals and the trial court correctly based their findings of fact on the testimonies of the parties and their witnessess. It can be said
therefore that those conclusions are based on substantial evidence. No cogent reason exists to disturb them. As reiterated in a long line of decisions, it is
beyond the province of this Court to make its own findings of facts different from those of the trial court as affirmed by the Court of Appeals (Vda. de
Cailles vs. Mayuga 170 SCRA 347; New Owners/Management of TML Garments, Inc. vs. Zaragosa, 170 SCRA 563). In petitions for review of
decisions of the Court of Appeals, the jurisdiction of this Court is confined to a review of questions of law, except when the findings of fact are not
supported by the records or are so glaringly erroneous as to constitute a serious abuse of discretion (Lim vs. Court of Appeals, 158 SCRA 307; Samson
vs. CA, 141 SCRA 194; Republic vs. IAC, 144 SCRA 705). The case at bar does not fall under the exceptions.

WHEREFORE, finding no reversible error in the decision of the Court of Appeals, the petition for review is DENIED, with costs against
thepetitioners.

SO ORDERED.

Property 302
 HEIRS OF DOMINGO VALIENTES, G.R. No. 157852
Petitioners,

Present:

- versus - CORONA, C.J.,

Chairperson, VELASCO,

JR.,
HON. REINERIO (ABRAHAM) B. RAMAS,
Acting Presiding Judge, RTC, Branch 29, 9th LEONARDO-DE CASTRO,
Judicial Region, San Miguel, Zamboanga del Sur
and VILMA V. MINOR, DEL CASTILLO, and PEREZ,
Respondents.
JJ.

Promulgated:

December 15, 2010

x -------------------------------------------------------------------------------------------------------- x

DECISION

LEONARDO-DE CASTRO, J.:

Property 303
 This is a Petition for Certiorari assailing the Decision[1] of the Court of Appeals dated August 16, 2002 and the subsequent Resolution denying
reconsideration dated January 16, 2003 in CA-

G.R. SP No. 68501.

Petitioners claim that they are the heirs of Domingo Valientes who, before his death, was the owner of a parcel of land in Gabay, Margosatubig,
Zamboanga del Sur then covered by Original Certificate of Title (OCT) No. P-18,208 of the Register of Deeds of Zamboanga del Sur. In 1939, Domingo
Valientes mortgaged the subject property to secure his loan to the spouses Leon Belen and Brigida Sescon (spouses Belen). In the 1950s, the Valientes
family purportedly attempted, but failed, to retrieve the subject property from the spouses Belen. Through an allegedly forged document captioned VENTA
DEFINITIVA purporting to be a deed of sale of the subject property between Domingo Valientes and the spouses Belen, the latter obtained Transfer
Certificate of Title (TCT) No. T-5,427 in their name. On February 28, 1970, Maria Valientes Bucoy and Vicente Valientes, legitimate children of the late
Domingo Valientes, had their Affidavit of Adverse Claim[2] duly entered in the Memorandum of Encumbrances at the back of TCT No. T-5,427. Upon
the death of the spouses Belen, their surviving heirs Brigida Sescon Belen and Maria Lina Belen executed an extra- judicial settlement with partition and
sale in favor of private respondent Vilma Valencia-Minor, the present possessor of the subject property.

On June 20, 1979, herein private respondent Minor filed with the then Court of First Instance of Pagadian City a PETITION FOR
CANCELLATION OF MEMORANDUM OF ENCUMBRANCE APPEARING IN TCT NO. T-5,427 OF THE REGISTRY OF DEEDS OF
ZAMBOANGA DEL SUR,

which was docketed as SPL Case No. 1861.[3] On July 31, 2000, the Regional Trial Court (RTC) granted Minors prayer to allow the Register of Deeds
to have the title to the subject property transferred to her name.

In the meantime, on August 20, 1998, petitioners filed a Complaint before the RTC of San Miguel, Zamboanga del Sur for the
CANCELLATION OF TRANSFER CERTIFICATE OF TITLE NO. T-5,427, RECONVEYANCE, WITH ACCOUNTING, RECEIVERSHIP AND
APPLICATION FOR A WRIT OF PRELIMINARY PROHIBITORY INJUNCTION PLUS DAMAGES. The Complaint was

docketed as Civil Case No. 98-021.[4]

Property 304
 Private respondent Minor filed an Omnibus Motion to Dismiss Civil Case No. 98-021 on the grounds of forum shopping and litis pendentia.
On August 3, 2000, the RTC issued an order in open court ruling that forum shopping does not apply. On September 22, 2000, private respondent Minor
filed a Motion for Reconsideration[5]of the August 3, 2000 Order. On May 7, 2001, the RTC issued an Order granting the Motion for Reconsideration by
dismissing Civil Case No. 98-021 on the ground of forum shopping.[6] Petitioners filed a Motion for Reconsideration [7] on May 30, 2001, but the same
was denied by the RTC in its Order[8] dated September 18, 2001.

On November 12, 2001, petitioners filed with the Court of Appeals a Petition for Certiorari[9] assailing the RTC Orders dated
May 7, 2001 and September 18, 2001.Petitioners raised the sole issue of whether the trial court was correct in finding that Civil Case No. 98-021 constitutes
forum shopping, litis pendentia or res judicata with SPL Case No. 186. The Petition was docketed as CA-G.R. SP No. 68501.

The Court of Appeals rendered its assailed Decision on said petition on August 16, 2002. Despite agreeing with petitioners that there was
no forum shopping, litispendentia or res judicata in the filing of Civil Case No. 98-021, the Court of Appeals, asserting that it has the discretion to review
matters not otherwise assigned as errors on appeal if it finds that their consideration is necessary at arriving at a complete and just resolution of the case,[10]
held that Civil Case No. 98-021 cannot prosper on the grounds of prescription and laches.

Hence, this Petition for Certiorari, wherein petitioners raised the following grounds for assailing the Court of Appeals Decision:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION WHEN IT APPLIED PRESCRIPTION IN THE PRESENT PETITION, AFTER ALL, WHEN SHE
DID NOT APPEAL THE DECISION OF THE HONORABLE REGIONAL TRIAL COURT DISMISSING THE COMPLAINT
ON THE SOLE GROUND OF RES

Property 305
JUDICATA, PRIVATE RESPONDENT IS DEEMED TO HAVE ALREADY WAIVED THE DEFENSE OF PRESCRIPTION.

II

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION IN DISMISSING THE COMPLAINT ON THE GROUND OF PRESCRIPTION, THE PRESENT
ACTION, ALTHOUGH CAPTIONED FOR CANCELLATION OF TRANSFER CERTIFICATE OF TITLE NO. T-5,427,
RECONVEYANCE AND ETC., SUBSTANTIALLY, IS FOR QUIETING OF TITLE, HENCE, PRESCRIPTION WILL NOT LIE.

III

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION IN APPLYING THE CASES OF TENIO-OBSEQUIO VERSUS COURT OF APPEALS, 330 SCRA
88, AND DECLARO VS. COURT OF APPEALS, 346 SCRA 57 WHEN FACTS OBTAINING IN SAID CASES ARE NOT
ATTENDANT IN THE PRESENT CASE FOR CANCELLATION OF TRANSFER CERTIFICATE OF TITLE NO. T-5,427 ON
THE GROUND OF FORGERY OR BY REASON OF FORGED DOCUMENT CAPTIONED VENTA DEFINITIVA.

IV

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION WHEN IT [RENEGED] FROM ITS SOLEMN DUTY TO RENDER SUBSTANTIAL JUSTICE
DUE THE PARTIES RATHER THAN THE SANCTIFICATION OF TECHNICAL RULES OR EQUITY ON PRESCRIPTION.[11]

Property 306
Authority of the Court of Appeals to Dismiss the Complaint on the Grounds of
Prescription and Laches Despite Respondents Failure to Appeal the Dismissal
Order

Petitioners recount that private respondent Minor interposed prescription as one of her grounds for the dismissal of the case in her Answer with
Affirmative Defenses.When private respondent Minors Motion to Dismiss was denied by the RTC in open court, she filed a Motion for Reconsideration
dwelling on forum shopping, litis pendentia and/or res judicata.[12] The trial court proceeded to dismiss the case on the ground of forum shopping.[13]
Petitioners now claim before us that private respondent Minors failure to appeal the RTCs dismissal of the complaint on the sole ground of forum shopping
constituted a waiver of the defense of prescription. Petitioners further argue that the consideration by the Court of Appeals of grounds not assigned as
errors in the Appellees Brief runs contrary to the precepts of fair play, good taste and estoppel.[14]

We rule in favor of private respondent Minor on this issue.

Firstly, it stretches the bounds of credulity for petitioners to argue that a defendant in a case should appeal the dismissal order she prayed for
just because other grounds for dismissal were not considered by the court.

Secondly, and more importantly, Section 1, Rule 9 of the Rules of Court provides:

Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in the
answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction
over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred
by a prior judgment or by statute of limitations, the court shall dismiss the claim.

Property 307
 The second sentence of this provision does not only supply exceptions to the rule that defenses not pleaded either in a motion to dismiss or in
the answer are deemed waived, it also allows courts to dismiss cases motu proprio on any of the enumerated grounds (1) lack of jurisdiction over the
subject matter; (2) litis pendentia; (3) res judicata; and (4) prescription provided that the ground for dismissal is apparent from the pleadings or the
evidence on record.

We therefore rule that private respondent Minor cannot be deemed to have waived the defense of prescription, and that the Court of Appeals
may consider the same motu proprio. Furthermore, as regards the pronouncement by the Court of Appeals that Civil Case No. 98- 021 is likewise
heavily infirmed with laches, we rule that the Court of Appeals is not in error when it considered the same motu proprio.While not included in the above
enumeration under Section 1, Rule 9 of the Rules of Court, we have ruled in previous cases that laches need not be specifically pleaded and may be
considered by the court on its own initiative in determining the rights of the parties. [15]

Having thus determined the authority of the Court of Appeals to dismiss the Complaint on the grounds of prescription and laches despite private
respondent Minors failure to appeal the dismissal Order, We shall now proceed to determine whether or not prescription or laches has already set in to
bar the filing of Civil Case No. 98-021.

Imprescriptibility of Quieting of Title

After the Court of Appeals ruled in favor of petitioners on the issue of whether Civil Case No. 98-021 is already barred by forum shopping, res
judicata or litis pendentia, the appellate court, nevertheless, affirmed the dismissal order, but on the grounds of prescription and laches:

Be that as it may, this Court is imbued with sufficient discretion to review matters, not otherwise assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case (Heirs of Ramon Durano,
Sr. vs. Uy, 344 SCRA 238).

Property 308
 The case cannot prosper because an action for reconveyance is a legal remedy granted to a landowner whose property has
been wrongfully or erroneously registered in anothers name, which must be filed within ten years from the issuance of the title since
such issuance operates as a constructive notice (Declaro vs. Court of Appeals, 346 SCRA 57). Where a party has neglected to assert
his rights over a property in question for an unreasonably long period, he is estopped from questioning the validity of another persons
title to the property (Ibid.) Long inaction and passivity in asserting ones rights over a disputed property precludes him from recovering
said property (Po Lam vs. Court vs. Court of Appeals, 347 SCRA 86).

In conclusion, petitioners cause of action has already prescribed and now heavily infirmed with laches. [16]

Petitioners claim that although the complaint was captioned for CANCELLATION OF TRANSFER CERTIFICATE OF TITLE NO. T-5,427,
RECONVEYANCE, WITH ACCOUNTING, RECEIVERSHIP, AND APPLICATION FOR A WRIT OF PRELIMINARY PROHIBITORY

INJUNCTION PLUS DAMAGES, the complaint is substantially in the nature of an action to quiet title which allegedly does not prescribe. Petitioners
also allege that the cases cited by the Court of Appeals in ruling that prescription has set in, particularly that of Declaro v. Court of Appeals,[17] which in
turn cites Tenio-Obsequio v. Court of Appeals,[18] are inapplicable to the case at bar since neither fraud nor forgery was attendant in said cases.

As regards petitioners claim that the complaint in Civil Case No. 98-021 is really one of quieting of title which does not prescribe, it appears
that petitioners are referring to the doctrine laid down in the often-cited case of Heirs of Jose Olviga v. Court of Appeals,[19] wherein we held:

With regard to the issue of prescription, 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.[20]

Property 309
 The cause of action of petitioners in Civil Case No. 98-021, wherein they claim that private respondent Minors predecessor-in-interest acquired
the subject property by forgery, can indeed be considered as that of enforcing an implied trust. In particular, Article 1456 of the Civil Code provides:

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

However, the Court made a clear distinction in Olviga: when the plaintiff in such action is not in possession of the subject property, the action
prescribes in ten years from the date of registration of the deed or the date of the issuance of the certificate of title over the property. When the plaintiff
is in possession of the subject property, the action, being in effect that of quieting of title to the property, does not prescribe. In the case at bar, petitioners
(who are the plaintiffs in Civil Case No. 98-021) are not in possession of the subject property. Civil Case No. 98-021, if it were to be considered as that
of enforcing an implied trust, should have therefore been filed within ten years from the issuance of TCT No. T-5,427 on December 22, 1969. Civil Case
No. 98-021 was, however, filed on August 20, 1998, which was way beyond the prescriptive period.

As an alternative argument, petitioners claim that the prescriptive period for filing their complaint is thirty years, pursuant to Article 1141 of
the Civil Code, in connection with Articles 1134 and 1137 thereof, which respectively provide:

Art. 1141. Real actions over immovables prescribe after thirty years.

Property 310
 This provision is without prejudice to what is established for the acquisition of ownership and other real rights by
prescription.

Property 311
 Art. 1134. Ownership and other real rights over immovable property are acquired by ordinary prescription through
possession of ten years.

Art. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession
thereof for thirty years, without need of title or of good faith.

The theory of petitioners is that the Motion to Dismiss hypothetically admits the allegations of the complaint, including the allegations thereon
that the spouses Belen were successful in fraudulently acquiring TCT No. T-5,427 in their favor by means of the forged VENTA DEFINITIVA. Thus,
for purposes of ruling on a Motion to Dismiss, it is hypothetically admitted that private respondent Minors predecessors-in-interest are in bad faith. The
applicable prescriptive period, therefore, is that provided in Article 1141 in relation to Article 1137 of the Civil Code, which is thirty years. Civil Case
No. 98-021 was filed on August 20, 1998, 28 years and eight months from the issuance of TCT No. T-5,427 on December 22, 1969.

Articles 1141, 1134 and 1137 of the Civil Code, however, are general rules on prescription which should give way to the special statute on
registered lands, Presidential Decree No. 1529, otherwise known as the Property Registration Decree.Under the Torrens System as enshrined in

P.D. No. 1529, the decree of registration and the certificate of title issued become incontrovertible upon the expiration of one year from the date of entry
of the decree of registration, without prejudice to an action for damages against the applicant or any person responsible for the fraud.[21]

As previously discussed, however, we have allowed actions for reconveyance based on implied trusts even beyond such one-year period, for
such actions respect the decree of registration as incontrovertible. We explained this in Walstrom v. Mapa, Jr.[22]:

We have ruled before in Amerol vs. Bagumbaran that notwithstanding the irrevocability of the Torrens title already issued
in the name of another person, he can still be compelled under the law to reconvey the subject property to the rightful owner. The
property registered is deemed to be held in trust for the real owner by the person in whose name it is registered. After all, the Torrens
system was not designed

Property 312
 to shield and protect one who had committed fraud or misrepresentation and thus holds title in bad faith.

In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the
transfer of the property, in this case the title thereof, which has been wrongfully or erroneously registered in another person's name,
to its rightful and legal owner, or to one with a better right. This is what reconveyance is all about.

Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute nor is it imprescriptible. An
action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years from the issuance of the Torrens
title over the property.[23]

As discussed above, Civil Case No. 98-021 was filed more than 28 years from the issuance of TCT No. T-5,427. This period is unreasonably
long for a party seeking to enforce its right to file the appropriate case. Thus, petitioners claim that they had not slept on their rights is patently
unconvincing.

As a final note, it should be pointed out that in choosing to file a Petition for Certiorari before this Court, petitioners are required to prove
nothing less than grave abuse of discretion on the part of the Court of Appeals. We have consistently held that certiorari will not be issued to cure errors
in proceedings or correct erroneous conclusions of law or fact. As long as a court acts within its jurisdiction, any alleged errors committed in the exercise
of its jurisdiction will amount to nothing more than errors of judgment which are reviewable by timely appeal and not by a special civil action of
certiorari.[24] In the case at bar, petitioners proved neither grave abuse of discretion, nor even a simple error of judgment on the part of the Court of
Appeals.The present petition should, therefore, fail.

WHEREFORE, the present Petition for Certiorari is DISMISSED. The Decision of the Court of Appeals dated August 16, 2002 and the
Resolution dated January 16, 2003 in CA-G.R. SP No. 68501 are AFFIRMED.

No pronouncement as to costs.

Property 313
SO ORDERED.

Section 31. Decree of registration. - x x x

The decree of registration shall bind the land and quiet title thereto, subject only to such exceptions or liens as may be provided by
law. It shall be conclusive upon and against all persons, including the National Government and all branches thereof, whether mentioned by
name in the application or notice, the same being included in the general description "To all whom it may concern."

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.

Property 314
[ GR No. L-38387, Jan 29, 1990 ]

HILDA WALSTROM v. FERNANDO MAPA +DECISION

260 Phil. 456

SARMIENTO, J.:

This is a review of the Order dated December 1, 1973 of the then Court of First Instance of Baguio- Benguet, Branch IV, which dismissed, before
trial on the merits, the petitioner's complaint in Civil Case No. 2434. The concluding portion of the assailed order states:

This Court is unprepared to consider this case as falling under any of the exceptions to the rule on exhaustion of administrative remedies because under
plaintiff's allegations, her "Petition for Relief" is still pending resolution by the Secretary of Agriculture and Natural Resources who may reconsider his
action on the matter in dispute; and, furthermore, an action for annulment of title issued pursuant to a patent must be initiated by the Director of Lands
or at least by his prior authority and consent (Kabayan (sic)[1] vs. Republic, L-33307, August 30, 1973) who may be directed by the Secretary for that
purpose if plaintiff's "Petition for Relief" is granted and the previous action reconsidered. The records fail to show that such authority or consent has
been secured by the plaintiff before instituting the present action.

A motion to dismiss of this nature does not affect the jurisdiction of the court but shows that plaintiff lacks a cause of action. (Commissioner of
lmmigration vs. Vamenta, Jr., 45 SCRA 342.) In other words, non-compliance with this requirement justifies the dismissal for lack of cause of action.
(Cruz vs. Del Rosario, 9 SCRA 755.)

WHEREFORE, the Court, finding the motion to dismiss to be in order, hereby orders the dismissal of the case without pronouncement as to costs.

SO ORDERED.[2]

This drawn-out controversy between the parties, which is one of the many cases we inherited from the pre-EDSA Court, arose from the following
facts and proceedings:

I.

(1) The petitioner alleges that long before World War II, Cacao Dianson, predecessor-in-interest of Gabriela Walstrom, filed a Free Patent
Application (FPA) for a parcel of land located between what are known as Lots Nos. 1 and 2 of Psu-153657. Under the said Free Patent Application,
Cacao Dianson was able to secure on April 10, 1933 the issuance of Free Patent No. 14885 and Original Certificate of Title No. 1217 in his name.
(2) On June 9, 1933, Josefa Abaya Mapa, predecessor-in-interest of the private respondents, filed Miscellaneous Sales Application No. 6439 for a
parcel of land located in barrio Pico, municipalityof La Trinidad, Mountain Province.
(3) According to the petitioner, a public auction of the land subject of Josefa Abaya Mapa's miscellaneous sales application was held on
April 18, 1934. Josefa Abaya Mapa was the only bidder.

Property 315
(4) On May 12, 1934, the Director of Lands awarded Josefa Abaya Mapa a tract of land with an area of 2,800 square meters which was appraised at
P0.05 per square meter, located in Pico, La Trinidad, Mountain Province, with the following boundaries: N. Public Land; S.E. Public Land; S. Road; W.
Public Land (not surveyed). No improvements had been made on the land.
(5) On June 1, 1956, Cacao Dianson filed Free Patent Application No. 3-74 covering Lots Nos. 1, 2, and 3 of Psu-153657, situated in Barrio Beckel, La
Trinidad, Mountain Province, and on the same date he filed with the District Land Office in Baguio City a letter protesting the construction in April,
1956 by Josefa Abaya Mapa of a camarin on the parcel of land (described as "portion A") of one of the parcels of land more specifically, Lot No. 1 of
Psu-153657 covered by Dianson's FPA No. 3-74.[3]
(6) The private respondents counter that this portion being claimed by Dianson, which is designated as Portion "A" of Lot 1, Psu-153657, was
already awarded to Josefa Abaya Mapa in the public bidding held in 1934.
(7) On June 17, 1958, the controversy between Cacao Dianson and Josefa Abaya Mapa with respect to the disputed property was referred to
Bureau of Lands Investigator Antonio Mejia for investigation. After conducting several hearings and making an ocular inspection of the controverted
premises, Mejia submitted his "Report of Investigation," wherein he stated the following:
FINDINGS OF FACTS

Josefa Mapa Abaya has filed a Miscellaneous Sales Application for a parcel of land located in Pico, La Trinidad, Mt. Province, on June 9, 1933 and
the same was awarded to her on May 12, 1934. The land has an area of 2800 square meters with the following boundaries: North-Public Land, South-
East-Public Land, South-Road and West-Public Land.

The purchase price has been paid in full in 1943 as per Official Receipt No. B-1982778 dated November 8, 1943.

The land was first applied for by her husband, Fernando Mapa, but it was later transferred to Josefa Mapa Abaya.

Cacao Dianson filed a Free Patent Application for the same parcel of land on June 1, 1956, alleging that the said land was first occupied by his father,
Dianson, in 1884. The land has been surveyed under Psu-153657 on September 10, 1956.

Cacao Dianson is occupying the land and has fenced it. Josefa Mapa Abaya has constructed a sort of a shack near the land. Terraces were made by
Cacao Dianson in the premises. Cacao Dianson has also constructed a shack inside the land.

No survey appears to have been conducted on the land covered by the Miscellaneous Sales Application of Josefa Mapa Abaya.

Rodrigo H. Romea conducted a survey on the land. However, Mr. Romea made two surveys separately. One on the land pointed to her by Josefa
Mapa Abaya and the other, on the land which according to his findings and opinion would be the correct place of the land covered by the application
of Josefa Mapa Abaya.

Lands Investigator Mejia also found that:

During the ocular inspection of the land, it was found out that Mrs. Josefa Mapa Abaya has constructed a shack near the road. On the other hand,
Cacao Dianson has also constructed a hut in the premises of the said land. In fact, Cacao Dianson was in a threatening mood against the Mapas during
the ocular inspection. Of the alleged improvements introduced by Mrs. Josefa Mapa Abaya, they were not seen by the herein Investigator, except the
shack constructed by her. However, rice

Property 316
terraces were found in the premises and other plants, but from the appearance of the said improvements, it seems to be recently
introduced.

This Investigator has searched all the records in the Office of the Bureau of Lands, Baguio City, but no available records could be found regarding
the location of the land applied for by Josefa Mapa Abaya. A verification of the records, however, show that Cacao Dianson has sold the land applied
for by him to a certain Agripino Farol, a resident of Davao.[4]

(8) The regional land officer of Dagupan City, in a decision dated August 12, 1964, resolved the controversy between Cacao Dianson and
Josefa Abaya Mapa in this wise:

In view of the foregoing, the undersigned holds and so decides that Free Patent Application No. 3-74 of Cacao Dianson be, as hereby it is, amended so
as to exclude therefrom Portion "A" of Lot No. 1, Psu-153657, as shown on the sketch drawn at the back hereof and shall cover only portion "B" of Lot
No. 1, Lots 2 and 3 of Psu-153657, and the Miscellaneous Sales Application No. 6439 (E-1341) of Josefa Abaya Mapa shall cover said portion "A" of
Lot No. 1, Psu-153657 and thereafter both applications shall continue to be given due course. [5]

(9) In the meantime, Cacao Dianson died on August 7, 1964. Nearly two years later, on July 8, 1966, Gabriela Walstrom filed a motion for
consideration with the Director of Lands of the decision dated August 12, 1964 of the regional land officer, claiming that she had acquired the rights
and interests of Cacao Dianson to the subject parcel of land by virtue of a transfer of said rights and interests by Dianson to one Agripino Farol who,
in turn, transferred the same rights and interests to Gabriela Walstrom.
(10) On September 9, 1966, the Director of Lands, acting on the motion for reconsideration filed by Gabriela Walstrom, issued an order setting
aside the decision of August 12, 1964 of the district land officer of Dagupan City.
(11) On November 9, 1966, Josefa Abaya Mapa appealed the order dated September 9, 1966 of the Director of Lands to the Department of
Agriculture and Natural Resources (DANR).

This became DANR Case No. 3118.

II.

(1) On July 28, 1967, the DANR Secretary rendered a decision, dismissing Josefa Abaya Mapa's appeal from the order dated September 9, 1966
of the Director of Lands.
(2) On September 21, 1967, the heirs of Josefa Abaya Mapa, through their judicial administrator, Victorino Mapa, filed a motion for
reconsideration of the decision of the DANR promulgated on July 28, 1967.
(3) On June 13, 1968, the DANR Secretary set aside the order of the Director of Lands dated September 9, 1966 and ordered that the decision of
the regional land officer in Dagupan City dated August 12, 1964 be reinstated and given full force and effect.
(4) On July 30, 1968, counsel of Gabriela Walstrom manifested his intention to file a motion for reconsideration against the DANR order, June 13,
1968, but it was only on September 20, 1968 that a memorandum in support of his motion for reconsideration was filed.
(5) On March 4, 1969, DANR Secretary Fernando Lopez promulgated an order denying the motion for reconsideration of Gabriela Walstrom on
two (2) grounds, as follows:
1. From the foregoing, it is clear that more than thirty days had elapsed from the time plaintiff received the order she is seeking to be
reconsidered to the time she manifested any intention to have the same reconsidered. Such being the case, her motion does not merit any
consideration whatsoever for having been filed out of time.

Property 317
2. Nevertheless, this office reviewed the records of this case in view of the errors mentioned by movant in her memorandum and the answer
thereto filed by defendant. This office, however, does not find any reversible error in its Order of June 13, 1968.[6]
(6) Gabriela Walstrom filed a second motion for reconsideration of the Order of the DANR dated June 13, 1968. In the meantime Mapa filed a
motion for execution of the said order of DANR.
(7) The DANR, in its order dated March 24, 1970, denied the second motion for reconsideration of Walstrom and granted the motion for
execution filed by the heirs of Josefa Abaya Mapa.
(8) On June 8, 1970, Gabriela Walstrom filed a petition for relief with the DANR. Before her petition was heard, she died on October 4, 1970. The
heirs of Josefa Abaya Mapa, pursuing the case, filed an answer dated March 29, 1972, to the petition of Walstrom, stating that:
Preliminary Statement

The land being controverted by Appellee Walstrom was the subject of the Miscellaneous Sales Application and not a Homestead Patent Application.
The property now being contested by Appellee Walstrom is already titled in the name of the HEIRS OF JOSEFA ABAYA MAPA, under original
Certificate of Title No. P-456 of the Registry of Deeds for the Province of Benguet, pursuant to a Miscellaneous Sales Patent No. 4487. This property,
therefore, is now under the Torrens System.

It is also worthwhile to note that the land in question is only a small portion of the claim of Cacao Dianson and Walstrom. This is the land in
question particularly designated as Portion "A" of Lot 1, Psu-153657.[7]

(Emphasis supplied by petitioner Walstrom)

It was only upon receipt on April 11, 1972 of the above-stated answer of the heirs of Josefa Abaya Mapa to the petition for relief of the late Gabriela
Walstrom, that the herein petitioner Hilda Walstrom, daughter and successor-in-interest of the late Gabriela, learned for the first time that the
property being contested by Walstrom was already titled in the name of the heirs of Josefa Abaya Mapa, under Original Certificate of Title No. P-
456 of the Registry of Deeds for the Province of Benguet, pursuant to Miscellaneous Sales Patent No. 4487. [8]

III.

Upon subsequent inquiry with respect to the claim of the heirs of Josefa Abaya Mapa that the property in dispute in DANR Case No. 3118 had already
been titled pursuant to Miscellaneous Sales Patent No. 4487, the petitioner further became aware, also for the first time, that Miscellaneous Sales
Patent No. 4487 was issued by the DANR Secretary on July 19, 1971 and released for transmittal to the office of the Register of Deeds for Benguet
Province on July 22, 1971; that on September 30, 1971, respondent register of deeds issued Original Certificate of Title No. P-456, pursuant to
Miscellaneous Sales Patent No. 4487; and that on or about November 13, 1971, respondent Fernando Mapa, Jr. tranferred the property covered by
Original Certificate of Title No. P- 456 to the other heirs of Josefa Abaya Mapa, namely, defendants Victorino A. Mapa, Jose A. Mapa, Maria C.M. de
Goco, Fernando Mapa III, and Mario L. Mapa, in connection with which transfer, Transfer Certificate of Title No. T-6644 was issued by the Register
of Deeds of Benguet.[9]

During all this time, the petition for relief filed by Gabriela Walstrom on June 8, 1970 remained unresolved. In fact, the DANR Secretary issued an
order, dated January 9, 1972, giving due course to the said petition. According to petitioner Hilda Walstrom, she was compelled to file an action in the
then Court of First Instance of Baguio-Benguet on July 19, 1972 because the one-year prescriptive period for seeking judicial relief provided for in Sec.
38 of the Land Registration Act was about to lapse.

Property 318
The court a quo dismissed petitioner Hilda Walstrom's petition on the ground of "failure to exhaust administrative remedies."

Hence, this petition.

The petitioner submits two questions:

I.

DID PETITIONER-APPELLEE (sic) REALLY FAIL TO EXHAUST ADMINISTRATIVE REMEDIES?

II.

IN THE LIGHT OF THE FACT THAT THE DISPUTED MISCELLANEOUS SALES PATENT WAS ISSUED ON JUNE 19, 1971,DOES THE
FACT THAT THE PETITION FOR REVIEW IN DANR CASE NO. 3118 HAD NOT YET BEEN RESOLVED AS OF JULY 19, 1972,
PRECLUDE PETITIONER-APPELLANT FROM FILING ON SAID DATE (JULY 19, 1972) HER SUIT TO ANNUL SAID SALES PATENT
AND THE TORRENS CERTIFICATES OF TITLE ISSUED BY THE REGISTER OF DEEDS BY VIRTUE THEREOF?[10]

Petitioner Hilda Walstrom filed a civil complaint against the respondents praying for the nullification of the Mapas' sales patent and certificates of
title issued by the register of deeds of Benguet Province[11] under Section 38 of Act 496 or the Land Registration Act.

The pertinent portions of Section 38 of said Act are quoted as follows:

Sec. 38. Decree of registration and remedies after entry of decree.

If the court after hearing finds that the applicant or adverse claimant has title as stated in his application or adverse claim and proper for registration, a
decree of confirmation and registration shall be entered. Every decree of registration shall bind the land, and quiet title thereto, subject only to the
exceptions stated in the following section. It shall be conclusive upon and against all persons, including the Insular Government and all the branches
thereof, whether mentioned by name in the application, notice of citation, or included in the general description "To all whom it may concern." Such
decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for
reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of
registration obtained by fraud to file in the competent Court of First Instance a petition for review within one year after entry of the decree provided no
innocent purchaser for value has acquired an interest. x x x.

It is the teaching of the foregoing provisions that a decree of registration may be reopened or reviewed by the proper Regional Trial Court upon the
concurrence of five essential requisites, to wit:

(a) that the petitioner has a real and dominical right; (b) that he has been deprived thereof; (c) through fraud; (d) that the petition is filed within
one year from the issuance of the decree; and (e) that the property has not as yet been transferred to an innocent purchaser for value.[12]

An examination of the records of the case shows non-concurrence of the essential elements enumerated above.

The first element is patently not present because the petitioner can not allege that she has already a real and dominical right to the piece of property in
controversy. The latest order of the DANR Secretary, dated June 13, 1968, was to give full force and effect to the regional land officer's decision,
dated August 12, 1964.[13] The regional land officer held that the petitioner's Free Patent Application No. 3-74, shall exclude the disputed portion "A"
of Lot No. 1, which, instead, shall be included in the Mapas' Miscellaneous Sales Application.

Property 319
 The second element is also absent since corollary to the aforecited ruling of the DANR Secretary, the petitioner can not aver
that she was deprived of property because she did not have a real right over portion "A".

Apropos the third element, the records are bereft of any indication that there was fraud in the issuance of the certificates of
title. As matters stand, the prerequsites have not been complied with. The petitioner's recourse to Section 38 would not have
prospered; accordingly, the respondent court's dismissal of petitioner's complaint was proper.

We also find that the lower court was correct in holding that the case does not fall under any of the exceptions to the rule on
exhaustion of administrative remedies. The petitioner herself admits that her petition for relief is still pending resolution by the
Secretary of Agriculture and Natural Resources who may reconsider his action on the matter in dispute. The petitioner's failure
to exhaust administrative remedies is a flaw which to our mind is fatal to a court review at this time. [14]

Instead of invoking Section 38, the petitioner should have pressed for the speedy resolution of her petition with the DANR.
The petitioner avers that since the one-year prescriptive period for seeking judicial relief provided for in Sec. 38 of the Land
Registration Act was about to lapse, she was compelled to file the action to nullify said patent. [15] The petitioner's submission
is not correct. Her fear of the futility, or even only inefficacy, of exhausting the administrative remedies granted her by law is
clearly unfounded.

We have ruled before in Amerol vs. Bagumbaran[16] that notwithstanding the irrevocability of the Torrens title already issued in
the name of another person, he can still be compelled under the law to reconvey the subject property to the rightful owner. The
property registered is deemed to be held in trust for the real owner by the person in whose name it is registered. After all, the
Torrens system was not designed to shield and protect one who had committed fraud or misrepresentation and thus holds title in
bad faith.[17]

In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of
the property, in this case the title thereof, which has been wrongfully or erroneously registered in another person's name, to its
rightful and legal owner, or to one with a better right. This is what reconveyance is all about. [18]

Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute nor is it imprescriptible. An action
for reconveyance based on an implied or constructive trust must perforce prescribe in ten years from the issuance of the Torrens
title over the property.[19]

We find no reversible error in the challenged order of the trial court.

WHEREFORE, the petition is DENIED. No costs.

SO ORDERED.

G.R. No. L-4656 November 18, 1912

RICARDO PARDELL Y CRUZ and

VICENTA ORTIZ Y FELIN DE PARDELL, plaintiffs-appellees,
vs.
GASPAR DE BARTOLOME Y ESCRIBANO and
MATILDE ORTIZ Y FELIN DE BARTOLOME, defendants-appellants.

Gaspar de Bartolome, in his own behalf.

B. Gimenez Zoboli, for appellees.

TORRES, J.:

This is an appeal by bill of exceptions, from the judgment of October 5, 1907, whereby the Honorable Dionisio Chanco,
judge, absolved the defendants from the complaint, and the plaintiff from a counterclaim, without special finding as to
costs.

Counsel for the spouses Ricardo y Cruz and Vicente Ortiz y Felin de Pardell, the first of whom, absent in Spain by
reason of his employment, conferred upon the second sufficient and ample powers to appear before the courts of
justice, on June 8, 1905, in his written complaint, alleged that the plaintiff, Vicente Ortiz, and the defendant, Matilde
Ortiz, are the duly recognized natural daughters of the spouses Miguel Ortiz and Calixta Felin y Paula who died in
Vigan, Ilocos Sur, in 1875 and 1882, respectively; that Calixta Felin, prior to her death, executed on August 17, 1876, a
nuncupative will in Vigan whereby she made her four children, named Manuel, Francisca, Vicenta, and Matilde,
surnamed Ortiz y Felin, her sole and universal heirs of all her property; that, of the persons enumerated, Manuel died
before his mother and Francisca a few years after her death, leaving no heirs by force of law, and therefore the only
existing heirs of the said testatrix are the plaintiff Vicenta Ortiz and the defendant Matilde Ortiz; that, aside from some
personal property and jewelry already divided among the heirs, the testatrix possessed, at the time of the execution of
her will, and left at her death the real properties which, with their respective cash values, are as follows:

1. A house of strong material, with the lot on which it is built, situated on Escolta Street, Vigan, and valued at P6,000.00
2. A house of mixed material, with the lot on which it stands, at No. 88 Washington Street, Vigan; valued at 1,500.00
Property 320
3. A lot on Magallanes Street, Vigan; valued at 100.00
4. A parcel of rice land, situated in the barrio of San Julian, Vigan; valued at 60.00
5. A parcel of rice land in the pueblo of Santa Lucia; valued at 86.00
6. Three parcels of land in the pueblo of Candon; valued at 150.00
Total 7,896.00
That, on or about the first months of the year 1888, the defendants, without judicial authorization, nor friendly or
extrajudicial agreement, took upon themselves the administration and enjoyment of the said properties and collected the
rents, fruits, and products thereof, to the serious detriment of the plaintiffs' interest; that, notwithstanding the different
and repeated demands extrajudicially made upon Matilde Ortiz to divide the aforementioned properties with the plaintiff
Vicente and to deliver to the latter the one-half thereof, together with one-half of the fruits and rents collected therefrom,
the said defendant and her husband, the self-styled administrator of the properties mentioned, had been delaying the
partition and delivery of the said properties by means of unkept promises and other excuses; and that the plaintiffs, on
account of the extraordinary delay in the delivery of one-half of said properties, or their value in cash, as the case might
be, had suffered losses and damages in the sum of P8,000. Said counsel for the plaintiffs therefore asked that judgment
be rendered by sentencing the defendants, Gaspar de Bartolome, and Matilde Ortiz Felin de Bartolome, to restore and
deliver to the plaintiffs one-half of the total value in cash, according to appraisal, of the undivided property specified,
which one-half amounted approximately to P3,948, or if deemed proper, to recognize the plaintiff Vicenta Ortiz to be
vested with the full and absolute right of ownership to the said undivided one-half of the properties in question, as
universal testamentary heir thereof together with the defendant Matilde Ortiz, to indemnify the plaintiffs in the sum of
P8,000, for losses and damages, and to pay the costs.

Counsel for the defendants, in his answer denied the facts alleged in paragraphs 1, 4, 6, 7, and 8 thereof, inasmuch as,
upon the death of the litigating sister's brother Manuel, their mother, who was still living, was his heir by force of law, and
the defendants had never refused to give to the plaintiff Vicente Ortiz her share of the said properties; and stated that he
admitted the facts alleged in paragraph 2, provided it be understood, however, that the surname of the defendant's
mother was Felin, and not Feliu, and that Miguel Ortiz died in Spain, and not in Vigan; that he also admitted paragraph 3
of the complaint, with the difference that the said surname should be Felin, and likewise paragraph 5, except the part
thereof relating to the personal property and the jewelry, since the latter had not yet been divided; that the said jewelry
was in the possession of the plaintiffs and consisted of: one Lozada gold chronometer watch with a chain in the form of
a bridle curb and a watch charm consisting of the engraving of a postage stamp on a stone mounted in gold and bearing
the initials M. O., a pair of cuff buttons made of gold coins, four small gold buttons, two finger rings, another with the
initials M. O., and a gold bracelet; and that the defendants were willing to deliver to the plaintiffs, in conformity with their
petitions, one-half of the total value in cash, according to appraisement, of the undivided real properties specified in
paragraph 5, which half amounted to P3,948.

In a special defense said counsel alleged that the defendants had never refused to divide the said property and had in
fact several years before solicited the partition of the same; that, from 1886 to 1901, inclusive, there was collected from
the property on Calle Escolta the sum of 288 pesos, besides a few other small amounts derived from other sources,
which were delivered to the plaintiffs with other larger amounts, in 1891, and from the property on Calle Washington,
called La Quinta, 990.95 pesos, which proceeds, added together, made a total of 1,278.95 pesos, saving error or
omission; that, between the years abovementioned, Escolta, and that on Calle Washington, La Quinta, 376.33, which
made a total of 1,141.71, saving error or omission; that, in 1897, the work of reconstruction was begun of the house on
Calle Escolta, which been destroyed by an earthquake, which work was not finished until 1903 and required an
expenditure on the part of the defendant Matilde Ortiz, of 5,091.52 pesos; that all the collections made up to August 1,
1905, including the rent from the stores, amounted to only P3,654.15, and the expenses, to P6,252.32, there being,
consequently, a balance of P2,598.17, which divided between the sisters, the plaintiff and the defendant, would make
the latter's share P1,299.08; that, as shown by the papers kept by the plaintiffs, in the year 1891 the defendant
Bartolome presented to the plaintiffs a statement in settlements of accounts, and delivered to the person duly authorized
by the latter for the purpose, the sum of P2,606.29, which the said settlement showed was owing his principals, from
various sources; that, the defendant Bartolome having been the administrator of the undivided property claimed by the
plaintiffs, the latter were owing the former legal remuneration of the percentage allowed by law for administration; and
that the defendants were willing to pay the sum of P3,948, one-half of the total value of the said properties, deducting
therefrom the amount found to be owing them by the plaintiffs, and asked that judgment be rendered in their favor to
enable them to recover from the latter that amount, together with the costs and expenses of the suit.

The defendants, in their counter claim, repeated each and all of the allegations contained in each of the paragraphs of
section 10 of their answer; that the plaintiffs were obliged to pay to the administrator of the said property the
remuneration allowed him by law; that, as the revenues collected by the defendants amounted to no more than
P3,654.15 and the expenditures incurred by them, to P6,252.32, it followed that the plaintiffs owed the defendants
P1,299.08, that is one-half of the difference between the amount collected from and that extended on the properties, and
asked that judgment be therefore rendered in their behalf to enable them to collect this sum from the plaintiffs, Ricardo
Pardell and Vicenta Ortiz, with legal interest thereon from December 7, 1904, the date when the accounts were
rendered, together with the sums to which the defendant Bartolome was entitled for the administration of the undivided
properties in question.

By a written motion of August 21, 1905, counsel for the plaintiffs requested permission to amend the complaint by
inserting immediately after the words "or respective appraisal," fifth line of paragraph 5, the phrase "in cash in
accordance with the assessed value," and likewise further to amend the same, in paragraph 6 thereof, by substituting
the following word in lieu of the petition for the remedy sought: "By reason of all the foregoing, I beg the court to be
pleased to render the judgment by sentencing the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de
Bartolome, to restore and deliver to the plaintiffs an exact one-half of the total vale of the undivided properties described
in the complaint, such value to be ascertained by the expert appraisal of two competent persons, one of whom shall be
appointed by the plaintiffs and the other by the defendants, and, in case of disagreement between these two appointees
such value shall be determined by a third expert appraiser appointed by the court, or, in a proper case, by the price
offered at public auction; or, in lieu thereof, it is requested that the court recognize the plaintiff, Vicenta Ortiz, to be
vested with a full and absolute right to an undivided one-half of the said properties; furthermore, it is prayed that the
plaintiffs be awarded an indemnity of P8,000 for losses and damages, and the costs." Notwithstanding the opposition of
the defendants, the said amendment was admitted by the court and counsel for the defendants were allowed to a period
of three days within which to present a new answer. An exception was taken to this ruling.
Property 321
The proper proceedings were had with reference to the valuation of the properties concerned in the division sought and
incidental issues were raised relative to the partition of some of them and their award to one or the other of the parties.
Due consideration was taken of the averments and statements of both parties who agreed between themselves, before
the court, that any of them might at any time acquire, at the valuation fixed by the expert judicial appraiser, any of the
properties in question, there being none in existence excluded by the litigants. The court, therefore, by order of
December 28, 1905, ruled that the plaintiffs were entitled to acquire, at the valuation determined by the said expert
appraiser, the building known as La Quinta, the lot on which it stands and the warehouses and other improvements
comprised within the inclosed land, and the seeds lands situated in the pueblos of Vigan and Santa Lucia; and that the
defendants were likewise entitled to acquire the house on Calle Escolta, the lot on Calle Magallanes, and the three
parcels of land situated in the pueblo of Candon.

After this partition had been made counsel for the defendants, by a writing of March 8, 1906, set forth: That, having
petitioned for the appraisement of the properties in question for the purpose of their partition, it was not to be understood
that he desired from the exception duly entered to the ruling made in the matter of the amendment to the complaint; that
the properties retained by the defendants were valued at P9,310, and those retained by the plaintiffs, at P2,885, one-half
of which amounts each party had to deliver to the other, as they were pro indiviso properties; that, therefore, the
defendants had to pay the plaintiffs the sum of P3,212.50, after deducting the amount which the plaintiffs were obliged to
deliver to the defendants, as one-half of the price of the properties retained by the former; that, notwithstanding that the
amount of the counterclaim for the expenses incurred in the reconstruction of the pro indiviso property should be
deducted from the sum which the defendants had to pay the plaintiffs, the former, for the purpose of bringing the matter
of the partition to a close, would deliver to the latter, immediately upon the signing of the instrument of purchase and
sale, the sum of P3,212.50, which was one-half of the value of the properties alloted to the defendants; such delivery,
however, was not to be understood as a renouncement of the said counterclaim, but only as a means for the final
termination of the pro indiviso status of the property.

The case having been heard, the court on October 5, 1907, rendered judgment holding that the revenues and the
expenses were compensated by the residence enjoyed by the defendant party, that no losses or damages were either
caused or suffered, nor likewise any other expense besides those aforementioned, and absolved the defendants from
the complaint and the plaintiffs from the counterclaim, with no special finding as to costs. An exception was taken to this
judgment by counsel for the defendants who moved for a new trial on the grounds that the evidence presented did not
warrant the judgment rendered and that the latter was contrary to law. This motion was denied, exception whereto was
taken by said counsel, who filed the proper bill of exceptions, and the same was approved and forwarded to the clerk of
this court, with a transcript of the evidence.

Both of the litigating sisters assented to a partition by halves of the property left in her will by their mother at her death; in
fact, during the course of this suit, proceedings were had, in accordance with the agreement made, for the division
between them of the said hereditary property of common ownership, which division was recognized and approved in the
findings of the trial court, as shown by the judgment appealed from.

The issues raised by the parties, aside from said division made during the trial, and which have been submitted to this
court for decision, concern: (1) The indemnity claimed for losses and damages, which the plaintiffs allege amount to
P8,000, in addition to the rents which should have been derived from the house on Calle Escolta, Vigan; (2) the payment
by the plaintiffs to the defendants of the sum of P1,299.08, demanded by way of counterclaim, together with legal
interest thereon from December 7, 1904; (3) the payment to the husband of the defendant Matilde Ortiz, of a percentage
claimed to be due him as the administrator of the property of common ownership; (4) the division of certain jewelry in the
possession of the plaintiff Vicenta Ortiz; and (5) the petition that the amendment be held to have been improperly
admitted, which was made by the plaintiffs in their written motion of August 21, 1905, against the opposition of the
defendants, through which admission the latter were obliged to pay the former P910.50.lawphil.net

Before entering upon an explanation of the propriety or impropriety of the claims made by both parties, it is
indispensable to state that the trial judge, in absolving the defendants from the complaint, held that they had not caused
losses and damages to the plaintiffs, and that the revenues and the expenses were compensated, in view of the fact that
the defendants had been living for several years in the Calle Escolta house, which was pro indiviso property of joint
ownership.

By this finding absolving the defendants from the complaint, and which was acquiesced in by the plaintiffs who made no
appeal therefrom, the first issue has been decided which was raised by the plaintiffs, concerning the indemnity for losses
and damages, wherein are comprised the rents which should have been obtained from the upper story of the said house
during the time it was occupied by the defendants, Matilde Ortiz and her husband, Gaspar de Bartolome.

Notwithstanding the acquiescence on the part of the plaintiffs, assenting to the said finding whereby the defendants
were absolved from the complaint, yet, as such absolution is based on the compensation established in the judgment of
the trial court, between the amounts which each party is entitled to claim from the other, it is imperative to determine
whether the defendant Matilde Ortiz, as coowner of the house on Calle Escolta, was entitled, with her husband, to reside
therein, without paying to her coowner, Vicenta Ortiz, who, during the greater part of the time, lived with her husband
abroad, one-half of the rents which the upper story would have produced, had it been rented to a stranger.

Article 394 of the Civil Code prescribes:

Each coowner may use the things owned in common, provided he uses them in accordance with their object and in such
manner as not to injure the interests of the community nor prevent the coowners from utilizing them according to their
rights.

Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling, in the house of joint ownership;
but the record shows no proof that, by so doing, the said Matilde occasioned any detriment to the interest of the
community property, nor that she prevented her sister Vicenta from utilizing the said upper story according to her rights.
It is to be noted that the stores of the lower floor were rented and accounting of the rents was duly made to the plaintiffs.

Property 322
Each coowner of realty held pro indiviso exercises his rights over the whole property and may use and enjoy the same
with no other limitation than that he shall not injure the interests of his coowners, for the reason that, until a division be
made, the respective part of each holder can not be determined and every one of the coowners exercises, together with
his other coparticipants, joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same.

As the hereditary properties of the joint ownership of the two sisters, Vicenta Ortiz, plaintiff, and Matilde Ortiz, defendant,
were situated in the Province of Ilocos Sur, and were in the care of the last named, assisted by her husband, while the
plaintiff Vicenta with her husband was residing outside of the said province the greater part of the time between 1885
and 1905, when she left these Islands for Spain, it is not at all strange that delays and difficulties should have attended
the efforts made to collect the rents and proceeds from the property held in common and to obtain a partition of the
latter, especially during several years when, owing to the insurrection, the country was in a turmoil; and for this reason,
aside from that founded on the right of coownership of the defendants, who took upon themselves the administration
and care of the properties of joint tenancy for purposes of their preservation and improvement, these latter are not
obliged to pay to the plaintiff Vicenta one-half of the rents which might have been derived from the upper of the story of
the said house on Calle Escolta, and, much less, because one of the living rooms and the storeroom thereof were used
for the storage of some belongings and effects of common ownership between the litigants. The defendant Matilde,
therefore, in occupying with her husband the upper floor of the said house, did not injure the interests of her coowner,
her sister Vicenta, nor did she prevent the latter from living therein, but merely exercised a legitimate right pertaining to
her as coowner of the property.

Notwithstanding the above statements relative to the joint-ownership rights which entitled the defendants to live in the
upper story of the said house, yet in view of the fact that the record shows it to have been proved that the defendant
Matilde's husband, Gaspar de Bartolome, occupied for four years a room or a part of the lower floor of the same house
on Calle Escolta, using it as an office for the justice of the peace, a position which he held in the capital of that province,
strict justice, requires that he pay his sister-in-law, the plaintiff, one half of the monthly rent which the said quarters could
have produced, had they been leased to another person. The amount of such monthly rental is fixed at P16 in
accordance with the evidence shown in the record. This conclusion as to Bartolome's liability results from the fact that,
even as the husband of the defendant coowner of the property, he had no right to occupy and use gratuitously the said
part of the lower floor of the house in question, where he lived with his wife, to the detriment of the plaintiff Vicenta who
did not receive one-half of the rent which those quarters could and should have produced, had they been occupied by a
stranger, in the same manner that rent was obtained from the rooms on the lower floor that were used as stores.
Therefore, the defendant Bartolome must pay to the plaintiff Vicenta P384, that is, one-half of P768, the total amount of
the rents which should have been obtained during four years from the quarters occupied as an office by the justice of the
peace of Vigan.

With respect to the second question submitted for decision to this court, relative to the payment of the sum demanded
as a counterclaim, it was admitted and proved in the present case that, as a result of a serious earthquake on August
15, 1897, the said house on Calle Escolta was left in ruins and uninhabitable, and that, for its reconstruction or repair,
the defendants had to expend the sum of P6,252.32. This expenditure, notwithstanding that it was impugned, during the
trial, by the plaintiffs, was duly proved by the evidence presented by the defendants. Evidence, unsuccessfully rebutted,
was also introduced which proved that the rents produced by all the rural and urban properties of common ownership
amounted, up to August 1, 1905, to the sum of P3,654.15 which, being applied toward the cost of the repair work on the
said house, leaves a balance of P2,598.17, the amount actually advanced by the defendants, for the rents collected by
them were not sufficient for the termination of all the work undertaken on the said building, necessary for its complete
repair and to replace it in a habitable condition. It is therefore lawful and just that the plaintiff Vicenta Ortiz, who was
willing to sell to her sister Matilde for P1,500, her share in the house in question, when it was in a ruinous state, should
pay the defendants one-half of the amount expanded in the said repair work, since the building after reconstruction was
worth P9,000, according to expert appraisal. Consequently, the counterclaim made by the defendants for the payment to
them of the sum of P1,299.08, is a proper demand, though from this sum a reduction must be made of P384, the
amount of one-half of the rents which should have been collected for the use of the quarters occupied by the justice of
the peace, the payment of which is incumbent upon the husband of the defendant Matilde, as aforesaid, and the balance
remaining, P915.08, is the amount which the plaintiff Vicenta must pay to the defendants.

The defendants claim to be entitled to the collection of legal interest on the amount of the counterclaim, from December
7, 1904. This contention can not be sustained, inasmuch as, until this suit is finally decided, it could not be known
whether the plaintiffs would or would not be obliged to pay the sum whatever in reimbursement of expenses incurred by
the plaintiffs in the repair work on the said house on Calle Escolta, whether or not the defendants, in turn, were entitled
to collect any such amount, and, finally, what the net sum would be which the plaintiff's might have to pay as
reimbursement for one-half of the expenditure made by the defendants. Until final disposal of the case, no such net sum
can be determined, nor until then can the debtor be deemed to be in arrears. In order that there be an obligation to pay
legal interest in connection with a matter at issue between the parties, it must be declared in a judicial decision from
what date the interest will be due on the principal concerned in the suit. This rule has been established by the decisions
of the supreme court of Spain, in reference to articles 1108, 1109, and 1110 of the Civil Code, reference on April 24,
1867, November 19, 1869, and February 22, 1901.

With regard to the percentage, as remuneration claimed by the husband of the defendant Matilde for his administration
of the property of common ownership, inasmuch as no stipulation whatever was made in the matter by and between him
and his sister-in-law, the said defendant, the claimant is not entitled to the payment of any remuneration whatsoever. Of
his own accord and as an officious manager, he administered the said pro indiviso property, one-half of which belonged
to his wife who held it in joint tenancy, with his sister-in-law, and the law does not allow him any compensation as such
voluntary administrator. He is merely entitled to a reimbursement for such actual and necessary expenditures as he may
have made on the undivided properties and an indemnity for the damages he may have suffered while acting in that
capacity, since at all events it was his duty to care for and preserve the said property, half of which belonged to his wife;
and in exchange for the trouble occasioned him by the administration of his sister-in-law's half of the said property, he
with his wife resided in the upper story of the house aforementioned, without payment of one-half of the rents said
quarters might have produced had they been leased to another person.

With respect to the division of certain jewelry, petitioned for by the defendants and appellants only in their brief in this
appeal, the record of the proceedings in the lower court does not show that the allegation made by the plaintiff Vicenta is
Property 323
not true, to the effect that the deceased mother of the litigant sisters disposed of this jewelry during her lifetime,
because, had she not done so, the will made by the said deceased would have been exhibited in which the said jewelry
would have been mentioned, at least it would have been proved that the articles in question came into the possession of
the plaintiff Vicenta without the expressed desire and the consent of the deceased mother of the said sisters, for the gift
of this jewelry was previously assailed in the courts, without success; therefore, and in view of its inconsiderable value,
there is no reason for holding that the said gift was not made.

As regards the collection of the sum of P910.50, which is the difference between the assessed value of the undivided
real properties and the price of the same as determined by the judicial expert appraiser, it is shown by the record that
the ruling of the trial judge admitting the amendment to the original complaint, is in accord with the law and principles of
justice, for the reason that any of the coowners of a pro indiviso property, subject to division or sale, is entitled to petition
for its valuation by competent expert appraisers. Such valuation is not prejudicial to any of the joint owners, but is
beneficial to their interests, considering that, as a general rule, the assessed value of a building or a parcel of realty is
less than the actual real value of the property, and this being appraiser to determine, in conjunction with the one
selected by the plaintiffs, the value of the properties of joint ownership. These two experts took part in the latter
proceedings of the suit until finally, and during the course of the latter, the litigating parties agreed to an amicable
division of the pro indiviso hereditary property, in accordance with the price fixed by the judicial expert appraiser
appointed as a third party, in view of the disagreement between and nonconformity of the appraisers chosen by the
litigants. Therefore it is improper now to claim a right to the collection of the said sum, the difference between the
assessed value and that fixed by the judicial expert appraiser, for the reason that the increase in price, as determined by
this latter appraisal, redounded to the benefit of both parties.

In consideration of the foregoing, whereby the errors assigned to the lower court have been duly refuted, it is our opinion
that, with a partial reversal of the judgment appealed from, in so far as it absolves the plaintiffs from the counterclaim
presented by the defendants, we should and hereby do sentence the plaintiffs to the payment of the sum of P915.08, the
balance of the sum claimed by the defendants as a balance of the one-half of the amount which the defendants
advanced for the reconstruction or repair of the Calle Escolta house, after deducting from the total of such sum claimed
by the latter the amount of P384 which Gaspar de Bartolome, the husband of the defendant Matilde, should have paid
as one-half of the rents due for his occupation of the quarters on the lower floor of the said house as an office for the
justice of the peace court of Vigan; and we further find: (1) That the defendants are not obliged to pay one-half of the
rents which could have been obtained from the upper story of the said house; (2) that the plaintiffs can not be compelled
to pay the legal interest from December 7, 1904, on the sum expanded in the reconstruction of the aforementioned
house, but only the interest fixed by law, at the rate of 6 per cent per annum, from the date of the judgment to be
rendered in accordance with this decision; (3) that the husband of the defendant Matilde Ortiz is not entitled to any
remuneration for the administration of the pro indiviso property belonging to both parties; (4) that, neither is he entitled to
collect from the plaintiffs the sum of P910.50, the difference between the assessed valuation and the price set by the
expert appraisal solicited by the plaintiffs in their amendment to the complaint; and, (5) that no participation shall be
made of jewelry aforementioned now in the possession of the plaintiff Vicenta Ortiz. The said judgment, as relates to the
points appealed, is affirmed, in so far as its findings agree with those of this decision, and is reversed, in so far as they
do not. No special finding is made regarding the costs of both instances. So ordered.

G.R. No. L-49731 September 29, 1988

ALFREDO SERING, petitioner,

vs.
RESTITUTO PLAZO and GERTRUDES SUAN, respondents.

Manuel Tesiorna and Noel P. Catre for petitioner.

Timoteo R. Quimpo, Jr. for respondents.

NARVASA, J.:

The application of settled principles is all that is needed to resolve the instant appeal. Article 487 of the Civil Code
provides that anyone of the co-owners of an immovable may bring an action in ejectment. A co-owner may thus bring an
ejectment action without joining the other co-owners, the suit being deemed instituted for the benefit of all. 1 And the
term, "action in ejectment," includes a suit of forcible entry (detentacion) or unlawful detainer (desahucio). 2

The proceeding at bar had its inception in a forcible entry suit filed by petitioner Sering against respondent Spouses
Restituto Plazo and Gertrudes Suan with the then Municipal Court of del Carmen, Surigao del Norte. 3 The case
resulted in a judgment against the Plazos who thereupon appealed to the Court of First Instance of Surigao del Norte. In
the latter court the Plazos learned that the property subject of the suit was not owned solely by Sering but was owned in
common by him and others. This prompted the Plazos to move for the impleading of the other co-owners as parties
plaintiff, on the theory that they were indispensable parties. 4 The Court agreed and ordered Sering to amend his
complaint so as to include his co-owners as co-plaintiffs. Sering demurred claiming that under the law anyone of the co-
owners could bring suit for ejectment without joining the others. 5 The Plazos contended, on the other hand, that the
provision invoked by Sering had no application to forcible entry actions, but only to suits of unlawful detainer. Because
Sering failed to comply with the Courts order for amendment of the complaint, the Trial Court dismissed his complaint. 6
It also thereafter denied his motion for reconsidereration 7 Sering has come to this Court praying for the nullification and
reversal of said order of dismissal and that denying his plea for reconsideration.

The orders complained of are indeed tainted by serious error and should therefore be reversed and set aside, upon the
considerations set out in the opening paragraph of this resolution. The same issues had been raised and resolved as
early as eight (8) years before promulgation of the contested orders. In Vencilao v. Camarento, decided in 1969, 8 this
Court pertinently ruled as follows: 9

Property 324
2. Anent the question of whether an action of forcible entry and detainer should be brought in the name of all co-
owners, We hold that under Article 487 of the new Civil Code, any of the co-owners may bring the action ... . In forcible
entry and detainer action(s) the matter to be determined is simply the question of prior physical possession. It having
been alleged in the complaint that the plaintiff was in actual possession of the properties, certainly the plaintiff alone,
who was in actual possession, could file the complaint.

The Court has been cited to no reason of substance for modifying or overruling this doctrine.

WHEREFORE, the challenged Orders dismissing the petitioner's complaint for ejectment and denying reconsideration of
the dismissal decree 10 are REVERSED AND SET ASIDE, and the case is REMANDED to the Regional Trial Court for
resolution, with all deliberate dispatch, of the respondents' appeal from the judgment of the inferior court. This
Resolution is immediately executory.

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

IGLESIA NI CRISTO, G.R. No. 168943

Petitioner,

Present:

- versus - PANGANIBAN, C.J., Chairperson,

YNARES-SANTIAGO,

AUSTRIA-MARTINEZ,

HON. THELMA A. CALLEJO, SR., and

PONFERRADA, in her CHICO-NAZARIO, JJ.

capacity as Presiding Judge,

Regional Trial Court, Br. 104,

Quezon City, and HEIRS OF Promulgated:

ENRIQUE G. SANTOS,

Respondents. October 27, 2006

x--------------------------------------------------x

DECISION

CALLEJO, SR., J.:

This is a Petition for Review on Certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 72686 and
its Resolution[2] denying the motion for reconsideration of the said decision.

On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed Santos, and Sonia Santos-Wallin,
represented by Enrique G. Santos, filed a complaint[3] for Quieting of Title and/or Accion Reinvindicatoria before the
Regional Trial Court (RTC) of Quezon City against the Iglesia Ni Cristo (INC), defendant therein.

Plaintiffs alleged therein that, during his lifetime, Enrique Santos was the owner of a 936-square-meter parcel of land
located in Tandang Sora, Quezon City covered by Transfer Certificate of Title (TCT) No. 57272 issued by the Register of
Deeds on July 27, 1961 which cancelled TCT No. 57193-289. He had been in possession of the owners duplicate of
said title and had been in continuous, open, adverse and peaceful possession of the property. He died on February 9,
1970 and was survived by his wife, Alicia Santos, and other plaintiffs, who were their children. Thereafter, plaintiffs took
peaceful and adverse possession of the property, and of the owners duplicate of said title. When the Office of the
Register of Deeds of Quezon City was burned on June 11, 1988, the original copy of said title was burned as well. The
Register of Deeds had the title reconstituted as TCT No. RT-110323, based on the owners duplicate of TCT No. 57272.
Sometime in February 1996, plaintiffs learned that defendant was claiming ownership over the property based on TCT
No. 321744 issued on September 18, 1984 which, on its face, cancelled TCT No. 320898, under the name of the
Philippine National Bank, which allegedly cancelled TCT No. 252070 in the names of the spouses Marcos and Romana
dela Cruz. They insisted that TCT Nos. 321744, 320898 and 252070 were not among the titles issued by the Register of
Property 325
Deeds of Quezon City and even if the Register of Deeds issued said titles, it was contrary to law. Enrique Santos, during
his lifetime, and his heirs, after his death, never encumbered or disposed the property. In 1996, plaintiffs had the
property fenced but defendant deprived them of the final use and enjoyment of their property.

Plaintiffs prayed that, after due proceedings, judgment be rendered in their favor, thus:

WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered quieting the title of plaintiffs over
and/or recover possession of their said property in the name of deceased Enrique Santos, covered by said TCT No. RT-
110323(57272) of the Register of Deeds at Quezon City and that:

1. The title of defendant, TCT No. 321744 be ordered cancelled by the Register of Deeds of Quezon City;

2. The defendant be ordered to pay plaintiffs claims for actual damages in the sum of P100,000.00;

3. The defendant be ordered to pay plaintiffs claims for compensatory damages in the sum of at least P1,000,000.00;

4. The defendant be ordered to pay plaintiffs claims for reimbursement of the lawyers professional fees consisting of the
aforesaid P50,000.00 acceptance fee and reimbursement of the said success fee in par. 10 above; and lawyers
expenses of P2,000.00 for each hearing in this case;

5. The defendant be ordered to pay expenses and costs of litigation in the sum of at least P200,000.00.

Other reliefs that are just and equitable in the premises are, likewise, prayed for.[4]

As gleaned from the caption of the complaint, plaintiffs appear to be the heirs of Enrique Santos, represented by Enrique
G. Santos. The latter signed the Verification and Certificate of Non-Forum Shopping which reads:

I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am one of the children of the late Enrique Santos and I
represent the heirs of said Enrique Santos who are my co-plaintiffs in the above-captioned case and that I directed the
preparation of the instant complaint, the contents of which are true and correct to the best of my knowledge and the
attachments are faithful reproductions of the official copies in my possession.

I hereby certify that I have not commenced any other action or proceeding involving the same issues in the Supreme
Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency, and to the best of my
knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or different Divisions
thereof, or any other tribunal or agency, and that I shall notify this Commission within three days from notice that a
similar action or proceeding has been filed or is pending thereat.

IN WITNESS WHEREOF, I hereby affix my signature this 23rd day of October 2001 at Pasig City, Metro Manila.

(Sgd.)

ENRIQUE G. SANTOS

SUBSCRIBED AND SWORN to before me this 23rd day of October 2001 at Pasig City, affiant exhibiting to me his CTC
No. 07303074 issued at Sta. Cruz, Laguna on April 16, 2001.

(Sgd.)
Property 326
PETER FRANCIS G. ZAGALA

Notary Public

Until December 31, 2002

PTR No. 0287069

Issued on 1-10-01

At Pasig City[5]

Defendant moved to dismiss plaintiffs complaint on the following grounds: (1) plaintiffs failed to faithfully comply with the
procedural requirements set forth in Section 5, Rule 7 of the 1997 Rules of Civil Procedure; (2) the action (either
Quieting of Title or Accion Reinvindicatoria) had prescribed, the same having been filed only on October 24, 2001
beyond the statutory ten-year period therefor; and (3) that the complaint is defective in many respects.[6]

Defendant asserted that the case involved more than one plaintiff but the verification and certification against forum
shopping incorporated in the complaint was signed only by Enrique Santos. Although the complaint alleges that plaintiffs
are represented by Enrique Santos, there is no showing that he was, indeed, authorized to so represent the other
plaintiffs to file the complaint and to sign the verification and certification of non-forum shopping.[7] Thus, plaintiffs failed
to comply with Section 5, Rule 7 of the Rules of Court. Defendant cited the ruling of this Court in Loquias v. Office of the
Ombudsman.[8]

Defendant maintained that the complaint is defective in that, although there is an allegation that Enrique Santos
represents the other heirs, there is nothing in the pleading to show the latters authority to that effect; the complaint fails
to aver with particularity the facts showing the capacity of defendant corporation to sue and be sued; and the pleading
does not state the address of plaintiffs. Defendant likewise averred that the complaint should be dismissed on the
ground of prescription. It argued that plaintiffs anchor their claim on quieting of title and considering that they are not in
possession of the land in question, their cause of action prescribed after ten years. On the other hand, if the supposed
right of plaintiffs is based on accion reinvindicatoria, prescription would set in after 10 years from dispossession. In both
cases, defendant asserts, the reckoning point is 1984 when defendant acquired TCT No. 321744 and possession of the
land in question.

In their Comment[9] on the motion, plaintiffs averred that the relationship of a co-owner to the other co-owners is
fiduciary in character; thus, anyone of them could effectively act for another for the benefit of the property without need
for an authorization. Consequently, Enrique Santos had the authority to represent the other heirs as plaintiffs and to sign
the verification and certification against forum shopping.[10] On the issue of prescription, plaintiffs argued that the
prescriptive period for the actions should be reckoned from 1996, when defendant claimed ownership over the property
and barred plaintiffs from fencing their property, not in 1984 when TCT No. 321744 was issued by the Register of Deeds
in the name of defendant as owner.

In its reply, defendant averred that absent any authority from his co-heirs, Enrique Santos must implead them as
plaintiffs as they are indispensable parties. In response, plaintiffs aver that a co-owner of a property can execute an
action for quieting of title without impleading the other co-owners.

The trial court issued an Order[11] denying defendants motion to dismiss. It declared that since Enrique Santos was one
of the heirs, his signature in the verification and certification constitutes substantial
compliance with the Rules. The court cited the ruling of this Court in Dar v. Alonzo-Legasto.[12] The court, likewise, held
that prescription had not set in and that failure to state the address of plaintiffs in the complaint does not warrant the
dismissal of the complaint.

Defendant filed a motion for reconsideration, which the court likewise denied in an Order[13] dated July 10, 2002.

Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and Prohibition with Prayer for the Issuance of a
Temporary Restraining Order and/or Preliminary Injunction[14] before the CA, raising the following issues:

I.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD
THAT THE CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY ENRIQUE G. SANTOS ALONE IS A
Property 327
SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE, IN CLEAR
CONTRAVENTION OF THE RULES OF COURT, AND THE RULING IN LOQUIAS V. OFFICE OF THE OMBUDSMAN,
G.R. NO. 1399396 (SIC), AUGUST 16, 2000, 338 SCRA 62, AND ORTIZ V. COURT OF APPEALS, G.R. NO. 127393,
299 SCRA 708 (DECEMBER 4, 1998).

II.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION IN APPLYING
THE RULING IN DAR, ET. AL. V. HON. ROSE MARIE ALONZO-LEGASTO, ET. AL., G.R. NO. 143016, AUGUST 30,
2000 TO THE INSTANT CASE.

III.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD
THAT THE AUTHORITY OF ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE
COMPLAINT AGAINST THE INC IS A MATTER OF EVIDENCE.

IV.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD
THAT THE ACTION FOR QUIETING OF TITLE AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-
45415) HAS NOT YET PRESCRIBED.[15]

Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos signed the verification and certification of
non-forum shopping. Under Section 5, Rule 7 of the 1997 Rules of Civil Procedure, all the plaintiffs must sign, unless
one of them is authorized by a special power of attorney to sign for and in behalf of the others. Petitioner argues that the
bare claim of Enrique Santos that he signed the verification and certification in his behalf and of the other plaintiffs who
are his co-heirs/co-owners of the property does not even constitute substantial compliance of the rule. Contrary to the
ruling of the trial court, the absence or existence of an authority of Enrique Santos to sign the verification and
certification for and in behalf of his co-plaintiffs is not a matter of evidence. The defect is fatal to the complaint of
respondents and cannot be cured by an amendment of the complaint. The trial court erred in applying the ruling of this
Court in Dar v. Alonzo-Legasto.[16]

Petitioner maintained that the action of respondents, whether it be one for quieting of title or an accion reinvindicatoria,
had prescribed when the complaint was filed on October 24, 2001. Petitioner asserts that this is because when
respondents filed their complaint, they were not in actual or physical possession of the property, as it (petitioner) has
been in actual possession of the property since 1984 when TCT No. 321744 was issued to it by the Register of Deeds.
This is evident from the nature of a reinvindicatory action itself which is an action whereby plaintiff alleges ownership
over the subject parcel of land and seeks recovery of its full possession. By their action, respondents thereby admitted
that petitioner was in actual possession of the property, and as such, respondents action for quieting of title or accion
reinvindicatoria may prescribe in ten (10) years from 1984 or in 1994, it appearing that it acted in good faith when it
acquired the property from the registered owner, conformably with Article 555(4) of the New Civil Code.

On April 7, 2005, the CA rendered the assailed decision[17] dismissing the petition, holding that the RTC did not commit
grave abuse of its discretion amounting to lack or excess of jurisdiction in denying petitioners motion to dismiss. As the
Court held in DAR v. Alonzo-Legasto[18] and in Gudoy v. Guadalquiver,[19] the certification signed by one with respect
to a property over which he shares a common interest with the rest of the plaintiffs (respondents herein) substantially
complied with the Rules. As to the issue of prescription, the appellate court held that the prescriptive period should be
reckoned from 1996, when petitioner claimed ownership and barred respondents from fencing the property.

Petitioner is now before this Court on petition for review on certiorari, raising the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE CERTIFICATION OF NON-FORUM
SHOPPING SIGNED BY RESPONDENT ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH
SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE AND IN APPLYING THE CASE OF GUDOY V.
GUADALQUIVER, 429 SCRA 723, WITHOUT REGARD TO MORE RECENT JURISPRUDENCE.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE AUTHORITY OF RESPONDENT
ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE
PETITIONER IS A MATTER OF EVIDENCE.
Property 328
III.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION FOR QUIETING OF TITLE
AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED.[20]

Petitioner reiterated its arguments in support of its petition in the CA as its arguments in support of its petition in the
present case.

Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification and certification against forum shopping read:

Sec. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be under oath,
verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and
correct of his personal knowledge or based on authentic records.

A pleading required to be verified which contains a verification based on information and belief or upon knowledge,
information and belief, or lacks a proper verification, shall be treated as an unsigned pleading.

Sec. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or
other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any
court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if
he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact
within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other
initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon
motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein
shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If
the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions.

The purpose of verification is simply to secure an assurance that the allegations of the petition (or complaint) have been
made in good faith; or are true and correct, not merely speculative. This requirement is simply a condition affecting the
form of pleadings, and noncompliance therewith does not necessarily render it fatally defective. Indeed, verification is
only a formal, not a jurisdictional requirement.[21]

The issue in the present case is not the lack of verification but the sufficiency of one executed by only one of plaintiffs.
This Court held in Ateneo de Naga University v. Manalo,[22] that the verification requirement is deemed substantially
complied with when, as in the present case, only one of the heirs-plaintiffs, who has sufficient knowledge and belief to
swear to the truth of the allegations in the petition (complaint), signed the verification attached to it. Such verification is
deemed sufficient assurance that the matters alleged in the petition have been made in good faith or are true and
correct, not merely speculative.

The same liberality should likewise be applied to the certification against forum shopping. The general rule is that the
certification must be signed by all plaintiffs in a case and the signature of only one of them is insufficient. However, the
Court has also stressed in a number of cases that the rules on forum shopping were designed to promote and facilitate
the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its
own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents
of the certification. This is because the requirement of strict compliance with the provisions merely underscores its
mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely
disregarded.[23]

Property 329
The substantial compliance rule has been applied by this Court in a number of cases: Cavile v. Heirs of Cavile,[24]
where the Court sustained the validity of the certification signed by only one of petitioners because he is a relative of the
other petitioners and co-owner of the properties in dispute; Heirs of Agapito T. Olarte v. Office of the President of the
Philippines,[25] where the Court allowed a certification signed by only two petitioners because the case involved a family
home in which all the petitioners shared a common interest; Gudoy v. Guadalquiver,[26] where the Court considered as
valid the certification signed by only four of the nine petitioners because all petitioners filed as co-owners pro indiviso a
complaint against respondents for quieting of title and damages, as such, they all have joint interest in the undivided
whole; and Dar v. Alonzo-Legasto,[27] where the Court sustained the certification signed by only one of the spouses as
they were sued jointly involving a property in which they had a common interest.

It is noteworthy that in all of the above cases, the Court applied the rule on substantial compliance because of the
commonality of interest of all the parties with respect to the subject of the controversy.

Applying the doctrines laid down in the above cases, we find and so hold that the CA did not err in affirming the
application of the rule on substantial compliance. In the instant case, the property involved is a 936-square-meter real
property. Both parties have their respective TCTs over the property. Respondents herein who are plaintiffs in the case
below have a common interest over the property being the heirs of the late Enrique Santos, the alleged registered owner
of the subject property as shown in one of the TCTs. As such heirs, they are considered co-owners pro indiviso of the
whole property since no specific portion yet has been adjudicated to any of the heirs. Consequently, as one of the heirs
and principal party, the lone signature of Enrique G. Santos in the verification and certification is sufficient for the RTC to
take cognizance of the case. The commonality of their interest gave Enrique G. Santos the authority to inform the RTC
on behalf of the other plaintiffs therein that they have not commenced any action or claim involving the same issues in
another court or tribunal, and that there is no other pending action or claim in another court or tribunal involving the
same issues. Hence, the RTC correctly denied the motion to dismiss filed by petitioner.

Considering that at stake in the present case is the ownership and possession over a prime property in Quezon City, the
apparent merit of the substantive aspects of the case should be deemed as a special circumstance or compelling reason
to allow the relaxation of the rule.

Time and again, this Court has held that rules of procedure are established to secure substantial justice. Being
instruments for the speedy and efficient administration of justice, they may be used to achieve such end, not to derail it.
In particular, when a strict and literal application of the rules on non-forum shopping and verification will result in a patent
denial of substantial justice, these may be liberally construed.[28] The ends of justice are better served when cases are
determined on the merits after all parties are given full opportunity to ventilate their causes and defenses rather than on
technicality or some procedural imperfections.[29]

Indeed, this Court strictly applied the rules on verification and certification against forum shopping as in the cases of
Loquias v. Office of the Ombudsman[30] and Tolentino v. Rivera.[31] However, in both cases, the commonality of
interest between or among the parties is wanting. In Loquias, the co-parties were being sued in their individual
capacities as mayor, vice mayor and members of the municipal board. In Tolentino, the lone signature of Tolentino was
held insufficient because he had no authority to sign in behalf of the Francisco spouses. In such case, the Court
concluded that Tolentino merely used the spouses names for whatever mileage he thought he could gain. It is thus clear
from these cases that the commonality of interest is material in the relaxation of the Rules.

Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-plaintiffs, we find no necessity to show
such authority. Respondents herein are co-owners of the subject property. As such co-owners, each of the heirs may
properly bring an action for ejectment, forcible entry and detainer, or any kind of action for the recovery of possession of
the subject properties. Thus, a co-owner may bring such an action, even without joining all the other co-owners as co-
plaintiffs, because the suit is deemed to be instituted for the benefit of all.[32]

We uphold the validity of the complaint because of the following circumstances: (1) the caption of the instant case is
Heirs of Enrique Santos v. Iglesia ni Cristo;[33] (2) the opening statement of the complaint states that plaintiffs are the
heirs of Enrique Santos and likewise names the particular heirs of the latter who instituted the complaint below;[34] (3)
the case involves a property owned by the predecessor-in-interest of plaintiffs therein;[35] and (4) the verification signed
by Enrique G. Santos clearly states that he is one of the children of the late Enrique Santos and that he represents the
heirs of said Enrique Santos.[36]

On the issue of prescription of action, petitioner avers that the action of respondents is one to quiet title and/or accion
reinvindicatoria, and that respondents asserted ownership over the property and sought the recovery of possession of
the subject parcel of land. It insists that the very nature of the action presupposes that respondents had not been in
actual and material possession of the property, and that it was petitioner which had been in possession of the property
since 1984 when it acquired title thereon. The action of respondent prescribed in ten years from 1984 when petitioner
allegedly dispossessed respondents, in accordance with Article 555(4) of the New Civil Code.

Property 330
The contention of petitioner has no merit. The nature of an action is determined by the material allegations of the
complaint and the character of the relief sought by plaintiff, and the law in effect when the action was filed irrespective of
whether he is entitled to all or only some of such relief.[37] As gleaned from the averments of the complaint, the action of
respondents was one for quieting of title under Rule 64 of the Rules of Court, in relation to Article 476 of the New Civil
Code. The latter provision reads:

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

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.

A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land appearing in some
legal form but which is, in fact, unfounded, or which it would be inequitable to enforce.[38] An action for quieting of title is
imprescriptible until the claimant is ousted of his possession.[39]

The owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if, at the time of the
commencement of his action, he was not in actual possession of real property. After all, under Article 477 of the New
Civil Code, the owner need not be in possession of the property. If on the face of TCT No. 321744 under the name of
plaintiff, its invalidity does not appear but rests partly in pais, an action for quieting of title is proper.[40]

In the present case, respondents herein, as plaintiffs below, alleged in their complaint, that their father, Enrique Santos,
was the owner of the property based on TCT No. 57272 issued on July 27, 1961; and that, after his death on February
9, 1970, they inherited the property; Enrique Santos, during his lifetime, and respondents, after the death of the former,
had been in actual, continuous and peaceful possession of the property until 1994 when petitioner claimed ownership
based on TCT No. 321744 issued on September 18, 1984 and barred respondents from fencing their property.

Petitioners claim that it had been in actual or material possession of the property since 1984 when TCT No. 321744 was
issued in its favor is belied by the allegations in the complaint that respondents had been in actual and material
possession of the property since 1961 up to the time they filed their complaint on October 24, 2001.

Admittedly, respondents interposed the alternative reinvindicatory action against petitioner. An accion reinvindicatoria
does not necessarily presuppose that the actual and material possession of the property is on defendant and that
plaintiff seeks the recovery of such possession from defendant. It bears stressing that an accion reinvindicatoria is a
remedy seeking the recovery of ownership and includes jus possidendi, jus utendi, and jus fruendi as well. It is an action
whereby a party claims ownership over a parcel of land and seeks recovery of its full possession.[41] Thus, the owner of
real property in actual and material possession thereof may file an accion reinvindicatoria against another seeking
ownership over a parcel of land including jus vindicandi, or the right to exclude defendants from the possession thereof.
In this case, respondents filed an alternative reinvindicatory action claiming ownership over the property and the
cancellation of TCT No. 321744 under the name of petitioner. In fine, they sought to enforce their jus utendi and jus
vindicandi when petitioner claimed ownership and prevented them from fencing the property.

Since respondents were in actual or physical possession of the property when they filed their complaint against
petitioner on October 24,
2001, the prescriptive period for the reinvindicatory action had not even commenced to run, even if petitioner was able to
secure TCT No. 321744 over the property in 1984. The reason for this is that

x x x one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is
in possession.[42]

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP No.
72686 is AFFIRMED. Costs against petitioner.

Property 331
SO ORDERED.

G.R. No. 75884 September 24, 1987

JULITA GO ONG, FOR HERSELF AND AS JUDICIAL GUARDIAN OF STEVEN GO ONG, petitioners,
vs.
THE HON. COURT OF APPEALS, ALLIED BANKING CORPORATION and the CITY SHERIFF OF QUEZON CITY,
respondents.

PARAS, J.:

This is a petition for review on certiorari of the March 21, 1986 Decision * of the Court of Appeals in AC-G.R. CV No.
02635, "Julita Ong etc. vs. Allied Banking Corp. et al." affirming, with modification, the January 5, 1984 Decision of the
Regional Trial Court of Quezon City in Civil Case No. Q-35230.

The uncontroverted facts of this case, as found by the Court of Appeals, are as follows:

...: Two (2) parcels of land in Quezon City Identified as Lot No. 12, Block 407, Psd 37326 with an area of 1960.6 sq. m.
and Lot No. 1, Psd 15021, with an area of 3,660.8 sq. m. are covered by Transfer Certificate of Title No. 188705 in the
name of "Alfredo Ong Bio Hong married to Julita Go Ong "(Exh. D). Alfredo Ong Bio Hong died on January 18, 1975 and
Julita Go Ong was appointed administratrix of her husband's estate in Civil Case No. 107089. The letters of
administration was registered on TCT No. 188705 on October 23, 1979. Thereafter, Julita Go Ong sold Lot No. 12 to
Lim Che Boon, and TCT No. 188705 was partially cancelled and TCT No. 262852 was issued in favor of Lim Che Boon
covering Lot No. 12 (Exh. D-4). On June 8, 1981 Julita Go Ong through her attorney-in-fact Jovita K. Yeo (Exh. 1)
mortgaged Lot No. 1 to the Allied Banking Corporation to secure a loan of P900,000.00 obtained by JK Exports, Inc. The
mortgage was registered on TCT No. 188705 on the same date with the following notation: "... mortgagee's consent
necessary in case of subsequent alienation or encumbrance of the property other conditions set forth in Doc. No. 340,
Page No. 69, Book No. XIX, of the Not. Public of Felixberto Abad". On the loan there was due the sum of P828,000.00
and Allied Banking Corporation tried to collect it from Julita Go Ong, (Exh. E). Hence, the complaint alleging nullity of the
contract for lack of judicial approval which the bank had allegedly promised to secure from the court. In response
thereto, the bank averred that it was plaintiff Julita Go Ong who promised to secure the court's approval, adding that
Julita Go Ong informed the defendant that she was processed the sum of P300,000.00 by the JK Exports, Inc. which will
also take charge of the interest of the loan.

Concluding, the trial court ruled:

Absent (of) any evidence that the property in question is the capital of the deceased husband brought into the marriage,
said property should be presumed as acquired during the marriage and, therefore, conjugal property,

After the dissolution of the marriage with the death of plaintiff's husband, the plaintiff acquired, by law, her conjugal
share, together with the hereditary rights thereon. (Margate vs. Rabacal, L-14302, April 30, 1963). Consequently, the
mortgage constituted on said property, upon express authority of plaintiff, notwithstanding the lack of judicial approval, is
valid, with respect to her conjugal share thereon, together with her hereditary rights.

On appeal by petitioner, respondent Court of Appeals affirmed, with modification, the appealed decision (Record, pp. 19-
22). The dispositive portion of the appellate court's decision reads:

WHEREFORE, with the modification that the extrajudicial foreclosure proceedings instituted by defendant against
plaintiff shall be held in abeyance to await the final result of Civil Case No. 107089 of the Court of First Instance of
Manila, 6th Judicial District Branch XXXII, entitled "IN THE MATTER OF THE INTESTATE ESTATE OF THE LATE
ALFREDO ONG BIO: JULITA GO ONG, ADMINISTRATRIX". In pursuance with which the restraining order of the lower
court in this case restraining the sale of the properties levied upon is hereby ordered to continue in full force and effect
coterminous with the final result of Civil Case No. 107089, the decision appealed from is hereby affirmed. Costs against
plaintiff-appellant.

SO ORDERED.

On April 8, 1986, petitioner moved for the reconsideration of the said decision (Ibid., pp. 24-29), but in a Resolution
dated September 11, 1986, respondent court denied the motion for lack of merit (Ibid., p. 23). Hence, the instant petition
(Ibid., pp. 6-17).

The Second Division of this Court, in a Resolution dated November 19, 1986 (Rollo, p. 30), without giving due course to
the petition, resolved to require private respondent to comment thereon and it did on February 19, 1987 (Ibid., pp. 37-
42). Thereafter, in a Resolution dated April 6, 1987, the petition was given due course and the parties were required to
file their respective memoranda (Ibid., p. 43).

Petitioner filed her Memorandum on May 13, 1987 (Ibid., pp. 45-56), while private respondent filed its Memorandum on
May 20, 1987 (Ibid., pp. 62-68).

The sole issue in this case is —

WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE PARCEL OF LAND UNDER PETITIONER'S
ADMINISTRATION IS NULL AND VOID FOR WANT OF JUDICIAL APPROVAL.
Property 332
The instant petition is devoid of merit.

The well-settled rule that the findings of fact of the trial court are entitled to great respect, carries even more weight
when affirmed by the Court of Appeals as in the case at bar.

In brief, the lower court found: (1) that the property under the administration of petitioner — the wife of the deceased, is
a community property and not the separate property of the latter; (2) that the mortgage was constituted in the wife's
personal capacity and not in her capacity as administratrix; and (3) that the mortgage affects the wife's share in the
community property and her inheritance in the estate of her husband.

Petitioner, asserting that the mortgage is void for want of judicial approval, quoted Section 7 of Rule 89 of the Rules of
Court and cited several cases wherein this Court ruled that the regulations provided in the said section are mandatory.

While petitioner's assertion may have merit insofar as the rest of the estate of her husband is concerned the same is not
true as regards her conjugal share and her hereditary rights in the estate. The records show that petitioner willingly and
voluntarily mortgaged the property in question because she was processed by JK Exports, Inc. the sum of P300,000.00
from the proceeds of the loan; and that at the time she executed the real estate mortgage, there was no court order
authorizing the mortgage, so she took it upon herself, to secure an order.

Thus, in confirming the findings of the lower court, as supported by law and the evidence, the Court of Appeals aptly
ruled that Section 7 of Rule 89 of the Rules of Court is not applicable, since the mortgage was constituted in her
personal capacity and not in her capacity as administratrix of the estate of her husband.

Nevertheless, petitioner, citing the cases of Picardal, et al. vs. Lladas (21 SCRA 1483) and Fernandez, et al. vs.
Maravilla (10 SCRA 589), further argues that in the settlement proceedings of the estate of the deceased spouse, the
entire conjugal partnership property of the marriage is under administration. While such may be in a sense true, that fact
alone is not sufficient to invalidate the whole mortgage, willingly and voluntarily entered into by the petitioner. An
opposite view would result in an injustice. Under similar circumstances, this Court applied the provisions of Article 493 of
the Civil Code, where the heirs as co-owners shall each have the full ownership of his part and the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even effect of the alienation or mortgage,
with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership (Philippine National Bank vs. Court of Appeals, 98 SCRA 207 [1980]).

Consequently, in the case at bar, the trial court and the Court of Appeals cannot be faulted in ruling that the questioned
mortgage constituted on the property under administration, by authority of the petitioner, is valid, notwithstanding the
lack of judicial approval, with respect to her conjugal share and to her hereditary rights. The fact that what had been
mortgaged was in custodia legis is immaterial, insofar as her conjugal share and hereditary share in the property is
concerned for after all, she was the ABSOLUTE OWNER thereof. This ownership by hers is not disputed, nor is there
any claim that the rights of the government (with reference to taxes) nor the rights of any heir or anybody else have been
prejudiced for impaired. As stated by Associate Justice (later Chief Justice) Manuel Moran in Jakosalem vs. Rafols, et
al., 73 Phil. 618 —

The land in question, described in the appealed decision, originally belonged to Juan Melgar. The latter died and the
judicial administration of his estate was commenced in 1915 and came to a close on December 2, 1924, only. During the
pendency of the said administration, that is, on July 5, 1917, Susana Melgar, daughter of the deceased Juan Melgar,
sold the land with the right of repurchase to Pedro Cui, subject to the stipulation that during the period for the repurchase
she would continue in possession of the land as lessee of the purchase. On December 12, 1920, the partition of the
estate left by the deceased Juan Melgar was made, and the land in question was adjudicated to Susana Melgar. In
1921, she conveyed, in payment of professional fees, one-half of the land in favor of the defendant-appellee Nicolas
Rafols, who entered upon the portion thus conveyed and has been in possession thereof up to the present. On July 23,
1921, Pedro Cui brought an action to recover said half of the land from Nicolas Rafols and the other half from the other
defendants, and while that case was pending, or about August 4, 1925, Pedro Cui donated the whole land in question to
Generosa Teves, the herein plaintiff-appellant, after trial, the lower court rendered a decision absolving Nicolas Rafols
as to the one-half of the land conveyed to him by Susana Melgar, and declaring the plaintiff owner of the other half by
express acknowledgment of the other defendants. The plaintiff appealed from that part of the judgment which is
favorable to Nicolas Rafols.

The lower court absolved Nicolas Rafols upon the theory that Susana Melgar could not have sold anything to Pedro Cui
because the land was then in custodia legis, that is, under judicial administration. This is error. That the land could not
ordinary be levied upon while in custodia legis, does not mean that one of the heirs may not sell the right, interest or
participation which he has or might have in the lands under administration. The ordinary execution of property in
custodia legis is prohibited in order to avoid interference with the possession by the court. But the sale made by an heir
of his share in an inheritance, subject to the result of the pending administration, in no wise stands in the way of such
administration.

The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court cannot adversely affect the substantive rights
of private respondent to dispose of her Ideal [not inchoate, for the conjugal partnership ended with her husband's death,
and her hereditary rights accrued from the moment of the death of the decedent (Art. 777, Civil Code) share in the co-
heirship and/or co-ownership formed between her and the other heirs/co-owners (See Art. 493, Civil Code, supra.). Sec.
7, Art. 89 of the Civil Code applies in a case where judicial approval has to be sought in connection with, for instance,
the sale or mortgage of property under administration for the payment, say of a conjugal debt, and even here, the
conjugal and hereditary shares of the wife are excluded from the requisite judicial approval for the reason already
adverted to hereinabove, provided of course no prejudice is caused others, including the government.

Moreover, petitioner is already estopped from questioning the mortgage. An estoppel may arise from the making of a
promise even though without consideration, if it was intended that the promise should be relied upon and in fact it was
relied upon, and if a refusal to enforce it would be virtually to sanction the perpetration of fraud or would result in other
injustice (Gonzalo Sy Trading vs. Central Bank, 70 SCRA 570).
Property 333
PREMISES CONSIDERED, the instant petition is hereby DENIED and the assailed decision of the Court of Appeals is
hereby AFFIRMED.

SO ORDERED.

G.R. No. 102380 January 18, 1993

HERODOTUS P. ACEBEDO and DEMOSTHENES P. ACEBEDO, petitioners,

vs.
HON. BERNARDO P. ABESAMIS, MIGUEL ACEBEDO, ALEXANDER ACEBEDO, NAPOLEON ACEBEDO,
RIZALINO ACEBEDO, REPUBLICA ACEBEDO, FILIPINAS ACEBEDO and YU HWA PING, respondents.

Heminio L. Ruiz for petitioners.

Vicente D. Millora for private respondents.

Romero A. Yu for respondent Yu Hua Ping.

CAMPOS, JR., J.:

The lower court's jurisdiction in approving a Deed of Conditional Sale executed by respondents-heirs and ordering
herein administrator-petitioner Herodotus Acebedo to sell the remaining portions of said properties, despite the absence
of its prior approval as a probate court, is being challenged in the case at bar.

The late Felix Acebedo left an estate consisting of several real estate properties located in Quezon City and Caloocan
City, with a conservative estimated value of about P30 million. Said estate allegedly has only the following unsettled
claims:

a. P87,937.00 representing unpaid real estate taxes due Quezon City;

b. P20,244.00 as unpaid real estate taxes due Caloocan City;

c. The unpaid salaries/allowances of former Administrator Miguel Acebedo, and the incumbent Administrator
Herodotus Acebedo; and

d. Inheritance taxes that may be due on the net estate.

The decedent was succeeded by eight heirs, two of whom are the petitioners herein, and the others are the private
respondents.

Due to the prolonged pendency of the case before the respondent Court for sixteen years, respondents-heirs filed a
"Motion for Approval of Sale", on October 4, 1989. The said sale involved the properties covered by Transfer Certificate
of Title Nos. 155569, 120145, 9145, and 18709, all of which are registered in Quezon City, and form part of the estate.
The consideration for said lots was twelve (12) million pesos and by that time, they already had a buyer. It was further
stated in said Motion that respondents-heirs have already received their proportionate share of the six (6) million pesos
paid by the buyer, Yu Hwa Ping, as earnest money; that the balance of P6,000,000.00 is more than enough to pay the
unsettled claims against the estate. Thus, they prayed for the Court to direct the administrator, Herodotus Acebedo
(referred to as petitioner-administrator hereafter):

1. to sell the properties mentioned in the motion;

2. with the balance of P6 million, to pay all the claims against the Estate; and

3. to distribute the residue among the Heirs in final settlement of the Estate.

To the aforesaid Motion, herein petitioner-administrator interposed an "Opposition to Approval of Sale", to wit:

1. That he has learned that some of the heirs herein have sold some real estate property of the Estate located at
Balintawak, Quezon City, without the knowledge of the herein administrator, without the approval of this Honorable
Court and of some heirs, and at a shockingly low price;

2. That he is accordingly hereby registering his vehement objection to the approval of the sale, perpetrated in a
manner which can even render the proponents of the sale liable for punishment for contempt of this Honorable Court;

3. The herein Administrator instead herein prays this Honorable Court to authorize the sale of the above
mentioned property of the Estate to generate funds to pay certain liabilities of the Estate and with the approval of this
Honorable Court if warranted, to give the heirs some advances chargeable against theirs (sic) respective shares, and,
for the purpose to authorize the herein Administrator, and the other heirs to help the Administrator personally or through
a broker, to look for a buyer for the highest obtainable price, subject always to the approval of this Honorable Court.1

On October 30, 1989, herein petitioners moved to be given a period of forty-five (45) days within which to look for a
buyer who will be willing to buy the properties at a price higher than P12,000,000.00.

The case was set for hearing on December 15, 1989. However, by said date, petitioners have not found any buyer
offering better terms. Thus, they asked the Court, on February 8, 1990, for an in extendible period of thirty days to look
for a buyer.

Property 334
Petitioner-administrator then filed a criminal complaint for falsification of a public document against Yu Hwa Ping and
notary public Eugenio Obon on February 26, 1990. He initiated this complaint upon learning that it was Yu Hwa Ping
who caused the notarization of the Deed of Conditional Sale wherein allegedly petitioner-administrator's signature was
made to appear. He also learned that after he confronted the notary public of the questioned document, the latter
revoked his notarial act on the same.

On April 2, 1990, petitioner-administrator filed the civil action to secure the declaration by the Court of the nullity of the
Deed of Conditional Sale and the Deed of Absolute Sale.

The period granted herein petitioners having lapsed without having found a buyer, petitioner Demosthenes Acebedo
sought to nullify the Orders granting them several periods within which to look for a better buyer. Respondents filed a
comment thereon.

Having miserably failed to find a better buyer, after seven long months, petitioner-administrator filed another "Opposition
to Approval of Sale", dated May 10, 1990, maintaining that the sale should wait for the country to recover from the
effects of the coup d'etat attempts, otherwise, the properties should be divided among the heirs.

On June 21, 1990, petitioners filed a "Motion for Leave of Court to Mortgage and Lease some of the Properties of the
Estate". To this Motion, respondents filed an Opposition on the following grounds : that the motion is not proper because
of the pending motion to approve the sale of the same properties; that said conditional sale was initiated by petitioner-
administrator who had earlier signed a receipt for P500,000.00 as earnest money; that the approval of the sale would
mean Yu Hwa Ping's assumption of payment of the realty taxes; that the estate has no further debts and thus, the
intestate administrator may be terminated.

On August 17, 1990, respondent Court issued an Order, the dispositive portion of which, stated, among others, to wit:2

b. the motion filed by the heirs-movants, dated October 4, 1989, praying that the new administrator be directed to
sell the properties covered by TCT Nos. 155569, 120145, 9145 and 18709, in favor of Yu Hwa Ping is hereby denied;
and

c. the new administrator is hereby granted leave to mortgage some properties of the estate at a just and
reasonable amount, subject to the approval of the Court.

On December 4, 1990, the respondent Judge issued an order resolving to call the parties to a conference on December
17, 1990. The conference was held, but still the parties were unable to arrive at an agreement. So, on January 4, 1991,
it was continued, wherein the parties actually agreed that the heirs be allowed to sell their shares of the properties to Yu
Hwa Ping for the price already agreed upon, while herein petitioners negotiate for a higher price with Yu Hwa Ping.

Petitioners, then, instead filed a "Supplemental Opposition" to the approval of the Deed of Conditional Sale.

On March 29, 1991, the respondent Court issued the challenged Order, the dispositive portion of which states, to wit:

WHEREFORE, the Order dated August 7, 1990, is hereby lifted, reconsidered and set aside, and another one is hereby
issued as follows:

1. Approving the conditional sale, dated September 10, 1989, executed by the heirs-movants, in favor of Yu Hwa
Ping, pertaining to their respective shares in the properties covered by TCT Nos. 155569, 120145, 1945 and 18709 of
the Register of Deeds of Quezon City;

2. Ordering the administrator Herodotus Acebedo to sell the remaining portions of the said properties also in favor
of Yu Hwa Ping at the same price as the sale executed by the herein heirs-movants;

3. Ordering Yu Hwa Ping to deposit with the Court the total remaining balance of the purchase price for the said
lots within TWENTY (20) DAYS from notice hereof;

4. The motion to cite former administrator Miguel Acebedo in contempt of court, resulting from his failure to submit
the owner's copy of TCT Nos. 155569, and 120145 is hereby denied.3

Yu Hwa Ping, on April 4, 1991, deposited the remaining balance of the purchase price for the properties subject of the
Deed of Conditional Sale in the amount of P6,500,000.00.

Petitioners herein received the questioned Order on April 11, 1991. Twenty one (21) days thereafter, they filed a Motion
for Reconsideration, praying that the Court reinstate its Order of August 17, 1990. To this, private respondents filed their
Opposition.4

Instead of making a reply, petitioners herein filed a Supplemental Motion for Reconsideration. The motions for
reconsideration of herein petitioners were denied by the respondent Court on August 23, 1991.

On September 23, 1991, herein petitioners filed a Motion for Partial Reconsideration, hoping for the last time that they
would be able to convince the Court that its Order dated March 29, 1991 in effect approving the conditional sale is
erroneous and beyond its jurisdiction.

On October 17, 1991, the respondent Court denied the Motion for Partial Reconsideration for "lack of merit".

On November 7, 1991, private respondents filed a Motion for Execution of the Order dated March 29, 1991. This was
pending resolution when the petitioners filed this Petition for Certiorari.

Property 335
The controversy in the case at bar revolves around one question: Is it within the jurisdiction of the lower court, acting as
a probate court, to issue an Order approving the Deed of Conditional Sale executed by respondents-heirs without prior
court approval and to order herein Administrator to sell the remaining portion of said properties?

We answer in the positive?

In the case of Dillena vs. Court of Appeals,5 this Court made a pronouncement that it is within the jurisdiction of the
probate court to approve the sale of properties of a deceased person by his prospective heirs before final adjudication.
Hence, it is error to say that this matter should be threshed out in a separate action.

The Court further elaborated that although the Rules of Court do not specifically state that the sale of an immovable
property belonging to an estate of a decedent, in a special proceeding, should be made with the approval of the court,
this authority is necessarily included in its capacity as a probate court. Therefore, it is clear that the probate court in the
case at bar, acted within its jurisdiction in issuing the Order approving the Deed of Conditional Sale.

We cannot countenance the position maintained by herein petitioners that said conditional sale is null and void for lack
of prior court approval. The sale precisely was made conditional, the condition being that the same should first be
approved by the probate court.

Petitioners herein anchor their claim on Section 7, Rule 89 of the Rules of Court.6 It is settled that court approval is
necessary for the validity of any disposition of the decedent's estate. However, reference to judicial approval cannot
adversely affect the substantive rights of the heirs to dispose of their ideal share in the co-heirship and/or co-ownership
among the heirs.7

This Court had the occasion to rule that there is no doubt that an heir can sell whatever right, interest, or participation he
may have in the property under administration. This is a matter which comes under the jurisdiction of the probate court.8

The right of an heir to dispose of the decedent's property, even if the same is under administration, is based on the Civil
Code provision9 stating that the possession of hereditary property is deemed transmitted to the heir without interruption
and from the moment of the death of the decedent, in case the inheritance is accepted. Where there are however, two or
more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs. 10

The Civil Code, under the provisions on co-ownership, further qualifies this right.11 Although it is mandated that each
co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and thus may alienate,
assign or mortgage it, and even substitute another person in its enjoyment, the effect of the alienation or the mortgage,
with respect to the
co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-
ownership.12 In other words, the law does not prohibit a co-owner from selling, alienating or mortgaging his ideal share
in the property held in common.13

As early as 1942, this Court has recognized said right of an heir to dispose of property under administration. In the case
of Teves de Jakosalem vs. Rafols, et al.,14 it was said that the sale made by an heir of his share in an inheritance,
subject to the result of the pending administration, in no wise, stands in the way of such administration. The Court then
relied on the provision of the Old Civil Code, Article 440 and Article 339 which are still in force as Article 533 and Article
493, respectively, in the new Civil Code. The Court also cited the words of a noted civilist, Manresa: "Upon the death of
a person, each of his heirs 'becomes the undivided owner of the whole estate left with respect to the part or portion
which might be adjudicated to him, a community of ownership being thus formed among the co-owners of the estate
which remains undivided'."

Private respondents having secured the approval of the probate court, a matter which is unquestionably within its
jurisdiction, and having established private respondents' right to alienate the decedent's property subject of
administration, this Petition should be dismissed for lack of merit.

PREMISES considered, Petition is hereby DISMISSED. With Costs.

SO ORDERED.

G.R. No. L-14429 June 30, 1962

RAMON MERCADO, BASILIA MERCADO joined by her husband,

FRANCISCO RONQUILLO, plaintiffs-appellants,
vs.
PIO D. LIWANAG, defendant-appellee.

Patricio D. Senador and Ricardo D. Galano for plaintiffs-appellants.

D. B. Melliza and D. M. Gangoso for defendant-appellee.

MAKALINTAL, J.:

The present appeal, taken by the plaintiff from the decision of the Court of First Instance of Rizal (Quezon City), is
before us on a certification by the Court of Appeals, the questions involved being purely legal. The case was submitted
to the trial court upon the following stipulation of facts:

1. That the complaint filed by the plaintiffs against the defendant seeks to annul a Deed of Sale on the ground of fraud
and on the provisions of Article 493 of the Civil Code.

2. That on July 14, 1956, in the City of Manila, Philippines, the plaintiff Ramon Mercado and the defendant Pio D.
Liwanag executed a Deed of Sale, photostat copy of which is attached hereto marked as Annex "A" and forming an
Property 336
integral hereof, covering a divided half and described in meter and bounds, or an area of 2,196 square meters at P7.00
per square meter or for a total amount of P15,372.00, of a parcel of land situated at Kangkong, Quezon City, covered
Transfer Certificate of Title No. 20805 of the Register of Deeds for the province of Rizal, now Quezon City:

3. That the said T.C.T. No. 20805 containing an area of 4,392 square meters, is issued in the name of the plaintiffs
Ramon Mercado and Basilia Mercado as co-owners PRO-INDIVISO, and the sale was without the knowledge and
consent of plaintiff Basilia Mercado;

4. That out of the total area of 4,392 square meters, an area consisting of 391 square meters was expropriated by the
National Power Corporation sometime in December 1953 at a price of P10.00 per square meter, Civil Case No. Q-829
(Eminent Domain) of the Court of First Instance of Rizal, Quezon City Branch, entitled "National Power Corporation,
plaintiff, versus Brigido Almodoban, et als., defendants," but this fact of expropriation came to the knowledge of the
defendant Pio D. Liwanag upon the registration of the Deed of Sale Annex "A". .

5. That pursuant to the Deed of Sale Annex "A" T.C.T. No. 32757 was issued in the name of Pio Liwanag and Basilia
photostat copy of which is hereto attached and marked as Annex "B".

6. That defendant submits the receipt signed by plaintiff Ramon Mercado dated July 14, 1956 photostat copy of which is
attached hereto and marked as Annex "C" and promissory note of the same date for P10,000.00, photostat copy of
which is attached hereto and marked is Annex "D" which are both self-explanatory, but plaintiff Ramon Mercado
disclaims payment and receipt of such check and promissory note, the check being uncashed and is still in the
possession of Atty. Eugenio de Garcia;

7. That plaintiffs and defendant respectfully submit for resolution of this Honorable Court the issue of whether or not the
Deed of Sale Annex "A" court be annulled based in the foregoing facts in relation to Article 493 of the Civil Code, setting
aside all other issues in the pleadings.

Upon the issue thus presented the trial court held that under Article 493 of the Civil Code the sale in question was valid
and so dismissed the complaint, without costs. This ruling is now assailed as erroneous.

Article 493 provides:

Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal
rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the
portion which may be alloted to him in the division upon the termination of the co-ownership.

Appellants except to the application of this provision in this case for the reason that in the deed of sale sought to be
annulled the vendor disposed of a divided and determinate half of the land under co-ownership. The argument, as far as
it goes, seems to be tenable. What a co-owner may dispose of under Article 493 is only his undivided aliquot share,
which shall be limited to the portion which may be allotted to him upon the termination of the co-ownership. He has no
right to divide the property into parts and then convey one part by metes and bounds. Lopez vs. Ilustre, 5 Phil. 567;
Gonzales, et al. vs. Itchon, et al., 47 O.G. 6290; Manresa, Vol. 3, 7th ed. p. 630.

The pertinent recitals in the disputed deed of sale read:

I hereby sell, transfer and convey absolutely and irrevocably unto said Pio D. Liwanag, his heirs, successors, and
assigns my rights, title and interest on my chosen portion of the above described property which consist of one-half of
aforesaid ownership bounded on the West by Pacifico Gahudo, on the North by Hacienda de Piedad and on the South
by Circumferential Road, consisting of 50 meters more or less frontal length along Circumferential Road, and with a total
area of 2,196 square meters as indicated in Co-owners Transfer Certificate of Title No. 20805.

Nevertheless, upon registration of the sale and cancellation of transfer certificate of title No. 20805 in the names of the
previous co-owners, the new transfer certificate that was issued (No. 32757) did not reproduce the description in the
instrument but carried the names of appellee Pio D. Liwanag and Basilia Mercado as "co-owners pro-indiviso." There is
no suggestion by any of the parties that this new certificate of title is invalid, irregular or inaccurate. There is no prayer
that it be canceled. As far as Basilia Mercado is concerned she retains in all their integrity her rights as co-owner which
she had before the sale, and consequently, she has no cause to complain. Much less has Ramon Mercado, for it was he
who was responsible for whatever indicia there may be in the deed of sale that a determinate portion of the property was
being sold, as shown by the second paragraph thereof, quoted without contradiction in appellee's brief as follows:

That the aforesaid Transfer Certificate of Title was originally in my name, but was split into two equal parts by virtue of
my desire to donate to my sister-in-law Juana Gregorio an equal half thereof with the understanding that I as donor
would have the absolute power to choose from the property owned in common that part which I would like to segregate
for myself or my heir and assigns.

And of course appellee himself not only does not challenge the new certificate of title, wherein he appears as co-owner
of an undivided one-half share, but precisely relies upon it for his defense in this action.

The title is the final and conclusive repository of the rights of the new co-owners. The question of whether or not the
deed of sale should be annulled must be considered in conjunction with the title issued pursuant thereto. Since,
according to this title, what appellee acquired by virtue of the sale is only an undivided half-share of the property, which
under the law the vendor Ramon Mercado had the absolute right to dispose of, the trial court committed no error in
dismissing the action. The end-result of the transaction is in accordance with Article 493 of the Civil Code.1äwphï1.ñët

The other point raised by appellants refers to the statement in the dispositive portion of the decision appealed from that
"the stipulation with regards to the deed of sale based on the ground of fraud is insufficient for all purposes and besides,
no proof showing the allegation of such fraud exists in the accord." It is contended that the trial court erred in making
such statement, the same being contrary to the stipulation in which the parties expressly eliminated the issue of fraud.
Property 337
From the entire context of the decision, however, it can be gathered that the case was not decided on the basis of the
said issue. In any event, even if the court did err in considering the question of fraud in spite of the stipulation, the error
is not a prejudicial one. As far as the dismissal of the actions concerned, it makes no difference whether fraud has not
been proven or fraud has been abandoned as an issue by express agreement.

WHEREFORE, the decision appealed from is affirmed, with costs against appellants in this instance.

G.R. No. L-33158 October 17, 1985

VALENTINA G. VILLANUEVA, assisted by her husband SEVERINO FERI, ANTONIO G. VILLANUEVA, ANGEL G.
VILLANUEVA and OLIMPIA G. VILLANUEVA, assisted by her husband F. DAGUIMOL, petitioners,
vs.
HON. ALFREDO C. FLORENDO, Judge of the CFI of Cagayan, Second Branch, ERLINDA V. VALLANGCA,
CONCEPCION G. VILLANUEVA and MACARIO K. VILLANUEVA, respondents.

CUEVAS, J.:

Petition for review on certiorari of the decision 1 dated July 14, 1970 of the then Court of First Instance of Cagayan
Branch II, in Civil Case No. 1486-A, entitled "Valentina G. Villanueva, et al., plaintiffs, versus Erlinda V. Vallangca, et al.,
defendants", the dispositive portion of which reads as follows:

WHEREFORE, the Court hereby renders judgment—

1. Ordering the reformation and amendment of Exhibit "3" by deleting the phrase located at the western side of
the lot which is five and one half (5-½) meters in width and fifteen (15) meters long';

2. Declaring Erlinda Vallangca, married to Concepcion Villanueva absolute owners of an Ideal and undivided
share of one-half (½) of the land described in paragraph 2 of the complaint, which was conveyed to them by Exhibit;

3. Ordering the partition of the land described in paragraph 2 of the complaint among the heirs of Basilia Garcia;

4. Ordering the dismissal of the defendants' counterclaim; and

5. Ordering the Clerk of Court to return to the plaintiffs the sum of P1,000.00 deposited by them with costs de
oficio.

SO ORDERED.

Petitioners and respondent Concepcion Villanueva are the children of spouses Macario Villanueva (one of the
respondents) and Basilia Garcia. Said spouses owned a small parcel of land with an area of 165 square meters situated
along Pres. Quezon St., in the Poblacion of Aparri, Cagayan. Sometime in 1944, Basilia Garcia died intestate, leaving
her husband, Macario Villanueva and children (herein petitioners) as her sole and only legitimate heirs.

On May 13, 1964, the surviving spouse, Macario, without the subject lot having been partitioned, sold in favor of Erlinda
Vallangca, the wife of respondent Concepcion Villanueva, one-half or 82.5 square meters of the aforementioned lot,
particularly the western portion thereof, measuring 15-½ meters by 15 meters, for P1,100.00, as evidenced by a Deed of
Sale marked as Exhibit "3". 2 Having been informed of the sale, petitioners signified their intention to redeem the lot in
question but respondent vendee refused to allow such redemption contending that she is the wife of one of the legal
heirs and therefore redemption will not lie against her because she is not the "third party" or "stranger" contemplated in
the law.

Petitioners filed a complaint for rescission of sale and legal redemption of the portion sold to Vallangca. The trial court,
on July 14, 1970, rendered a decision ordering among other things, the reformation of the Deed of Sale and declaring
the vendee the absolute owner of the subject lot.

Petitioners now submit 3 that the lower court erred—

(1) in holding that the property sold to Erlinda Vallangca, married to Concepcion Villanueva, is a conjugal
partnership property of the spouses, and therefore, the right of legal redemption will not lie against Erlinda Vallangca
and Concepcion Villanueva, instead of holding that Erlinda V. Vallangca, being a "third person" or .stranger the right of
legal redemption contemplated under Art. 1620 and, or 1088 (NCC) can be exercised as against the vendee in the sale;

(2) inordering for the formation and amendment Exh. 3 by deletion of the phrase "located at the western side of the
lot which is five and one-half meters in width and 15 meters long" instead of annulling and rescinding the sale as called
for under the circumstances; and

(3) in ordering the partition of the property described in par. 2 of the complaint among the heirs of Basilia Garcia,
where partition is not warranted considering that there is still pending before the same court a separate action for
partition of the same property filed by Concepcion Villanueva against plaintiff-petitioners.

Art. 1620 of the New Civil Code provides:

A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of
them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a
reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share
they may respectively have in the thing owned in common.
Property 338
It is not disputed that co-ownership exists but the lower court disallowed redemption because it considered the vendee,
Erlinda Vallangca, a co-heir, being married to Concepcion Villanueva, and the conveyance was held valid since it was in
favor of the conjugal partnership of the spouses in the absence of any statement that it is paraphernal in character.
Within the meaning of Art. 1620, the term "third person" or "stranger" refers to all persons who are not heirs in
succession, and by heirs are meant only those who are called either by will or the law to succeed the deceased and who
actually succeeds. In short, a third person is any one who is not a co-owner. 4 The vendee is related by affinity to the
deceased by reason of her marriage to one of the heirs and being married to Concepcion does not entitle the vendee to
inherit or succeed in her own right. She is not an heir of Basilia Garcia nor included in the "family relations" of spouses
Macario and Basilia as envisioned in Art. 217 of the Civil Code.

Art. 217. Family relations shall in lude those:

(1) Between Husband and wife;

(2) Between parent and child;
(3) Among other ascendants and their descendants;
(4) Among brothers and sisters.

The co-owners should therefore be allowed to exercise their right to redeem the property sold to Erlinda Vallangca. To
deny petitioners the right of redemption recognized in Art. 1620 of the Civil Code is to defeat the purpose of minimizing
co-ownership and to contravene the public policy in this regard. Moreover, it would result in disallowing the petitioners a
way out of what, in the words of Manresa, "might be a disagreeable or inconvenient association into which they have
been thrust." 5 Respondent seller Macario, as co-owner and before partition, has the right to freely sell and dispose of
his undivided interest or his Ideal share but not a divided part and one with boundaries as what was done in the case at
bar. It is an inherent and peculiar feature of co-ownership that although the co-owners may have unequal shares in the
common property quantitatively speaking, each co-owner has the same right in a qualitative sense as any one of the
other co-owners. In other words, every co-owner is the owner of the whole and over the whole, he exercises the right of
dominion, but he is at the same time the owner of a portion which is truly abstract because until division is effected, such
portion is not correctly determined. 6

It appearing that a separate action for partition of the subject lot is still pending before the CFI of Cagayan, the trial
court's order of partition is, therefore, uncalled for.

WHEREFORE, the petition is hereby GRANTED and the decision dated July 14, 1970 of the then CFI of Cagayan, Br. II,
is accordingly REVERSED. Costs against private respondents.

SO ORDERED.

Concepcion, Jr., Abad Santos, Escolin and Alampay, JJ., concur.

Separate Opinions

AQUINO, J., dissenting:

This is an intra-family litigation over 82.5 square meters of land. The spouses Macario K. Villanueva and Basilia Garcia
owned a lot with an area of 165 square meters located on President Quezon Street, Aparri, Cagayan. Basilia died in
1944 survived by Macario and their five children named Valentina, Olimpia, Angel, Antonio and Concepcion (a male
person), the husband of Erlinda V. Villangca.

The five children each owned a 1/10 share of that same lot while Macario owned ½ thereof as his conjugal share or 82,5
square meters. Note that north of the lot is the lot of Severino Feri, Valentina's husband. On 3/4 of the lot stands a
house of strong materials occupied by Valentina.

Macario claims that he is the owner of the house because after liberation he bought a house for P500 and transferred to
the lot (6 tsn Jan. 16, 1970). On the other hand, the trial court found that it is owned by Valentina (p. 64, Rollo). Macario
admits in his letter, Exhibit D.

On May 13, 1964 Macario (he is an insurance under-writer and was 79 in 1970 when he testified) sold for P1,1 00 to
Erlinda, the wife of his son Concepcion, his ½ conjugal share in said lot but he made the mistake of selling "the western
side of the lot". He should have sold only his Ideal proindiviso ½ share. He had to sell because he had to pay one
Timbang the mortgage debt secured by the lot (4 tsn Jan. 16, 1970; p. 35, Rollo).

Four years after the sale, or on October 17, 1968, the four children sued their father brother and sister-in-law for
rescision of the sale and for redemption. The alleged that there was no written notice to them of the sale, that they
learned of it only in September 1968 and that the house on the lot was valued at P7,000. They consigned the
redemption price of P1,100.

Macario answered the complaint without Counsel's assistance. He stated therein that to avoid trouble and quarelling
among the members of his family he would like to cancel the sale since Erlinda could not buy Valentina's house, to sell
his ½ share to Valentina and to return the P1,100 to Erlinda (Exh. C. pp. 32-33, Rollo).

Property 339
That answer should have terminated the case. But later a motion to dismiss and an answer were filed by Erlinda,
Concepcion and Macario. They insisted on the validity of the sale to Erlinda. Valentina filed another case, Civil Case No.
1501-A, for partition.

When the trial judge categorically asked Macario what was his proposition about the case, he said that it was his desire
that his son Concepcion should stay on the disputed lot because he had no lot on which to build his house (9-10 tsn Jan.
16, 1970).

Judge Florendo in his decision dated July 14, 1970 declared Erlinda the owner of the ½ portion bought by her after
ordering the reformation of the deed of sale to make it appear that an Ideal ½ share was bought by her and ordering the
return of the P1,100 to Valentina. Judge Florendo also ordered partition of the lot. Valentina and her brothers and sister
appealed to this Court under Republic Act No. 5440.

Macario created in this case a big legal problem for a small property. That problem would not have arisen had he been
properly legally advised. Instead of selling his proindiviso) ½ share or 82.5 square meters to his son Concepcion, a co-
owner to the extent of 1/06 or 16.5 square meters, he chose to sell it to his daughter-in-law, Erlinda, thus provoking the
issue of whether Erlinda is a third-person with respect to the co-owners.

Had he sold his 11/2 share to his son Concepcion, a co-owner, there would be no question about the sale to a "third
person". The right of redemption does not exist with respect to the vendee-co-owner. The Civil Code provides:

ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or
of any of them, are sold to a third person. ... (1522a)

ART. 1088. Should any of the heirs sell his hereditary rights to a (stranger) before the partition, any or all of the co-heirs
may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within
the period of one month from the time they were notified in writing of the sale by the vendor. (1067a)

Note that the "third person" in article 1620 is extrano (stranger) in the Spanish original of article 1522, not "tercero"
which is the Spanish for "third person".

Manresa, commenting on article 1067, now article 1088, observes, that "el marido de una heredera" is a stranger (7
Codigo Civil Espanol, 7th Ed., 1955, p. 812).

I am of the opinion that no right of redemption exists in favor of Erlinda's sisters-in-law and brothers-in-law because the
sale was made to the (conjugal partnership of Erlinda and Concepcion), a co-owner. The sale made Concepcion and
Erlinda the co-owners of 6/10 or 3/5 of the 165-square- meter lot. We have to be realistic and pragmatic in this case.

Even now, Macario could himself revoke or rectify the sale and resell his ½ share to Concepcion.

Castan Tobenas says that an "extrano" is a person who is not a co-owner. Literally, Erlinda is not a co-owner but the
unblinkable fact is that she is married to a co-owner and the ½ portion sold became her conjugal property and that of her
husband. They in turn are co-owners of that conjugal 1/2 portion.

The view that Erlinda is not a third person with respect to the co-ownership is supported by the ruling in Saclolo and
Pascual vs. Madlangsakay and Court of Agrarian Relations, 106 Phil. 1038. It was held in that case:

Under legal principles, by the contract of marriage, a man and woman enter a joint life, acting, living, and working as
one, whether under the common law or under the civil upon marriage the husband and the wife become one single,
moral, spritual and social being, not only for purposes of procreation for the purpose of mutual help and protection,
physically, morally and materially. There is between them a full and complete community existence.

Castan Tobenas says that "el matrimonio es el acto solemne por medio del cual el hombre y la mujer constituyen entre
si una union legal para la plena y perpetua comunidad de existencia".

Justice Labrador says that "if there is unity and community of existence between husband and wife, then the husband
may not be considered as a being distinct and different from the wife."

Hence, in the Saclolo case it was ruled that for purposes of the Agricultural Tenancy Law, Republic Act No. 1199, where
the wife sought to eject a tenant from her paraphernal land on the ground that her husband, who was jobless, would
work on the land, the tenant may be ejected although the law provides that the landowner may eject the tenant only
when he will personally cultivate his land.

The unity of husband and wife is patent in this case. Plaintiffs Valentina and Olimpia had to bring this case with the
assistance of their husbands against Erlinda and her husband, Concepcion.

The majority opinion relies on Basa vs. Aguilar, 117 SCRA 128 where one-half of a parcel of land, with an area of
32,383 square meters, was owned proindiviso by Olimpia, Arsenio, Nemesio, Ricardo, Atanacia Juliana and Feliciano,
surnamed Basa, and the other half was owned proindiviso by the spouses Genaro Puyat and Brigida Mesina.

The Puyat's sold their undivided ½ share to their son-in-law, Primo Tiongson, who was married to their daughter Macaria
It was held that the Basas had the right to redeem the ½ share sold to Tiongson who was considered a third person with
respect to the co-ownership inspite of the fact that he was a son-in-law of the two co-owners.

The instant case is different from the Basa case because the vendee herein is the wife of a co-owner Concepcion, who
owns a 1/10 (proindiviso) share of the disputed lot.

What is the just solution of this case? To a fair-minded person, the judicious solution is to award the lot to Valentina
whose house is built on 3/4 of the lot. The P1,100 deposited by her in payment of the ½ (proindiviso) share of her father
Property 340
should be paid to Erlinda. This is in accordance with the original answer of Macario (Exh. C) which should be regarded
as binding on him.

The second case filed by Valentina, Civil Case No. 1501-A, should be consolidated with the instant case. In the two
cases the trial judge should determine what amount at current prices should be paid by Valentina for the 1/10 share of
Concepcion and the 1/10 share of each of the other children. This solution should establish peace among the five
children.

Separate Opinions

AQUINO, J., dissenting:

This is an intra-family litigation over 82.5 square meters of land. The spouses Macario K. Villanueva and Basilia Garcia
owned a lot with an area of 165 square meters located on President Quezon Street, Aparri, Cagayan. Basilia died in
1944 survived by Macario and their five children named Valentina, Olimpia, Angel, Antonio and Concepcion (a male
person), the husband of Erlinda V. Villangca.

The five children each owned a 1/10 share of that same lot while Macario owned ½ thereof as his conjugal share or 82,5
square meters. Note that north of the lot is the lot of Severino Feri, Valentina's husband. On 3/4 of the lot stands a
house of strong materials occupied by Valentina.

Macario claims that he is the owner of the house because after liberation he bought a house for P500 and transferred to
the lot (6 tsn Jan. 16, 1970). On the other hand, the trial court found that it is owned by Valentina (p. 64, Rollo). Macario
admits in his letter, Exhibit D.

On May 13, 1964 Macario (he is an insurance under-writer and was 79 in 1970 when he testified) sold for P1,1 00 to
Erlinda, the wife of his son Concepcion, his ½ conjugal share in said lot but he made the mistake of selling "the western
side of the lot". He should have sold only his Ideal proindiviso ½ share. He had to sell because he had to pay one
Timbang the mortgage debt secured by the lot (4 tsn Jan. 16, 1970; p. 35, Rollo).

Four years after the sale, or on October 17, 1968, the four children sued their father brother and sister-in-law for
rescision of the sale and for redemption. The alleged that there was no written notice to them of the sale, that they
learned of it only in September 1968 and that the house on the lot was valued at P7,000. They consigned the
redemption price of P1,100.

Macario answered the complaint without Counsel's assistance. He stated therein that to avoid trouble and quarelling
among the members of his family he would like to cancel the sale since Erlinda could not buy Valentina's house, to sell
his ½ share to Valentina and to return the P1,100 to Erlinda (Exh. C. pp. 32-33, Rollo).

That answer should have terminated the case. But later a motion to dismiss and an answer were filed by Erlinda,
Concepcion and Macario. They insisted on the validity of the sale to Erlinda. Valentina filed another case, Civil Case No.
1501-A, for partition.

When the trial judge categorically asked Macario what was his proposition about the case, he said that it was his desire
that his son Concepcion should stay on the disputed lot because he had no lot on which to build his house (9-10 tsn Jan.
16, 1970).

Judge Florendo in his decision dated July 14, 1970 declared Erlinda the owner of the ½ portion bought by her after
ordering the reformation of the deed of sale to make it appear that an Ideal ½ share was bought by her and ordering the
return of the P1,100 to Valentina. Judge Florendo also ordered partition of the lot. Valentina and her brothers and sister
appealed to this Court under Republic Act No. 5440.

Macario created in this case a big legal problem for a small property. That problem would not have arisen had he been
properly legally advised. Instead of selling his proindiviso) ½ share or 82.5 square meters to his son Concepcion, a co-
owner to the extent of 1/06 or 16.5 square meters, he chose to sell it to his daughter-in-law, Erlinda, thus provoking the
issue of whether Erlinda is a third-person with respect to the co-owners.

Had he sold his 11/2 share to his son Concepcion, a co-owner, there would be no question about the sale to a "third
person". The right of redemption does not exist with respect to the vendee-co-owner. The Civil Code provides:

ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or
of any of them, are sold to a third person. ... (1522a)

ART. 1088. Should any of the heirs sell his hereditary rights to a (stranger) before the partition, any or all of the co-heirs
may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within
the period of one month from the time they were notified in writing of the sale by the vendor. (1067a)

Note that the "third person" in article 1620 is extrano (stranger) in the Spanish original of article 1522, not "tercero"
which is the Spanish for "third person".

Manresa, commenting on article 1067, now article 1088, observes, that "el marido de una heredera" is a stranger (7
Codigo Civil Espanol, 7th Ed., 1955, p. 812).

Property 341
I am of the opinion that no right of redemption exists in favor of Erlinda's sisters-in-law and brothers-in-law because the
sale was made to the (conjugal partnership of Erlinda and Concepcion), a co-owner. The sale made Concepcion and
Erlinda the co-owners of 6/10 or 3/5 of the 165-square- meter lot. We have to be realistic and pragmatic in this case.

Even now, Macario could himself revoke or rectify the sale and resell his ½ share to Concepcion.

Castan Tobenas says that an "extrano" is a person who is not a co-owner. Literally, Erlinda is not a co-owner but the
unblinkable fact is that she is married to a co-owner and the ½ portion sold became her conjugal property and that of her
husband. They in turn are co-owners of that conjugal 1/2 portion.

The view that Erlinda is not a third person with respect to the co-ownership is supported by the ruling in Saclolo and
Pascual vs. Madlangsakay and Court of Agrarian Relations, 106 Phil. 1038. It was held in that case:

Under legal principles, by the contract of marriage, a man and woman enter a joint life, acting, living, and working as
one, whether under the common law or under the civil upon marriage the husband and the wife become one single,
moral, spritual and social being, not only for purposes of procreation for the purpose of mutual help and protection,
physically, morally and materially. There is between them a full and complete community existence.

Castan Tobenas says that "el matrimonio es el acto solemne por medio del cual el hombre y la mujer constituyen entre
si una union legal para la plena y perpetua comunidad de existencia".

Justice Labrador says that "if there is unity and community of existence between husband and wife, then the husband
may not be considered as a being distinct and different from the wife."

Hence, in the Saclolo case it was ruled that for purposes of the Agricultural Tenancy Law, Republic Act No. 1199, where
the wife sought to eject a tenant from her paraphernal land on the ground that her husband, who was jobless, would
work on the land, the tenant may be ejected although the law provides that the landowner may eject the tenant only
when he will personally cultivate his land.

The unity of husband and wife is patent in this case. Plaintiffs Valentina and Olimpia had to bring this case with the
assistance of their husbands against Erlinda and her husband, Concepcion.

The majority opinion relies on Basa vs. Aguilar, 117 SCRA 128 where one-half of a parcel of land, with an area of
32,383 square meters, was owned proindiviso by Olimpia, Arsenio, Nemesio, Ricardo, Atanacia Juliana and Feliciano,
surnamed Basa, and the other half was owned proindiviso by the spouses Genaro Puyat and Brigida Mesina.

The Puyat's sold their undivided ½ share to their son-in-law, Primo Tiongson, who was married to their daughter Macaria
It was held that the Basas had the right to redeem the ½ share sold to Tiongson who was considered a third person with
respect to the co-ownership inspite of the fact that he was a son-in-law of the two co-owners.

The instant case is different from the Basa case because the vendee herein is the wife of a co-owner Concepcion, who
owns a 1/10 (proindiviso) share of the disputed lot.

What is the just solution of this case? To a fair-minded person, the judicious solution is to award the lot to Valentina
whose house is built on 3/4 of the lot. The P1,100 deposited by her in payment of the ½ (proindiviso) share of her father
should be paid to Erlinda. This is in accordance with the original answer of Macario (Exh. C) which should be regarded
as binding on him.

The second case filed by Valentina, Civil Case No. 1501-A, should be consolidated with the instant case. In the two
cases the trial judge should determine what amount at current prices should be paid by Valentina for the 1/10 share of
Concepcion and the 1/10 share of each of the other children. This solution should establish peace among the five
children.

G.R. No. L-44546 January 29, 1988

RUSTICO ADILLE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO, DOMINGO ASEJO, JOSEFA
ASEJO and SANTIAGO ASEJO, respondents.

SARMIENTO, J.:

In issue herein are property and property rights, a familiar subject of controversy and a wellspring of enormous conflict
that has led not only to protracted legal entanglements but to even more bitter consequences, like strained relationships
and even the forfeiture of lives. It is a question that likewise reflects a tragic commentary on prevailing social and cultural
values and institutions, where, as one observer notes, wealth and its accumulation are the basis of self-fulfillment and
where property is held as sacred as life itself. "It is in the defense of his property," says this modern thinker, that one "will
mobilize his deepest protective devices, and anybody that threatens his possessions will arouse his most passionate
enmity." 1

The task of this Court, however, is not to judge the wisdom of values; the burden of reconstructing the social order is
shouldered by the political leadership-and the people themselves.

The parties have come to this Court for relief and accordingly, our responsibility is to give them that relief pursuant to the
decree of law.
Property 342
The antecedent facts are quoted from the decision 2 appealed from:

xxx xxx xxx

... [T]he land in question Lot 14694 of Cadastral Survey of Albay located in Legaspi City with an area of some 11,325 sq.
m. originally belonged to one Felisa Alzul as her own private property; she married twice in her lifetime; the first, with
one Bernabe Adille, with whom she had as an only child, herein defendant Rustico Adille; in her second marriage with
one Procopio Asejo, her children were herein plaintiffs, — now, sometime in 1939, said Felisa sold the property in pacto
de retro to certain 3rd persons, period of repurchase being 3 years, but she died in 1942 without being able to redeem
and after her death, but during the period of redemption, herein defendant repurchased, by himself alone, and after that,
he executed a deed of extra-judicial partition representing himself to be the only heir and child of his mother Felisa with
the consequence that he was able to secure title in his name alone also, so that OCT. No. 21137 in the name of his
mother was transferred to his name, that was in 1955; that was why after some efforts of compromise had failed, his
half-brothers and sisters, herein plaintiffs, filed present case for partition with accounting on the position that he was only
a trustee on an implied trust when he redeemed,-and this is the evidence, but as it also turned out that one of plaintiffs,
Emeteria Asejo was occupying a portion, defendant counterclaimed for her to vacate that, —

Well then, after hearing the evidence, trial Judge sustained defendant in his position that he was and became absolute
owner, he was not a trustee, and therefore, dismissed case and also condemned plaintiff occupant, Emeteria to vacate;
it is because of this that plaintiffs have come here and contend that trial court erred in:

I. ... declaring the defendant absolute owner of the property;

II. ... not ordering the partition of the property; and

III. ... ordering one of the plaintiffs who is in possession of the portion of the property to vacate the land, p. 1
Appellant's brief.

which can be reduced to simple question of whether or not on the basis of evidence and law, judgment appealed from
should be maintained. 3

xxx xxx xxx

The respondent Court of appeals reversed the trial Court, 4 and ruled for the plaintiffs-appellants, the private
respondents herein. The petitioner now appeals, by way of certiorari, from the Court's decision.

We required the private respondents to file a comment and thereafter, having given due course to the petition, directed
the parties to file their briefs. Only the petitioner, however, filed a brief, and the private respondents having failed to file
one, we declared the case submitted for decision.

The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common?

Essentially, it is the petitioner's contention that the property subject of dispute devolved upon him upon the failure of his
co-heirs to join him in its redemption within the period required by law. He relies on the provisions of Article 1515 of the
old Civil Article 1613 of the present Code, giving the vendee a retro the right to demand redemption of the entire
property.

There is no merit in this petition.

The right of repurchase may be exercised by a co-owner with aspect to his share alone. 5 While the records show that
the petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner
of all of it. In other words, it did not put to end the existing state of co-ownership.

Necessary expenses may be incurred by one co-owner, subject to his right to collect reimbursement from the remaining
co-owners. 6 There is no doubt that redemption of property entails a necessary expense. Under the Civil Code:

ART. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation
of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by
renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such
waiver shall be made if it is prejudicial to the co-ownership.

The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of
the Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the
property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles
the vendee a retro to retain the property and consolidate title thereto in his name. 7 But the provision does not give to
the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership.

Neither does the fact that the petitioner had succeeded in securing title over the parcel in his name terminate the
existing co-ownership. While his half-brothers and sisters are, as we said, liable to him for reimbursement as and for
their shares in redemption expenses, he cannot claim exclusive right to the property owned in common. Registration of
property is not a means of acquiring ownership. It operates as a mere notice of existing title, that is, if there is one.

The petitioner must then be said to be a trustee of the property on behalf of the private respondents. The Civil Code
states:

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

Property 343
We agree with the respondent Court of Appeals that fraud attended the registration of the property. The petitioner's
pretension that he was the sole heir to the land in the affidavit of extrajudicial settlement he executed preliminary to the
registration thereof betrays a clear effort on his part to defraud his brothers and sisters and to exercise sole dominion
over the property. The aforequoted provision therefore applies.

It is the view of the respondent Court that the petitioner, in taking over the property, did so either on behalf of his co-
heirs, in which event, he had constituted himself a negotiorum gestor under Article 2144 of the Civil Code, or for his
exclusive benefit, in which case, he is guilty of fraud, and must act as trustee, the private respondents being the
beneficiaries, under the Article 1456. The evidence, of course, points to the second alternative the petitioner having
asserted claims of exclusive ownership over the property and having acted in fraud of his co-heirs. He cannot therefore
be said to have assume the mere management of the property abandoned by his co-heirs, the situation Article 2144 of
the Code contemplates. In any case, as the respondent Court itself affirms, the result would be the same whether it is
one or the other. The petitioner would remain liable to the Private respondents, his co-heirs.

This Court is not unaware of the well-established principle that prescription bars any demand on property (owned in
common) held by another (co-owner) following the required number of years. In that event, the party in possession
acquires title to the property and the state of co-ownership is ended . 8 In the case at bar, the property was registered in
1955 by the petitioner, solely in his name, while the claim of the private respondents was presented in 1974. Has
prescription then, set in?

We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by
repudiation (of the co-ownership). The act of repudiation, in turn is subject to certain conditions: (1) a co-owner
repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners; (3) the
evidence thereon is clear and conclusive, and (4) he has been in possession through open, continuous, exclusive, and
notorious possession of the property for the period required by law. 9

The instant case shows that the petitioner had not complied with these requisites. We are not convinced that he had
repudiated the co-ownership; on the contrary, he had deliberately kept the private respondents in the dark by feigning
sole heirship over the estate under dispute. He cannot therefore be said to have "made known" his efforts to deny the
co-ownership. Moreover, one of the private respondents, Emeteria Asejo, is occupying a portion of the land up to the
present, yet, the petitioner has not taken pains to eject her therefrom. As a matter of fact, he sought to recover
possession of that portion Emeteria is occupying only as a counterclaim, and only after the private respondents had first
sought judicial relief.

It is true that registration under the Torrens system is constructive notice of title, 10 but it has likewise been our holding
that the Torrens title does not furnish a shield for fraud. 11 It is therefore no argument to say that the act of registration is
equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration
operates as a universal notice of title.

For the same reason, we cannot dismiss the private respondents' claims commenced in 1974 over the estate registered
in 1955. While actions to enforce a constructive trust prescribes in ten years, 12 reckoned from the date of the
registration of the property, 13 we, as we said, are not prepared to count the period from such a date in this case. We
note the petitioner's sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent
misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only heir and child of his mother
Feliza with the consequence that he was able to secure title in his name also." 14 Accordingly, we hold that the right of
the private respondents commenced from the time they actually discovered the petitioner's act of defraudation. 15
According to the respondent Court of Appeals, they "came to know [of it] apparently only during the progress of the
litigation." 16 Hence, prescription is not a bar.

Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in a motion to dismiss or in
the answer otherwise it is deemed waived, 17 and here, the petitioner never raised that defense. 18 There are
recognized exceptions to this rule, but the petitioner has not shown why they apply.

WHEREFORE, there being no reversible error committed by the respondent Court of Appeals, the petition is DENIED.
The Decision sought to be reviewed is hereby AFFIRMED in toto. No pronouncement as to costs.

SO ORDERED,

G.R. No. 109910 April 5, 1995

REMEDIOS G. SALVADOR and GRACIA G. SALVADOR, petitioners,

vs.
COURT OF APPEALS, ALBERTO and ELPIA YABO, FRANCISCA YABO, et al., respondents.

DAVIDE, JR., J.:

Assailed in this petition is the legal determination made by the Court of Appeals on the issues of which portion of Lot No.
6080 and Lot No. 6180 formed part of the conjugal assets of the spouses Pastor Makibalo and Maria Yabo, and of
whether or not the rights of Pastor's co-heirs in the estate of Maria Yabo were extinguished through prescription or
laches.

Alipio Yabo was the owner of Lot No. 6080 and Lot No. 6180 situated in Barrio Bulua, Cagayan de Oro City, containing
an area of 1,267 and 3,816 square meters, respectively. Title thereto devolved upon his nine children, namely,
Victoriano, Procopio, Lope, Jose, Pelagia, Baseliza, Francisca, Maria, and Gaudencia, upon his death sometime before
or during the second world war.

On 28 April 1976, Pastor Makibalo, who is the husband of Maria Yabo, one of Alipio's children, filed with the then Court
of First Instance of Misamis Oriental a complaint, docketed as Civil Case No. 5000, against the spouses Alberto and
Property 344
Elpia Yabo for "Quieting of Title, Annulment of Documents, and Damages." In the complaint, he alleged that he owned a
total of eight shares of the subject lots, having purchased the shares of seven of Alipio's children and inherited the share
of his wife, Maria, and that except for the portion corresponding to Gaudencia's share which he did not buy, he
occupied, cultivated, and possessed continuously, openly, peacefully, and exclusively the two parcels of land. He then
prayed that he be declared the absolute owner of 8/9 of the lots in question.1

On 8 October 1976, the grandchildren and great-grandchildren of the late Alipio Yabo2 lodged with the same court a
complaint for partition and quieting of title with damages,3 docketed as Civil Case No. 5174, against Pastor Makibalo,
Enecia Cristal, and the spouses Eulogio and Remedies Salvador. They alleged that Lot No. 6080 and Lot No. 6180 are
the common property of the heirs of Alipio Yabo, namely, the plaintiffs, defendant Enecia Cristal, Maria Yabo and Jose
Yabo, whose share had been sold to Alberto Yabo; that after Alipio's death, the spouses Pastor and Maria Makibalo,
Enecia Cristal and Jose Yabo became the de facto administrators of the said properties; and that much to their surprise,
they discovered that the Salvador spouses, who were strangers to the family, have been harvesting coconuts from the
lots, which act as a cloud on the plaintiffs' title over the lots.

The plaintiffs then prayed that (a) they, as well as defendant Pastor Makibalo, in representation of his wife, and Enecia
Cristal, in representation of Gaudencia, be declared as the owners of the lots; (b) the Salvador spouses be declared as
having no rights thereto except as possible assignees of their co-defendants, Pastor Makibalo and Enecia Cristal; (c) the
lots be partitioned according to law among the aforementioned co-owners; and (d) the defendants be made to pay for
the value of the fruits they harvested from the lots and for moral and exemplary damages, attorney's fees, expenses of
the litigation, and costs of the suit.

The two cases were consolidated and jointly heard by Branch 5 of the Court of First Instance of Cagayan de Oro City.

By evidence, Pastor, Makibalo sought to prove the following allegations:

He was married to Maria Yabo who died on 17 March 1962.4 In August 1949, Jose and Victoriano, both surnamed
Yabo, sold their respective shares in the disputed lots to one Pedro Ebarat, and in 1952 the latter sold both shares to
Pastor Makibalo.5 Ebarat formalized this conveyance by executing an Affidavit of Waiver and Quitclaim dated 30 May
1969 in favor of Pastor.6

On 16 January 1951, the heirs of the late Lope Yabo sold Lope's shares in the litigated properties to one Dominador
Canomon,7 who, in turn, sold the same to Pastor.8 Canomon afterwards executed an Affidavit of Waiver and Quitclaim
in favor of the latter.9

Pastor Makibalo likewise purchased the shares of Baseliza in the two lots in 1942, of Procopio in 1957, of Francisca in
1958, and of Pelagia in 1967. The only share he did not buy was that of Gaudencia. After every purchase, he took
possession of the portions bought and harvested the products thereof.10

In 1966, Pastor sold back to Alberto a portion of Lot No. 6180 which was formerly the share of Alberto's father, Procopio.
11

In December 1968, Pastor mortgaged the two lots to the spouses Eulogio and Remedios Salvador. 12 On 26 September
1978, he executed a document denominated as a "Confirmation and Quitclaim" whereby he waived all his rights,
interests, and participation in the lots in favor of the Salvador spouses. 13

On the other hand, by their evidence, l4 the spouses Alberto and Elpia Yabo tried to prove that they had repurchased
from Pastor Makibalo the share of Procopio, which was previously sold to Pastor, and had bought the shares of Jose
and Maria. 15

Filoteo Yabo denied having sold the share of his father, Lope Yabo, in the contested lots and disowned his signature
and those of his mother, brothers, and sisters appearing at the back of Exhibit "C". 16

Ignacio Yabo testified that his father, Victoriano Yabo, did not know how to write and sign his name. He further declared
that he had no knowledge that his father affixed his thumbmark in the document marked as Exhibit "A" purporting to
alienate his father's share in the disputed lots. l7

On 15 January 1983, the trial court rendered its decision 18 holding as follows:

Assuming that the thumbmark on the typewritten name "Jose Yabo" in Exh. 3 was that of Jose Yabo, Alberto Yabo and
Elpia R. Yabo purchased the share of Jose Yabo in bad faith because they knew before and up to the execution of Exh.
3 on October 24, 1972 that Jose Yabo was no longer the owner of that area because from the documents she borrowed
from Mrs. Salvador they came to know that Jose Yabo had sold his shares to Pedro Ebarat, and they have seen that
Pastor Makibalo has been in possession of those shares together with the seven others exclusively as owner, he having
mortgaged them to Mrs. Salvador.

As Jose Yabo was no longer the owner of the one-ninth (1/9) shares which he sold to Alberto Yabo and Elpia Yabo
under Exh. 3, the sale is null and void, and Alberto and Elpia acquired nothing because Jose Yabo had no more title,
right or interest to dispose of.

...

Pastor Makibalo had been in possession of Jose Yabo's share since 1949 after purchasing it from Ebarat, and has been
in possession thereof up to September 26, 1978 when he sold it to the spouses Eulogio Salvador and Remedios
Salvador, who are now in possession of the same.

Exh. A, evidencing the sale of Victoriano Yabo's share to Pedro Ebarat was identified by the latter who testified that he
sold it to Pastor Makibalo in 1951. Exh. A is an ancient document — 1949 when the document came to existence up to

Property 345
now is more than 30 years, and the document had been in the possession of Pastor Makibalo, then Remedios Salvador
who had interest in its preservation.

As regards the shares of Lope Yabo, the same had been sold by his surviving spouse Juana Legaspi, and his children
Filoteo, Andresa, Jovita, Bonifacio, and Rundino for P105.00 on January 16, 1951 to Dominador Conomon (Exh. C and
C-1), who in turn sold it to Pastor Makibalo in 1952, executing a formal Deed of Waiver and Quitclaim on May 30, 1969
(Exh. D).

Exh. C is an ancient document, being more than 30 years old and has been in the possession of Pastor Makibalo and
then the spouses Eulogio and Remedios Salvador — who had an interest in its preservation. The claim of Filoteo Yabo
that the signatures appearing in Exh. C are not his and those of his brothers and sisters are of no avail, for if they were
not the ones who affixed those signatures and so they did not sell the shares of their father Lope Yabo, why did they not
then take possession of said shares — they remained silent from 1951 to September 16, 1976 a period of 25 years.
They are now [e]stopped by laches.

And as regards the shares of Baseliza, Francisca and Pelagia, there is no evidence presented to effectively rebut the
testimony of Pastor Makibalo that he acquired the shares of Baseliza Yabo in 1942 by changing it with a buffalo; that he
bought the shares of Francisca Yabo in 1958 and that he bought the shares of Pelagia Yabo in 1967; Pastor Makibalo
had been in possession of these shares from the time he acquired them, continuously, adversely, openly, and
peacefully, as owner up to the time he sold his rights and interest therein to the spouses Eulogio and Remedies
Salvador. The heirs of Baseliza, Francisca and Pelagia have not taken any step to protect their rights over those shares
for over 40 years in the case of Baseliza's share, for about 20 years in the case of Francisca's share, and for more than
10 years in the case of Pelagia's share. Laches, likewise has rendered their rights stale.

On March 10, 1966 Pastor Makibalo sold back to Alberto Yabo the share of Procopio Yabo in Lot 6180 (Exh. 1 and 2),
but there is nothing to show that. Pastor Makibalo also sold back Procopio's share in Lot 6080.

So then, by purchase, Pastor Makibalo and Maria Yabo acquired the shares of Baseliza, Victoriano, Jose, Lope,
Procopio and Francisca, or six (6) shares from Lots 6080 and 6180. These belonged to the conjugal partnership of
Pastor Makibalo and Maria Yabo. Maria Yabo had also a share from Lots 6080 and 6180, and Pastor Makibalo acquired
the shares of Pelagia Yabo in both Lots 6080 and 6180. All in all; Pastor Makibalo acquired eight shares in both Lot
6080 and 6180.

While Maria Yabo died on March 17, 1962, and so one-fourth (1/4) of the shares of Baseliza, Victoriano, Jose, Lope,
and Francisca, or one-fourth of five-ninth (5/9) of both lots and one-fourth (1/4) of Lot 6080 should go to the children of
the brothers and sisters of Maria Yabo by virtue of the provisions of Article 1001 of the New Civil Code, the latter have
lost their rights thereto by laches for their inaction for a very long period and their rights have become stale. On the other
hand, Pastor Makibalo who had been in possession of the whole of the eight shares in both Lots 6080 and 6180,
enjoying the fruits thereof exclusively, uninterruptedly, publicly, peacefully, and continuously from the death of Maria
Yabo up to the filing of the complaint in Civil Case No. 5174 on October 8, 1976, or a period of 14 years, had acquired
title to the whole of the eight shares in Lot 6080 and seven shares in Lot 6180 (the share of Procopio in Lot 6180 had
been sold back to Alberto Yabo).

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered finding Pastor Makibalo, now Eulogio Salvador and
Remedios Salvador the owner of eight (8) shares, equivalent to eight-ninth (8/9) of Lot No. 6080, and of seven (7)
shares, equivalent to seven-ninth (7/9) of Lot No. 6180, and therefore, ordering the partition of Lot 6080 so that the one-
ninth (1/9) alloted to Gaudencia Yabo will go to her heirs or their assigns, and the remaining eight-ninth (8/9) will go to
the spouses Eulogio Salvador and Remedios Salvador, as successor of Pastor Makibalo, and the partition of Lot 6180
so that the seven-ninth (7/9) portion which formerly belonged to Baseliza, Victoriano, Jose, Lope, Maria, Francisca, and
Pelagia will go to the spouses Eulogio and Remedios Salvador, the one-ninth (1/9) which formerly belonged to Procopio,
will go to Alberto Yabo, and the remaining one-ninth (1/9) which formerly belonged to Gaudencia, will go to Gaudencia's
heirs or their assigns.

Doc. No. 720, recorded on page 28 of Notarial Register No. VII, and acknowledged before Notary Public Isidro S.
Baculio (Exh. E) [purportedly executed by Maria Yabo and Pastor Makibalo] is hereby declared null and void, and so the
Office of the City Fiscal is directed to cause an investigation of this matter to find out the person or persons responsible
for the falsification of the said document, and if the evidence warrants, to file the corresponding criminal action in court.
The Office of the City Assessor of Cagayan de Oro City is, likewise, directed to cause the cancellation of Tax
Declarations Nos. 33553, marked as Exh. H-3, 33557, marked as Exh. H-2, both in the name of Alberto Yabo, for having
been issued on the basis of a falsified document. Let copies of this decision be furnished the Offices of the City Fiscal
and City Assessor, both of Cagayan de Oro City.

No pronouncement as to damages, attorney's fees and costs.

SO ORDERED. 19

The defendants in Civil Case No. 5000 and the plaintiffs in Civil Case No. 5174 appealed from the decision to the Court
of Appeals on 19 August 1983. 20

In its decision of 3 February 1993, 21 the Court of Appeals held that (a) Maria Yabo did not sell her share to Alberto and
Elpia Yabo; (b) prescription and laches have not run against the private respondents with respect to the 1/9 share of
Maria Yabo in the estate of her father and to her conjugal share in the portions acquired from her brothers and sisters;
and (c) Procopio never sold his share in Lot No. 6080 to Pastor Makibalo. More specifically it stated:

Exh. E is the document found by the lower court to be a falsification. This finding appellants do not dispute and have not
raised an error.

...

Property 346
While acknowledging. that upon the death of Maria Yabo on March 17, 1962, one-half (1/2) of the share of Maria Yabo
in Lots 6080 and 6180 and one-half (1/2) of Maria Yabo's conjugal share in the portions bought from Basiliza, Victoriano,
Jose, Lope, Pelagia and Francisca should go to the children of the brothers and sisters of Maria in accordance with
Article 1001 of the Civil Code, the lower court rule that said children have lost their rights by laches "for their inaction for
a very long period and their rights have become stale" (Decision, p. 16; Record, Vol. 2, p. 158).

Appellants in their second assignment of error aver that this is an error.

We agree that the lower court erred.

While between March 17, 1962 when Maria Yabo died and October 8, 1976, when Civil Case No. 5174 for partition was
filed, was a period of more than fourteen (14) years, that alone to our mind would not suffice to establish laches or
prescription. Upon the death of Maria Yabo, appellee Pastor Makibalo and appellants and the other children of the
brothers and sisters of Maria, by operation of law become co-owners of the one-ninth (1/9) share of Maria as heir of her
father Alipio and the conjugal share of Maria in the portions acquired from Basiliza, Victoriano, Jose, Lope, Pelagia and
Francisca. Time alone is not a decisive factor. Appellee Pastor Makibalo, it must be remembered, is the husband of
Maria and, therefore, an uncle in-law of appellants. In our culture, a demand by an heir or heirs for partition immediately
upon the death of a relative is more often taken not as a legitimate assertion of a right but of something else, like greed.
It must also be noted that the spouses, the appellee Pastor Makibalo and his deceased wife Maria, were childless and,
therefore, appellants and the other children of the brothers and sisters of Maria must have felt that at any rate the
property would go to them in the course of time. This probably explains why appellants started asserting their right over
the property only after appellee Pastor Makibalo sold the same to the spouses Eulogio and Remedios Salvador.
Besides, Lots 6080 and 6180 have a combined area only of 5,083 square meters and before the development of
Northern Mindanao, and even in 1962 when Maria Yabo died, were not that valuable. This is shown by the fact that each
heir sold his other share only for P110.00.

As we have said not time alone. In the early case of Cortes v. Oliva, 33 Phil. 480, it was held that"(o)rdinarily,
possession by one joint owner will not be presumed to be adverse to the others, but will, as a rule, be held to be for the
benefit of all. Much stronger evidence is required to show an adverse holding by one of several joint owners than by a
stranger; and in such cases, to sustain a plea of prescription, it must always clearly appear that one who was originally a
joint owner has repudiated the claims of his co-owners, and that his co-owners were apprised or should have been
apprised of his claim of adverse and exclusive ownership before the alleged prescription began to run (at page 484).
This ruling on prescription should apply with equal force to laches.

The third assignment of error challenges the finding of the lower court that "there is nothing to show that Pastor Makibalo
also sold back Procopio's share in Lot 6080" (Decision, p. 16; Records, Vol. 2,p. 158).

Exhibits 1 and 2 cover only Procopio's share in Lot 6180. In other words, Exhibits 1 and. 2 conveyed back to Alberto
Yabo only his father, Procopio's share in Lot 6180.

There is indeed no evidence that Pastor Makibalo also sold back to Alberto, his father Procopio's share in Lot 6080.

But from the evidence it appears that Procopio Yabo never sold his share in Lot 6080 to Pastor Makibalo. So there was
no need to convey back Procopio's share in Lot 6080.

This fact is evident from the Affidavit of Confirmation of Sale (Exh. M) dated April 22, 1970, executed by Alberto Yabo,
which is the very document relied upon by the lower court (Decision, p. 11; Record, Vol. 2, p. 153) in finding that "Alberto
Yabo admitted that the share of his father Procopio Yabo was previously bought by Pastor Makibalo." A look at Exh. M,
particularly par. 3 thereof, reveals that AlbertoYabo merely acknowledged or confirmed the sale of his father's share to
Pastor Makibalo in Lot 6180. In effect, it at the same time proves that Lot 6080 was never sold by Procopio to appellee
Pastor Makibalo; otherwise, it would have been included in the said Affidavit of Confirmation of Sale. The Deed of
Absolute Sale (Exh. 2) subsequently executed by Pastor Makibalo in favor of Alberto Yabo on April 23, 1970, further
proves this point, since the latter merely bought back what was previously sold, his father's share in Lot 6180.22

The respondent court then concluded and held as follows:

In summary, appellee Pastor Makibalo and his assigns, the spouses Eulogio and Remedios Salvador, are entitled only
to one-half (½) of the one-ninth (1/9) share of Maria and three-fourths (3/4) of the six-ninth (6/9) shares acquired from
Basiliza, Victoriano, Jose, Lope, Pelagia and Francisca. Accordingly, the partition should be done as follows:

(1) 1/9 of Lots 6080 end 6180 should be given to the heirs of Gaudencia Yabo or their successors and assigns;

(2) 1/9 of Lot 6180 should go to Alberto Yabo and his wife Elpia Yabo;

(3) 1/9 of Lot 6080 should be given to the heirs of Procopio Yabo and their successors end assigns, including
Alberto Yabo;

(4) The 1/9 share of Maria Yabo in Lots 6080 and 6180 should be partitioned: One-half (1/2) for the surviving
spouse Pastor Makibalo (now the spouses Eulogio Salvador and Remedios Salvador) and the other half for the children
of the brothers and sisters of Maria Yabo in equal shares.

(5) The remaining 6/9, one-half (1/2) of which is conjugal between Maria Yabo and appellee Pastor Makibalo
should be partitioned three-fourths (3/4) for Pastor Makibalo (now the spouses Eulogio Salvador and Remedios
Salvador) and one-fourth (1/4) for the children of the brothers and sisters of Maria Yabo in equal shares.

(6) Jose Yabo if he is still alive should participate in the partition as heir of Maria otherwise he shall be represented
by his children.

Property 347
WHEREFORE, premises considered, subject to the modification in the partition, as indicated above, the decision
appealed from is AFFIRMED, without pronouncement as to costs. The lower court is directed if necessary to fully effect
the partition, to conduct further hearings and determine whether Jose Yabo is still alive and who are the children of the
brothers and sisters of Maria Yabo.23

Unable to obtain a reconsideration of the said-decision, Remedios Salvador, together with her daughter, Ma. Gracia
Salvador, as one of the successors-in-interest of Eulogio M. Salvador who died during the pendency of the appeal, 24
elevated the case to this Court contending that the respondent court erred in ruling that: (1) the shares of Pelagia Yabo
should be included in the partition; (2) prescription and laches have not run against the private respondents in relation to
the 1/9 share of Maria Yabo in the estate of her father and to her ½ conjugal share in those acquired by purchase; (3)
Procopio Yabo never sold to Pastor Makibalo his share in Lot No. 6080; and(4) Jose Yabo should be allowed to
participate as heir of Maria even as he had openly rejected this option by refusing to participate in both civil cases. 25

Article 160 of the Civil Code provides that all property of the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains .exclusively to the husband or to the wife. Since the shares of Jose, Victoriano, Lope,
Baseliza, Procopio, and Francisca in Lot No. 6180 and Lot No. 6080 had been purchased by Pastor during his marriage
with Maria, and there is no proof that these were acquired with his exclusive money, the same are deemed conjugal
properties. Not forming part of the conjugal partnership are: (1) the 1/9 share inherited by Maria which remained as her
exclusive property pursuant to Article 146 (2) of the Civil Code; (2) the 1/9 share of Gaudencia which was not sold to
Pastor; and (3) the 1/9 share of Pelagia which was acquired by Pastor in 1967 or five years after the death of his wife
and which was therefore his exclusive property.

There is, thus; merit in the petitioners' first assigned error. The Court of .Appeals should have excluded from the
conjugal partnership the share of Pelagia which Pastor had acquired after his wife's death.

Upon Maria's death in 1962, the conjugal partnership of gains was dissolved. 26 Half of the conjugal properties, together
with Maria's l/9 hereditary share in the disputed lots, constituted Maria's estate and should thus go to her surviving heirs.
27 Under Article 1001 of the Civil Code, her heirs are her spouse, Pastor Makibalo, who shall be entitled to-one-half
(1/2) of her estate, her brother, Jose, and the children of her other brothers and sisters, who shall inherit the other half.
There having been no actual partition of the estate yet, the said heirs became co-owners thereof by operation of law. 28

We now determine whether prescription and laches can be applied against the co-heirs of Pastor Makibalo.

It has been said that Article 494 of the Civil Code which provides that each co-owner may demand at any time the
partition of the common property implies that an action to demand partition is imprescriptible or cannot be barred by
laches. 29 The imprescriptibility of the action cannot, however, be invoked when one of the co-owners has possessed
the property as exclusive owner and for a period sufficient to acquire it by prescription. 30

What needs to be addressed first is whether or not Pastor Makibalo has acquired by prescription the shares of his other
co-heirs or co-owners. Prescription as a mode of acquiring ownership requires a continuous, open, peaceful, public, and
adverse possession for a period of time fixed by law.

This Court has held that the possession of a co-owner is like that of a trustee and shall not be regarded as adverse to
the other co-owners but in fact as beneficial to all of them. 31 Acts which may be considered adverse to strangers may
not be considered adverse insofar as co-owners are concerned. A mere silent possession by a co-owner, his receipt of
rents, fruits or profits from the property, the erection of buildings and fences and the planting of trees thereon, and the
payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear and convincing
evidence that he exercised acts of possession which unequivocably constituted an ouster or deprivation of the rights of
the other co-owners. 32

Thus, in order that a co-owner's possession may be deemed adverse to the cestui que trust or the other co-owners, the
following elements must concur: (1) that he has performed unequivocal acts of repudiation amounting to an ouster of the
cestui que trust or the other co-owners; (2) that such positive acts of repudiation have been made known to the cestui
que trust or the other co-owners; and (3) that the evidence thereon must be clear and convincing. 33

In Pangan vs. Court of Appeals, 34 this Court had occasion to lay down specific acts which are considered as acts of
repudiation:

Filing by a trustee of an action in court against the trustor to quiet title to property, or for recovery of ownership thereof,
held in possession by the former, may constitute an act of repudiation of the trust reposed on him by the latter.

The issuance of the certificate of title would constitute an open and clear repudiation of any trust, and the lapse of more
than 20 years, open and adverse possession as owner would certainly suffice to vest title by prescription.

An action for the reconveyance of land based on implied or constructive trust prescribes within 10 years. And it is from
the date of the issuance of such title that the effective assertion of adverse title for purposes of the statute of limitation is
counted.

The prescriptive period may only be counted from the time petitioners repudiated the trust relation in 1955 upon the filing
of the complaint for recovery of possession against private respondents so that the counterclaim of the private
respondents contained in their amended answer wherein they asserted absolute ownership of the disputed realty by
reason of the continuous and adverse possession of the same is well within the l0-year prescriptive period.

There is clear repudiation of a trust when one who is an apparent administrator of property causes the cancellation of
the title thereto in the name of the apparent beneficiaries and gets a new certificate of title in his own name.

It is only when the defendants, alleged co-owners of the property in question, executed a deed of partition and on the
strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance of a new one
wherein they appear as the new owners of a definite area each, thereby in effect denying or repudiating the ownership
Property 348
of one of the plaintiffs over his alleged share in the entire lot, that the statute of limitations started to run for the purposes
of the action instituted by the latter seeking a declaration of the existence of the co-ownership and of their rights
thereunder.

The records do not show that Pastor Makibalo adjudicated to himself the whole estate of his wife by means of an
affidavit filed with the Office of the Register of Deeds as allowed under Section 1 Rule 74 of the Rules of Court, or that
he caused the issuance of a certificate of title in his name or the cancellation of the tax declaration in Alipio's name and
the issuance of a new one in his own name. The only act which may be deemed as a repudiation by Pastor of the co-
ownership over the lots is his filing on 28 April 1976 of an action to quiet title (Civil Case No. 5000). The period of
prescription started to run only from this repudiation. However, this was tolled when his co-heirs, the private respondents
herein, instituted on 8 October 1976 an action for partition (Civil Case No. 5174) of the lots. Hence, the adverse
possession by Pastor being for only about six months would not vest in him exclusive ownership of his wife's estate, and
absent acquisitive prescription of ownership, laches and prescription of the action for partition will not lie in favor of
Pastor. 35

The issue presented by the petitioners in their third assigned error involves a question of fact. This Court is not ordinarily
a trier of facts, its jurisdiction being limited to errors of law. Thus; the findings of facts of the Court of Appeals are as a
rule deemed conclusive. However, when the findings of facts of the appellate court vary with those of the trial court, this
Court has to review the evidence in order to arrive at the correct findings. 36

In the instant case, a conflict in the findings of facts of the lower courts exists. The trial court found that Pastor was the
owner of Procopio's share in Lot No. 6080, as there was nothing to show that he sold it back to Alberto Yabo. The
respondent court on the other hand, held that Procopio Yabo never sold his share in Lot No. 6080 to pastor, thus, there
was no need to convey it back to Procopio's son, Alberto.

At this juncture, it is worthy to quote pertinent portions of the testimony of Pastor Makibalo:

COURT: (To the witness.)

Q Where is AlbertoYabo living?

A It is there in their house at Bulua.

ATTY. JARAULA: (Continuing.)

Q In whose land?

A Alipio Yabo's land.

Q What relation has that land to the two (2) parcels of land under litigation?

A I bought already.

Q So, will you please tell the Honorable Court, why Alberto Yabo is staying on that land when you said you have
bought that land already.

A So, I sold back a portion to them because they requested me.

COURT: (To the witness.)

Q When was that when you said that Alberto Yabo requested a portion?

A In 1967.

COURT:

Q Did you give that portion which they requested?

A Their share being inherited from their father Procopio was the portion they requested.

COURT

Q Yes. Did you grant that?

A Yes.

Q That is the area you sold to Alberto Yabo, pursuant to his request?

A Because that was the land they inherited from their father that was what they requested.

Q All right. So that, the area now being occupied by Alberto Yabo?

A Yes. That land in the Centro.

Q This is now identified as Lot No. 6180?

A Yes, Your Honor.

ATTY. JARAULA: (Continuing.)

Property 349
Q Where did you sign a document ceding that portion requested by Alberto Yabo?

A We did not make any receipt in favor of AlbertoYabo because they got only the receipt of that of his father.

COURT: (To the witness.)

Q You mean to say, that the receipt which Procopio signed when he sold his share for [sic] the document which
Alberto got?

A Yes.

COURT:

All right.

ATTY. JARAULA (Continuing.)

Q Now, for how much did you buy. the shares of each of the brothers and sisters of your wife?

A One Hundred Ten (P110.00) Pesos.

Q When you sold back to Alberto Yabo, the portion corresponding to the share of his father Procopio in the
Poblacion, how much did he pay you?

A The same.

Q By the same, you are referring by the same amount of One Hundred Ten (P110.00) Pesos?

A Yes, Sir. The same amount. 37

The petitioners contend that the sales or conveyances made by Alipio's heirs were for their consolidated shares in the
two lots. If this was so, and the receipt which Procopio signed when he sold his consolidated share to Pastor was turned
over to Alberto, the inevitable conclusion is that Alberto redeemed his father's share in both lots, not only in Lot: No.
6180. This conclusion is further buttressed by the above-quoted testimony of Pastor that he bought the shares
(consolidated) of each of Alipio's heirs for P110.00 and that when he sold back to Alberto the former share of Procopio,
Alberto paid him the same amount of P110.00.

However, since the share of Procopio in the two litigated parcels of land was purchased by Pastor during his marriage
with Maria, the same became conjugal property, and half of it formed part of Maria's estate upon her death in 1962.
Accordingly, Pastor's resale in favor of Alberto could only be valid with respect to Pastor's one-half (1/2) conjugal share
and one-fourth (1/4) hereditary share as heir of Maria. 38 The remaining one-fourth (1/4) should go to Pastor's co-heirs,
the private respondents herein.

Now on the fourth assigned error.

Section 1, Rule 69 of the Rules of Court requires that all persons interested in the land sought to be partitioned must be
joined as defendants in the complaints. All co-owners and persons having an interest in the property are considered
indispensable parties and an action for partition will not lie without the joinder of said persons. 39 It has been held that
the absence of an indispensable party in a case renders ineffective all the proceedings subsequent to the filing of the
complaint including the judgment. 40

It must be recalled that in Civil Case No. 5174 the private respondents sought the partition of the two lots based on the
co-ownership which arose from the right of succession to Alipio's estate. Since Jose Yabo confirmed, through his
thumbmark in the verification of the complaint, that he had already parted with his share in Alipio's estate, he in effect
admitted that he had ceased to be a co-owner of the two lots which comprised his father's estate. Thus, his non-joinder
as a party-plaintiff in the complaint would appear to be proper. He does not, as well, appear to be an indispensable party
in Civil Case No. 5000.

As it turned out, however, the evidence and the issues which cropped up rendered imperative the determination of the
conjugal assets of Pastor Makibalo and Maria Yabo and the partition of the latter's estate among her heirs. Her estate
consists of one-half(½) of the conjugal properties, which should then be divided pursuant to Article 1001 of the Civil
Code since the marriage produced no child; thus: one-half (½) to Pastor, and the other half to her brother Jose, and to
her nephews and nieces.

Insofar as the partition of Maria Yabo's estate is concerned, Jose is an indispensable party. Strictly, the rule on
indispensable parties may bar a partition of Maria's estate. Considering, however, that such estate or its partition are but
incidents in Civil Case No. 5000 and Civil Case No. 5174, and the parties have not offered any objection to the propriety
of the determination and partition of her estate, then in the light of Section 11 of Rule 3 41 and Sections 1 and 5, Rule 10
42 of the Rules of Court, and following the rulings of this Court in the 1910 case of Alonso vs. Villamor 43 and the 1947
case of Cuyugan vs. Dizon, 44 an amendment of the complaint in Civil Case No. 5174 to implead Jose Yabo as party
plaintiff would be in order.

In Alonso, it was held that under Section 110 of the Code of Civil Procedure — whose first paragraph is substantially the
same as the aforesaid Section 1 of Rule 10 — and Section 503 thereof, this Court "has full power, apart from that power
and authority which is inherent, to amend the process, pleadings, proceedings, and decision in this case by substituting,
as party plaintiff, the real party in interest." Our ruling in Cuyugan states:

Property 350
We, however, do not believe that the case should be dismissed for plaintiff's failure to join her husband. (Sec. 11, Rule
2, Rules of Court). Nor should the case be remanded to the court below and a new trial ordered on this account. The
complaint may and should be amended here, to cure the defect of party plaintiffs, after final decision is rendered.
Section 11, Rule 2, and Section 2, Rule 17, explicitly authorize such procedure. As this Court had occasion to say in
Quison vs. Salud, (12 Phil., 109, 116), "a second action would be but a repetition of the first and would involve both
parties, plaintiffs and defendant, in much additional expense and would cause much delay, in that way defeating the
purpose of the section, which is expressly stated to be "that the actual merits of the controversy may speedily be
determined without regard to technicalities and in the most expeditious and inexpensive manner." (See also Diaz vs. De
la Rama, 73 Phil., 104)

To avoid further delay in the disposition of this case, we declare Civil Case No. 5174 as thus duly amended.
Consequently, Jose Yabo may participate in the partition of the estate of Maria Yabo. The fourth assigned error must
then be rejected.

In view of the foregoing disquisitions, the appealed judgment should be modified as follows: (a) the former 1/9 share of
Pelagia Yabo in Lots No. 6180 and 6080 which she sold to Pastor should be treated as the latter's exclusive property
which should now pertain to the petitioners, his successors-in-interest; and (b) the former 1/9 share of Procopio Yabo in
both lots should be divided as follows: 3/4 (respondent Pastor's 1/2 conjugal share and 1/4 representing his share
therein as Maria's heir) for the spouses Alberto and Elpia Yabo, and 1/4 (representing the share therein of Maria's
collateral relatives as Maria's heirs) for the private respondents, including Alberto and Jose Yabo. The partition of the
two lots in controversy should therefore be made in this wise:

(1) 1/9 share of Gaudencia Yabo should be allotted to her heirs or successors-in-interest;

(2) 1/9 share formerly belonging to Pelagia Yabo — to the petitioners as successors-in-interest of Pastor Makibalo;

(3) 1/9 hereditary share of Maria Yabo to be divided as follows:

(a) 1/2 for the petitioners (as successors-in-interest of Pastor Makibalo), and

(b) 1/2 for the private respondents, including Jose Yabo or his heirs;

(4) 1/9 share formerly belonging to Procopio Yabo to be divided thus:

(a) 3/4 for Spouses Alberto and Elpia Yabo, and

(b) 1/4 for the other private respondents, including Jose Yabo or his heirs;

(5) 5/9 shares which became the conjugal properties of Pastor Makibalo and Maria Yabo to be divided thus:

(a) 3/4 for the petitioners (as successors-in-interest of Pastor Makibalo), and

(b) ¼ for the private respondents, including Jose Yabo or his heirs.

In sum, Lots Nos. 6180 anid 6080 should be partitioned as follows:

1/9 or 4/36 — to Guadencia Yabo's heirs or successors-in-interest;

3/4 of 1/9 or 3/36 — to the spouses Alberto and Elpina Yabo;

8/36 — to the private respondents, including Jose Yabu or his heirs;

21/36 — to the petitioners as successors-in-interest of Pastor Makibalo.

WHEREFORE, the challenged decision of the Court of Appeals of 8 February 1993 in CA-G.R. CV No. 12839 is
AFFIRMED, subject to the modifications indicated above. Upon the finality of this decision, let this case be forthwith
remanded to the court a quo for further proceedings on the partition of Lots Nos. 6180 and 6080 in conformity with this
decision.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 79899 April 24, 1989

D. ANNIE TAN, petitioner,

vs.
COURT OF APPEALS, CHINA BANKING CORPORATION, GEORGE LAUREL TAN, TEODORA TAN ONG, ROSA
TAN, ROSITA TAN, and MAURO UMALI TAN, respondents.

Tabaquero, Albano & Evangelista for petitioner.

Del Rosario, Lim, Telan De Vera & Vigilia for respondent China Banking Corporation. Estela B. Perlas for
respondents Tan.

GUTIERREZ, JR., J.:

Property 351
Tan Tiong Tick, married to Tan Ong Hun, was the registered owner of a 178 square meter parcel of land and its
improvements located at Lot No. 5, Block No. 2021 of the Cadastral Survey of Manila, Carvajal Street, Binondo, Manila.

Mr. and Mrs. Tan had six children - respondents George Laurel Tan, Teodora Tan Ong, Rosa Tan, Rosita Tan, Mauro
Umali Tan, and the petitioner, D. Annie Tan.

On February 6, 1963, in order to secure payment of various obligations with respondent China Banking Corporation or
China Bank for short, Mr. and Mrs. Tan Tiong Tick mortgaged the disputed property to the bank. Tan Tiong Tick died on
December 22, 1969 without having paid his obligations.

On June 27, 1972, China Bank foreclosed the mortgage and purchased the property at public auction as the highest
bidder for the sum of P186,100.00.

On August 31, 1972, the widow and children of Tan Tiong Tick filed a complaint against China Bank with the Court of
First Instance of Manila praying for the nullity of the real estate mortgage executed by the spouses Tan and the
foreclosure sale conducted by the Sheriff. They also asked that the redemption period be suspended.

The one year period for redemption expired on July 6, 1973 without the Tan heirs having exercised the right to redeem
the property. The widow Tan Ong Hun having died, only the children were left to redeem the lot and building. China
Bank consolidated its ownership over the land and improvements and a new title, Transfer Certificate Title No. 112924
was issued in the name of the bank on August 16, 1973.

About two weeks earlier, however, the heirs of Tan and China Bank agreed to amicably settle the action for nullity of
mortgage before the Court of First Instance of Manila. The parties filed a joint motion to dismiss.

The verbal agreement regarding the disposition of the property was confirmed in a letter of China Bank signed by four of
the children and one daughter-in-law on August 3, 1973. The heirs were given the right to repurchase the property for
P180,000.00 provided it was done on or before August 31,1974. The agreement reads in part:

xxx xxx xxx

It is understood, that should you fail to pay us in full the aforesaid sum of P180,000.00 on or before August 31, 1974,
your right to repurchase the property shall terminate and we shall be free to dispose of the property to any other party.
(p. 81, Folder of Exhibits; Exhibit 2, CBC)

There are allegations that some of the heirs tried to buy the property in the ensuing one year period but for one reason
or another, were unable to do so.

Finally, on August 30, 1974, or one day before the end of the period to buy back, petitioner D. Annie Tan went to the
office of Mr. Dee K. Chiong of China Bank and tendered her China Bank Manager's Check for P180,000.00 as payment.
Upon the insistence of the bank official, the deed of sale returning the property to the heirs was executed in favor, not of
D. Annie Tan who alone paid for the property but of all the six heirs of Tan Tiong Tick who would, therefore, share and
share alike.

This led to the filing of the action by D. Annie Tan against her brothers and sisters and the China Banking Corporation,
now respondents in this petition. The petitioner prayed the trial court to order the respondents-(1) to reconvey the
disputed property to her and (2) to pay actual damages in the amount of P300,000.00, moral damages in the amount of
P100,000.00, exemplary damages in the amount of P50,000.00, and attorney's fees in the amount of P10,000.00.

On September 1, 1980, the Court of First Instance of Manila rendered a decision, the dispositive portion of which reads:

ACCORDINGLY, judgment is hereby rendered as follows:

(1) Dismissing the complaint as well as defendants' counter-claim;

(2) Ordering each of the defendants, namely George Laurel Tan, Teodora Tan Ong, Rosa Tan and Rosita Tan to
reimburse the plaintiff the sum of P30,000.00 plus 12% interest from August 20, 1974 until the whole amount is fully
paid;

(3) Ordering the defendant Mauro Umali Tan who had been ordered in default to execute the deed of sale of his
rights and interests over the property covered in Transfer Certificate of Title No. 64806 in favor of the plaintiff in
accordance with his instrument of waiver dated June 25, 1974, and

(4) Without pronouncement as to costs. (Annex B, Rollo, pp. 43-44)

On October 17, 1986, the Court of Appeals affirmed the decision of the trial court. On September 7, 1987, a motion for
reconsideration was denied. Hence this petition.

The petitioner gives the following grounds why her petition should be given due course:

1. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF THE TRIAL
COURT ORDERING REIMBURSEMENT TO THE PETITIONER INSPITE OF THE FACT THAT THE LEGAL BASIS
FOR THE REIMBURSEMENT, WHICH WAS NOT CLEARLY EXPLAINED IN THE DECISION, MAY HAVE BEEN THE
ALLEGED EXISTENCE OF (1) A CO-OWNERSHIP AMONG THE HEIRS, AND (2) CREDITOR-DEBTOR
RELATIONSHIP BETWEEN THE HEIRS AND THE BANK, WHICH HAVE NOT BEEN FULLY ESTABLISHED BY
EVIDENCE.

Property 352
2. ASSUMING, WITHOUT ADMITTING, THE EXISTENCE AMONG THE HEIRS OF A CO-OWNERSHIP
AND/OR A CREDITOR/ DEBTOR RELATIONSHIP BETWEEN THE RESPONDENT BANK AND THE HEIRS,
RESPONDENT COURT GRAVELY ERRED IN NOT HOLDING THAT THE CO-HEIRS OF PETITIONER, THE
PRIVATE RESPONDENTS HEREIN, HAVE IMPLIEDLY WAIVED THEIR RIGHT TO BUY BACK THE PROPERTY BY
THEIR FAILURE TO RAISE THE MONEY FOR THEIR RESPECTIVE SHARES UP TO THE LAST DAY GIVEN THEM
BY THE RESPONDENT BANK ON AUGUST 31, 1974, THUS WHEN PETITIONER BOUGHT THE PROPERTY BY
HER EXCLUSIVE FUNDS, IT BENEFITED HER ALONE AND NOT HER CO-HEIRS.

3. RESPONDENT COURT OF APPEALS, GRAVELY ERRED IN NOT HOLDING THAT THE LETTER-
AGREEMENT DATED AUGUST 3, 1973, FOR WHICH THE RIGHTS OF THE PETITIONER AND HER CO-HEIRS TO
BUY BACK THE FORECLOSED PROPERTY AROSE, IS ACTUALLY NOT A RIGHT TO REPURCHASE BUT IS AN
OPTION TO BUY BACK THE PROPERTY WHICH MAY BE EXERCISED BY THE HEIRS SINGLY OR
COLLECTIVELY. (Rollo, pp. 21-22)

The decision of the trial court, affirmed by the Court of Appeals, is based on the principle that the heirs of Mr. and Mrs.
Tan Tiong Tick being co- owners of the foreclosed property, a repurchase or reconveyance effected by only one of those
heirs redounds to the co-ownership. This explains why the courts below ordered four of the heirs - George Laurel Tan,
Teodora Tan Ong, Rosa Tan and Rosita Tan - to reimburse D. Annie Tan the sum of P30,000.00 each plus 12%
interests while the share of the fifth heir who was in default and who had waived his interest would go to the petititioner.

The petitioner contends that there was no co-ownership and no creditor/debtor relationship between her and the other
children.

The petitioner states:

This controversy addresses itself to the question of whether or not the co- ownership among the heirs over a parcel of
land formerly belonging to their parents had been dissolved by the foreclosure and consolidation of title by a bank after
the redemption period of one (1) year had expired, such that a unilateral obligation given by the bank to the heirs to buy
back the foreclosed property out of liberality is actually an option to buy given to the heirs as group of persons singly or
collectively, and not strictly a right of repurchase to be exercised by the heirs as co-owners. If it is admitted that the co-
ownership of the heirs over the foreclosed property of their parents had been dissolved by the consolidation of the title in
the mortgagee's name, which in this case is respondent Bank and that there exists no creditor-debtor relationship
between respondent Bank and the heirs, then the bank may not impose an obligation to the heirs that they should
purchase back the property only as former co-owners or as solidary debtors, but as groups of persons, singly or
collectively. The bank would then be imposing an onerous condition upon the heirs of going back to the dissolved co-
ownership which the law frowns upon. To settle this case once and for all, herein petitioner anchors her claim on the
theory that when the respondent Bank foreclosed the property and consolidated its title on August 16, 1973 and T.C.T.
No. 112924 was issued in its name, the co-ownership of the heirs of the deceased parents of petitioner and private
respondents over the property in question have been dissolved. In this wise, the decision of the respondent court
premised on the existence of a co-ownership or in a creditor-debtor relationship, and ordering the reimbursement to
petitioner of the money for the purchase of the property in question which allegedly redounded to the benefits of her co-
heirs as co-owners or solidary debtors has no leg to stand on. It is this erroneous decision of respondent court based on
a misapprehension of facts and contrary to settled jurisprudence that petitioner comes to this Honorable Court, for relief.
(Sese v. Intermediate Appellate Court, G.R. No. 66186, July 31, 1987; Moran, Jr. v. Court of Appeals, 133 SCRA 88;
Manero v. Court of Appeals, 102 SCRA 817; Carolina Industries v. CMS Brokerage, 97 SCRA 734; Sacay v.
Sandiganbayan, 142 SCRA 593) (Rollo, pp. 7-9)

The first question which arises is the correctness of the assumption that there was a co-ownership among the children of
Tan Tiong Tick and Tan Ong Hun when the petitioner purchased the property.

Since the lot and its improvement were mortgaged by the deceased parents, there can be no question that a co-
ownership existed among the heirs during the period given by law to redeem the foreclosed property. Redemption by
one during this period would have inured to the benefit of all (Adille v. Court of Appeals, G.R. No. 44546, 157 SCRA 455
[1988]; and De Guzman v. Court of Appeals, G.R. No. 47378, 148 SCRA 75 [1987]).

The records show, however, that when the petitioner purchased the disputed property on August 30, 1974, any co-
ownership among the brothers and sisters no longer existed. The period to redeem had expired more than one year
earlier, on July 6, 1973. The respondent China Bank consolidated its ownership and a new title was issued in the bank's
name. When the heirs allowed the one year redemption period to expire without redeeming their parents' former
property and permitted the consolidation of ownership and the issuance of a new title, the co-ownership was
extinguished. The challenged ruling of the respondent court is, therefore, based on erroneous premises.

Under Section 63-B of Presidential Decree No. 1529, the Property Registration Decree, in case of non-redemption, the
purchaser at the foreclosure sale, meaning the respondent Bank in this case, is entitled to a new certificate of title in its
name after filing the necessary papers with the Register of Deeds (Spouses Teofisto and Eulalia Verceles v. Court of
First Instance of Rizal, et al., G.R. No. 62219, February 28, 1989). It becomes a ministerial duty to place the buyer in
possession of the property he now owns (Banco Filipino v. Intermediate Appellate Court, G.R. No. 68878,142 SCRA 44
[1986]). Ownership, therefore, passed to China Bank and there was no more co-ownership among the heirs.

The non-existence of a common inheritance of the Tan children at the time the disputed property was purchased from
China Bank is moreover supported by the evidence showing that there was no more inheritance to divide. It had already
been divided. Tan Tiong Tick left other properties in addition to the property disputed in this petition. The eldest son,
George Laurel Tan, inherited practically all the properties consisting of several hectares of real estate in Novaliches,
Metro Manila; a furnished house in Greenhills, Mandaluyong; and a cigar factory (t.s.n., November 18, 1976, p. 24). The
petitioner also claims that stock certificates went to another sister, Teodora Tan Ong because she "forced" the other
heirs to sign a deed of sale in her favor.

May the heirs be considered as debtors in common, substituting for their parents in liquidating the latter's obligations?

Property 353
The answer is again, No.

Upon the foreclosure of the mortgaged property and its purchase by China Bank as the highest bidder, the proceeds of
the auction sale were applied to the various debts of the Tan spouses. The parents' debts were paid. The obligation
having been extinguished, there was no more common debt and no legal subrogation arising when one pays the debts
properly accruing to several others.

Respondent China Bank contends that the letter agreement dated August 3, 1973 called for the reconveyance of the
land and improvements to all the heirs "in equal undivided shares."

There is no such stipulation in the letter. There is reference to a verbal agreement to reconvey to the "heirs of your late
father" but no requirement that everybody must share in the purchase or the offer would be withdrawn.

What is clear is that the bank's general manager, Mr. Dee K. Chiong tried to impose the above requirement when the
one year period to buy back was about to expire. Mr. Dee rejected the offer of D. Annie Tan to buy the property for
herself alone. He insisted that the money brought by the petitioner would be considered a joint fund of all the heirs and
ordered the same annotated on the back of the check given as payment for the property.

This attitude of Mr. Dee K. Chiong is in sharp contrast to the bank's official stand embodied in a letter to the Central
Bank.

Asked to comment on a letter-complaint filed by D. Annie Tan with Malacañang and forwarded to the Central Bank, the
respondent bank through its Legal Officer wrote the Director, Department of Commercial and Savings Bank, Central
Bank an explanation, part of which states:

To our mind, the dispute is not between the Bank and the heirs or any one of them, but among the heirs themselves, for
as far as the Bank is concerned, it makes no difference whether the property is reconveyed to all the heirs or to any one
of them alone as they may agree. As a matter of fact the complainant has already filed a Petition under the Cadastral
Case now pending in the CFI, Manila, involving the property and all the heirs. (Copy of the Petition is hereto attached as
Annex "l0").

At any rate, it is our honest conviction that the charges filed by the complainant and the interpretation of Articles 1302
and 1303 of the New Civil Code properly belong to the Courts where the complainant can always have her right, if any,
vindicated, and if only to resolve the issue, we shall welcome any court action to clear the matter. (Folder of Exhibits, pp.
97- 98)

The petitioner questions the unusual interest shown by China Bank in the case when its stand should be one of
neutrality. She claims that there is an orchestrated alliance between the bank and the other private respondents as
shown by the fact that the bank seems to be more eager and vigorous than the other heirs to win the case. (Rollo, p.
310).

As earlier stated, there is nothing in the August 3, 1973 letter-agreement which called for either a purchase by all the
heirs or no purchase at all. But could not Mr. Dee K. Chiong validly impose such a requirement at the time the tender of
money to buy the property was made?

Again, the answer is in the negative.

We agree with the petitioner that her agreeing to sign an annotation at the back of the check was a case of vitiated
consent. She states that her conformity was null and void because it was made under duress. The records show that up
to the last hour the petitioner was pleading with Mr. Dee K. Chiong to buy the property for herself alone as the money
she had raised was not in any way owned by the other heirs. Since the period was expiring, the petitioner had no choice.
It was a case of either agreeing to the bank executive's requirement or losing the family property forever to strangers.

Mr. Dee could not impose a new co-ownership upon the petitioner, her brothers and sisters. Co-ownership is
discouraged by law.

As held in the case of Basa v. Aguilar (G.R. No. L-30994, 117 SCRA 128, 130-131 [1982]):

Legal redemption is in the nature of a privilege created by law partly for reasons of public policy and partly for the benefit
and convenience of the redemptioner, to afford him a way out of what might be a disagreeable or inconvenient
association into which he has thrust. (10 Manresa, 4th Ed., 317.) It is intended to minimize co-ownership. The law grants
a co-owner the exercise of the said right of redemption when the shares of the other owners are sold to "a third person."
A third person, within the meaning of this Article, is anyone who is not a co-owner. (Sentencia of February 7, 1944 as
cited in Tolentino, Comments on the Civil Code, Vol. V, p. 160.) (Emphasis supplied)

The records show that the annotation at the back of the P180,000.00 manager's check that the funds were contributed
by all the heirs was made by a China Bank representative and that D. Annie Tan was told by Dee K Chiong that if she
would not sign it, he would not accept the manager's check and she would lose her right to buy the lot within the period
offered by the bank. The petitioner, at first, refused but being placed between the difficulty of agreeing to the condition or
losing the property, she decided to agree. (t.s.n., September 27, 1976, pp. 24-25; t.s.n., November 18, 1976, p. 36) The
petitioner was also aware that a certain Mr. Ang who operated a travel agency in the next door building was eager to
buy the property at double the price stated in the letter-agreement executed more than a year earlier. (Court of Appeals
Rollo, Brief for Plaintiff-Appellant, p. 77)

The petitioner further argues:

The insistence by respondent Bank that the said letter-agreement is a right to re-purchase given to all the heirs of the
late Tan Tiong Tick to be exercised only collectively cannot legally stand considering the following circumstances:

Property 354
a) What will happen if one of the heirs of the late Tan Tiong Tick refuses or fails to exercise his right to purchase
for whatever reason? Cannot any of the other heirs, but all, raise sufficient funds for the full amount of the purchase
price because the other heirs could not let him or her borrow money to cover his or her share? Would such refusal then
prejudice the other heirs?

b) Cannot two or more heirs, but not all, who have sufficient funds exercise the right of purchase?

c) Would all the heirs then who signed the letter-agreement as in the case at bar lose their right to purchase the
property because of the refusal of one heir?

d) If only one of the heirs has sufficient funds to purchase the property and the others do not have, and this particular
heir does not want to lend her or his money to the other heirs who have none, can the offer of the other heir to exercise
the option to buy in her or his own name alone be legally refused?

e) Finally, can the buying back of the property by one heir alone be disallowed considering that she is the one
who has enough or sufficient funds and that her action will prevent the property from going to third persons, like
respondent Bank, for failure to pay the purchase price on the last day of the period given by respondent Bank?'

It is petitioner's submission that to follow the arguments of respondent Bank that the letter-agreement can only be
exercised collectively and not singly would render the said agreement a useless piece of paper, and gravely prejudicial
to the property itself.

What is more, even the respondent bank's legal officer, Atty. Arsenio Sy Santos, when asked to comment on the case of
the petitioner, admitted that indeed the letter-agreement of August 3,1973 is actually an option to buy. Said legal officer
gave the following observations and comments, to wit:

xxxxxx xxx

Observations and comments -

It may be interesting to note that the provisions of Articles 1302 and 1303 which read as follows:

"Art. 1302. It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor who is preferred even without the debtor's knowledge;

(2) When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor.

(3) When even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays,
without prejudice to the effects of confusion as to the latter's share.

Art. 1303. Subrogation transfers to the person subrogated the credit with all the rights thereto appertaining,
either against the debtor or against third person, be they guarantors or possessors of mortgages, subject to stipulated in
a conventional subrogations (sic)."

refer to cases where the creditor-debtor relationship exists among the parties. (Rollo, pp. 243-246)

xxx xxx xxx

There was no creditor-debtor relationship existing among the heirs and Mr. Dee had no legal authority to create one.

China Bank contends that when it told the petitioner that the property could not be reconveyed to her alone, she was
likewise informed that a similar offer from some of the other co-heirs had also been politely turned down. (Exhibit 7,
China Bank, Folder of Exhibits, p. 87)

The petitioner disputes this claim. She states that there was no such offer by her co-heirs because she was the only one
willing to buy back the lot and the only one with the means to do so at that time. It was only on September 12, 1974 that
the individual respondents offered to repurchase. By that time, D. Annie Tan had already paid for the lot and was
already insisting on a conveyance of the property in her name alone.

The petitioner states:

There is, therefore, no doubt that the money used in buying back the property belongs exclusively to the petitioner.
Private respondents' in action in not contributing the necessary money up to the last day of the buy back period is fatal
to their cause. To paraphrase one case decided by this Honorable Court, courts cannot look with favor at parties who,
by their silence, delay and inaction, knowingly induce another to spend time, effort and expense in protecting their
interests over the property by paying the buy back money only to spring from ambush and claim title or interest over the
property when the land and building value have become higher. (See Lola v. Court of Appeals, G.R. No. 46575,
November 13, 1986). Moreover, the laws aid the vigilant, not those who slumber on their rights. (Miraflor v. Court of
Appeals, G.R. Nos. 40151-52, April 8, 1986).

Definetly, the effects of a waiver militates against the private respondents. Having forfeited, abandoned and/or waived
their rights, private respondents are now estopped from taking an inconsistent position. They cannot now assert that
they are still CO-owners of the property with the petitioner. (Sec. 65, Rule 123, Rules of Court; Hernaez v. Hernaez, 32
Phil. 214) (See also Banco de Oro Savings & Mortgage Bank v. Equitable Banking Corporation, G.R. No. 74917,
January 20, 1988, citing Saura Import and Export Co. v. Court of Appeals, 24 SCRA 974). All the elements of a valid
waiver (1) the existence of a right; (2) the knowledge of the existence thereof; and (3) the intention to relinquish such
right, either expressly or impliedly are present. (Director of Lands v. Abiertas, 44 O.G. 928). ... (Rollo, pp. 238-239)

Property 355
The claim of the respondents Tan in their memorandum that they gave their individual contributions to the petitioner to
raise the P180,000.00 is not worthy of credence. At the time of the repurchase, the petitioner was already estranged
from the respondents Tan and they would not have given her any money without corresponding receipts or given her
money under any circumstance, for that matter. In fact, there is no reason why the petitioner should be the one to collect
the money of the heirs and bring it to China Bank. She was neither a son nor the eldest. Neither did the others feel
kindly towards her. The petitioner had called for a conference on July 23, 1974 at 619 Carvajal Street, Binondo, Manila
to discuss compliance with the letter-agreement considering the fast approaching deadline. Not one showed up. (Rollo,
pp. 44-45) The money was raised by D. Annie Tan through her connections with Jardine Davies because of her
construction business. The decision of the respondent court confirmed the factual findings of the trial court. It declared
that the respondents Tan became debtors of petitioner Tan and ordered them to reimburse the P30,000.00 each which
were advanced by the petitioner. There was no pooling of resources up to August 30,1974 when at 4:00 in the
afternoon, D. Annie Tan went to Mr. Dee K. Chiong with the China Bank manager's check for P180,000.00.

The equities of this case also favor the grant of the petition. D. Annie Tan went to plenty of trouble in her effort to buy
back the property formerly owned by her parents. There is nothing in the records to show that, beyond making some
perfunctory allegations, the respondents Tan did anything to save the property from falling into the hands of other
persons. The petitioner states that she has now spent substantial sums to pay for real estate taxes and to renovate, and
improve the premises. According to her she has "spent her little fortunes to preserve the patrimony left by her parents."
She alone deserves to be entitled to the property, in law and equity. (Rollo, p. 317)

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the Court of Appeals is REVERSED and
SET ASIDE. The respondent China Banking Corporation is ordered to execute the deed of sale over the disputed
property in favor of the petitioner alone.

SO ORDERED.

G.R. No. L-46296 September 24, 1991

EPITACIO DELIMA, PACLANO DELIMA, FIDEL DELIMA, VIRGILIO DELIMA, GALILEO DELIMA, JR., BIBIANO
BACUS, OLIMPIO BACUS and PURIFICACION BACUS, petitioners,

vs.

HON. COURT OF APPEALS, GALILEO DELIMA (deceased), substituted by his legal heirs, namely:
FLAVIANA VDA. DE DELIMA, LILY D. ARIAS, HELEN NIADAS, ANTONIO DELIMA, DIONISIO DELIMA,
IRENEA DELIMA, ESTER DELIMA AND FELY DELIMA, respondents.

Gabriel J. Canete for petitioners.

Emilio Lumontad, Jr. for private respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals reversing the trial
court's judgment which declared as null and void the certificate of title in the name of respondents'
predecessor and which ordered the partition of the disputed lot among the parties as co-owners.

The antecedent facts of the case as found both by the respondent appellate court and by the trial
court are as follows:

During his lifetime, Lino Delima acquired Lot No. 7758 of the Talisay-Minglanilla Friar Lands
Estate in Cebu by sale on installments from the government. Lino Delima later died in 1921 leaving
as his only heirs three brothers and a sister namely: Eulalio Delima, Juanita Delima, Galileo Delima
Property 356
and Vicente Delima. After his death, TCT No. 2744 of the property in question was issued on
August 3, 1953 in the name of the Legal Heirs of Lino Delima, deceased, represented by Galileo
Delima.

On September 22, 1953, Galileo Delima, now substituted by respondents, executed an affidavit of
"Extra-judicial Declaration of Heirs." Based on this affidavit, TCT No. 2744 was cancelled and
TCT No. 3009 was issued on February 4,1954 in the name of Galileo Delima alone to the exclusion
of the other heirs.

Galileo Delima declared the lot in his name for taxation purposes and paid the taxes thereon
from 1954 to 1965.

On February 29, 1968, petitioners, who are the surviving heirs of Eulalio and Juanita Delima, filed
with the Court of First Instance of Cebu (now Regional Trial Court) an action for reconveyance
and/or partition of property and for the annulment of TCT No. 3009 with damages against their
uncles Galileo Delima and Vicente Delima,. Vicente Delima was joined as party defendant by the
petitioners for his refusal to join the latter in their action.

On January 16, 1970, the trial court rendered a decision in favor of petitioners, the dispositive
portion of which states:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the following are the declared

owners of Lot No. 7758 of the Talisay-Minglanilla Friar Lands Estate presently covered by
transfer Certificate of Title No. 3009, each sharing a pro-indiviso share of one-fourth;

1) Vicente Delima (one-fourth)

2) Heirs of Juanita Delima, namely: Bibiano Bacus, Olimpio Bacus and Purificacion Bacus (on-fourth);

3) Heirs of Eulalio Delima, namely Epitacio, Pagano, Fidel, Virgilio and Galileo Jr., all surnamed Delima
(one-fourth); and

Property 357
 4) The Heirs of Galileo Delima, namely Flaviana Vda. de Delima, Lily D. Arias, Helen Niadas and Dionisio,
Antonio, Eotu Irenea, and Fely, all surnamed Delima (one-fourth).

Transfer Certificate of Title No. 3009 is declared null and void and the Register of Deeds
of Cebu is ordered to cancel the same and issue in lieu thereof another title with the above
heirs as pro-indiviso owners.

After the payment of taxes paid by Galileo Delima since 1958, the heirs of Galileo Delima
are ordered to turn a over to the other heirs their respective shares of the fruits of the lot in
question computed at P170.00 per year up to the present time with legal (interest).

Within sixty (60) days from receipt of this decision the parties are ordered to petition the
lot in question and the defendants are directed to immediately turn over possession of the
shares here awarded to the respective heirs.

Defendants are condemned to pay the costs of the

suit. The counterclaim is dismissed.

SO ORDERED. (pp. 54-55, Rollo)

Not satisfied with the decision, respondents appealed to the Court of Appeals. On May 19, 1977,
respondent appellate court reversed the trial court's decision and upheld the claim of Galileo
Delima that all the other brothers and sister of Lino Delima, namely Eulalio, Juanita and Vicente,
had already relinquished and waived their rights to the property in his favor, considering that he
(Galileo Delima) alone paid the remaining balance of the purchase price of the lot and the realty
taxes thereon (p. 26, Rollo).

Hence, this petition was filed with the petitioners alleging that the Court of Appeals erred:

1) In not holding that the right of a co-heir to demand partition of inheritance is imprescriptible. If it
does, the defenses of prescription and laches have already been waived.

2) In disregarding the evidence of the petitioners.(p.13, Rollo)

The issue to be resolved in the instant case is whether or not petitioners' action for partition is
already barred by the statutory period provided by law which shall enable Galileo Delima to perfect
his claim of ownership by acquisitive prescription to the exclusion of petitioners from their shares
in the disputed property. Article 494 of the Civil Code expressly provides:

Property 358
 Art. 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may
demand at any time the partition of the thing owned in common, insofar as his share is
concerned.

Nevertheless, an agreement to keep the thing undivided for a certain period of time, not
exceeding ten years, shall be valid. This term may be extended by a new agreement.

A donor or testator may prohibit partition for a period which shall not exceed twenty

years. Neither shall there be any partition when it is prohibited by law.

No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-
heirs so long as he expressly or impliedly recognizes the co-ownership.

As a rule, possession by a co-owner will not be presumed to be adverse to the others, but will be
held to benefit all. It is understood that the co-owner or co-heir who is in possession of an
inheritance pro-indiviso for himself and in representation of his co-owners or co-heirs, if, as such
owner, he administers or takes care of the rest thereof with the obligation of delivering it to his co-
owners or co-heirs, is under the same situation as a depository, a lessee or a trustee (Bargayo v.
Camumot, 40 Phil, 857; Segura v. Segura, No. L-29320, September 19, 1988, 165 SCRA 368).
Thus, an action to compel partition may be filed at any time by any of the co-owners against the
actual possessor. In other words, no prescription shall run in favor of a co-owner against his
co-

Property 359
owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership (Del Blanco
v. Intermediate Appellate Court, No. 72694, December 1, 1987, 156 SCRA 55).

However, from the moment one of the co-owners claims that he is the absolute and exclusive owner
of the properties and denies the others any share therein, the question involved is no longer one of
partition but of ownership (De Castro v. Echarri, 20 Phil. 23; Bargayo v. Camumot, supra; De los
Santos v. Santa Teresa, 44 Phil. 811). In such case, the imprescriptibility of the action for partition
can no longer be invoked or applied when one of the co-owners has adversely possessed the
property as exclusive owner for a period sufficient to vest ownership by prescription.

It is settled that possession by a co-owner or co-heir is that of a trustee. In order that such possession
is considered adverse to the cestui que trust amounting to a repudiation of the co- ownership, the
following elements must concur: 1) that the trustee has performed unequivocal acts amounting to
an ouster of the cestui que trust; 2) that such positive acts of repudiation had been made known to
the cestui que trust; and 3) that the evidence thereon should be clear and conclusive (Valdez v.
Olorga, No. L-22571, May 25, 1973, 51 SCRA 71; Pangan v. Court of Appeals, No. L- 39299,
October 18, 1988, 166 SCRA 375).

We have held that when a co-owner of the property in question executed a deed of partition and
on the strength thereof obtained the cancellation of the title in the name of their predecessor and
the issuance of a new one wherein he appears as the new owner of the property, thereby in effect
denying or repudiating the ownership of the other co-owners over their shares, the statute of
limitations started to run for the purposes of the action instituted by the latter seeking a declaration
of the existence of the co-ownership and of their rights thereunder (Castillo v. Court of Appeals,
No. L- 18046, March 31, 1964, 10 SCRA 549). Since an action for reconveyance of land based on
implied or constructive trust prescribes after ten (10) years, it is from the date of the issuance of
such title that the effective assertion of adverse title for purposes of the statute of limitations is
counted (Jaramil v. Court of Appeals, No. L-31858, August 31, 1977, 78 SCRA 420).

Evidence shows that TCT No. 2744 in the name of the legal heirs of Lino Delima, represented by
Galileo Delima, was cancelled by virtue of an affidavit executed by Galileo Delima and that on
February 4, 1954, Galileo Delima obtained the issuance of a new title in Ms name numbered TCT
No. 3009 to the exclusion of his co-heirs. The issuance of this new title constituted an open and
clear repudiation of the trust or co-ownership, and the lapse of ten (10) years of adverse possession
by Galileo Delima from February 4, 1954 was sufficient to vest title in him by prescription. As the
certificate of title was notice to the whole world of his exclusive title to the land, such rejection
was binding on the other heirs and started as against them the period of prescription. Hence, when
petitioners filed their action for reconveyance and/or to compel partition on February 29, 1968,
such action was already barred by prescription. Whatever claims the other co-heirs could have
validly asserted before can no longer be invoked by them at this time.

ACCORDINGLY, the petition is hereby DENIED and the assailed decision of the Court of
Appeals dated May 19, 1977 is AFFIRMED.

SO ORDERED.

Property 360
G.R. No. L-57062 January 24, 1992

MARIA DEL ROSARIO MARIATEGUI, ET AL., petitioners,

vs.

HON. COURT OF APPEALS, JACINTO MARIATEGUI, JULIAN MARIATEGUI and PAULINA

MARIATEGUI, respondents.

Montesa, Albon & Associates for petitioners.

Parmenio B. Patacsil, Patacsil Twins Law Office for the heirs of the late Maria del Rosario
Mariategui.

Tinga, Fuentes & Tagle Firm for private respondents.

BIDIN, J.:

This is a petition for review on certiorari of the decision * of the Court of Appeals dated December
24, 1980 in CA-G.R. No. 61841, entitled "Jacinto Mariategui, et al. v. Maria del Rosario
Mariategui, et al.," reversing the judgment of the then Court of First Instance of Rizal, Branch VIII
** at Pasig, Metro Manila.

The undisputed facts are as follows:

Lupo Mariategui died without a will on June 26, 1953 (Brief for respondents, Rollo, pp. 116; 8).
During his lifetime, Lupo Mariategui contracted three (3) marriages. With his first wife, Eusebia
Montellano, who died on November 8, 1904, he begot four (4) children, namely: Baldomera, Maria
del Rosario, Urbana and Ireneo. Baldomera died and was survived by her children named Antero,
Rufina, Catalino, Maria, Gerardo, Virginia and Federico, all surnamed Espina. Ireneo also died
and left a son named Ruperto. With his second wife, Flaviana Montellano, he begot a daughter
named Cresenciana who was born on May 8, 1910 (Rollo, Annex "A", p. 36).

Lupo Mariategui and Felipa Velasco (Lupo's third wife) got married sometime in 1930. They had
three children, namely: Jacinto, born on July 3, 1929, Julian, born on February 16, 1931 and
Paulina, born on April 19, 1938. Felipa Velasco Mariategui died in 1941 (Rollo, Ibid).

At the time of his death, Lupo Mariategui left certain properties which he acquired when he was
still unmarried (Brief for respondents, Rollo, pp. 116; 4). These properties are described in the
Property 361
complaint as Lots Nos. 163, 66, 1346 and 156 of the Muntinglupa Estate (Rollo, Annex "A", p.
39).

On December 2, 1967, Lupo's descendants by his first and second marriages, namely, Maria del
Rosario, Urbana, Ruperto, Cresencia, all surnamed Mariategui and Antero, Rufina, Catalino,
Maria, Gerardo, Virginia and Federico, all surnamed Espina, executed a deed of extrajudicial
partition whereby they adjudicated unto themselves Lot No. 163 of the Muntinglupa Estate.
Thereafter, Lot No. 163 was the subject of a voluntary registration proceedings filed by the
adjudicatees under Act No. 496, and the land registration court issued a decree ordering the
registration of the lot. Thus, on April 1, 1971, OCT No. 8828 was issued in the name of the above-
mentioned heirs. Subsequently, the registered owners caused the subdivision of the said lot into
Lots Nos. 163-A to 163-H, for which separate transfer certificates of title were issued to the
respective parties (Rollo, ibid).

On April 23, 1973, Lupo's children by his third marriage with Felipa Velasco (Jacinto, Julian and
Paulina) filed with the lower court an amended complaint claiming that Lot No. 163 together with
Lots Nos. 669, 1346 and 154 were owned by their common father, Lupo Mariategui, and that, with
the adjudication of Lot No. 163 to their co-heirs, they (children of the third marriage) were deprived
of their respective shares in the lots. Plaintiffs pray for partition of the estate of their deceased
father and annulment of the deed of extrajudicial partition dated December 2, 1967 (Petition, Rollo,
p. 10).

Property 362
Cresencia Mariategui Abas, Flaviana Mariategui Cabrera and Isabel Santos were impleaded in the
complaint as unwilling defendants as they would not like to join the suit as plaintiffs although they
acknowledged the status and rights of the plaintiffs and agreed to the partition of the parcels of
land as well as the accounting of their fruits (Ibid., Rollo, p. 8; Record on Appeal, p. 4).

The defendants (now petitioners) filed an answer with counterclaim (Amended Record on Appeal,
p. 13). Thereafter, they filed a motion to dismiss on the grounds of lack of cause of action and
prescription. They specifically contended that the complaint was one for recognition of natural
children. On August 14, 1974, the motion to dismiss was denied by the trial court, in an order the
dispositive portion of which reads:

It is therefore the opinion of the Court that Articles 278 and 285 of the Civil Code
cited by counsel for the defendants are of erroneous application to this case. The
motion to dismiss is therefore denied for lack of merit.

SO ORDERED. (Ibid, p. 37).

However, on February 16, 1977, the complaint as well as petitioners' counterclaim were dismissed
by the trial court, in its decision stating thus:

The plaintiffs' right to inherit depends upon the acknowledgment or recognition of

their continuous enjoyment and possession of status of children of their supposed
father. The evidence fails to sustain either premise, and it is clear that this action
cannot be sustained. (Ibid, Rollo, pp. 67-68)

The plaintiffs elevated the case to the Court of Appeals on the ground that the trial court committed
an error ". . . in not finding that the parents of the appellants, Lupo Mariategui and Felipa Velasco
(were) lawfully married, and in holding (that) they (appellants) are not legitimate children of their
said parents, thereby divesting them of their inheritance . . . " (Rollo, pp. 14-15).

On December 24, 1980, the Court of Appeals rendered a decision declaring all the children and
descendants of Lupo Mariategui, including appellants Jacinto, Julian and Paulina (children of the
third marriage) as entitled to equal shares in the estate of Lupo Mariategui; directing the
adjudicatees in the extrajudicial partition of real properties who eventually acquired transfer
certificates of title thereto, to execute deeds of reconveyance in favor, and for the shares, of Jacinto,
Julian and Paulina provided rights of innocent third persons are not prejudiced otherwise the said
adjudicatees shall reimburse the said heirs the fair market value of their shares; and directing all
the parties to submit to the lower court a project of partition in the net estate of Lupo Mariategui
after payment of taxes, other government charges and outstanding legal obligations.

The defendants-appellees filed a motion for reconsideration of said decision but it was denied for
lack of merit. Hence, this petition which was given due course by the court on December 7, 1981.
Property 363
The petitioners submit to the Court the following issues: (a) whether or not prescription barred
private respondents' right to demand the partition of the estate of Lupo Mariategui, and (b) whether
or not the private respondents, who belatedly filed the action for recognition, were able to prove
their successional rights over said estate. The resolution of these issues hinges, however, on the
resolution of the preliminary matter, i.e., the nature of the complaint filed by the private
respondents.

The complaint alleged, among other things, that "plaintiffs are the children of the deceased spouses
Lupo Mariategui . . . and Felipa Velasco"; that "during his lifetime, Lupo Mariategui had repeatedly
acknowledged and confirmed plaintiffs as his children and the latter, in turn, have continuously
enjoyed such status since their birth"; and "on the basis of their relationship to the deceased Lupo
Mariategui and in accordance with the law on intestate succession, plaintiffs are entitled to inherit
shares in the foregoing estate (Record on Appeal, pp. 5 & 6). It prayed, among others, that plaintiffs
be declared as children and heirs of Lupo Mariategui and adjudication in favor of plaintiffs their
lawful shares in the estate of the decedent (Ibid, p. 10).

A perusal of the entire allegations of the complaint, however, shows that the action is principally
one of partition. The allegation with respect to the status of the private respondents was raised only
collaterally to assert their rights in the estate of the deceased. Hence, the Court of Appeals correctly
adopted the settled rule that the nature of an action filed in court is determined by the facts alleged
in the complaint constituting the cause of action (Republic vs. Estenzo, 158 SCRA 282 [1988]).

Property 364
It has been held that, if the relief demanded is not the proper one which may be granted under the
law, it does not characterize or determine the nature of plaintiffs' action, and the relief to which
plaintiff is entitled based on the facts alleged by him in his complaint, although it is not the relief
demanded, is what determines the nature of the action (1 Moran, p. 127, 1979 ed., citing Baguioro
vs. Barrios, et al., 77 Phil. 120).

With respect to the legal basis of private respondents' demand for partition of the estate of Lupo
Mariategui, the Court of Appeals aptly held that the private respondents are legitimate children of
the deceased.

Lupo Mariategui and Felipa Velasco were alleged to have been lawfully married in or about 1930.
This fact is based on the declaration communicated by Lupo Mariategui to Jacinto who testified
that "when (his) father was still living, he was able to mention to (him) that he and (his) mother
were able to get married before a Justice of the Peace of Taguig, Rizal." The spouses deported
themselves as husband and wife, and were known in the community to be such. Although no
marriage certificate was introduced to this effect, no evidence was likewise offered to controvert
these facts. Moreover, the mere fact that no record of the marriage exists does not invalidate the
marriage, provided all requisites for its validity are present (People vs. Borromeo, 133 SCRA 106
[1984]).

Under these circumstances, a marriage may be presumed to have taken place between Lupo and
Felipa. The laws presume that a man and a woman, deporting themselves as husband and wife,
have entered into a lawful contract of marriage; that a child born in lawful wedlock, there being no
divorce, absolute or from bed and board is legitimate; and that things have happened according to
the ordinary course of nature and the ordinary habits of life (Section 5 (z), (bb), (cc), Rule 131,
Rules of Court; Corpus v. Corpus, 85 SCRA 567 [1978]; Saurnaba v. Workmen's Compensation,
85 SCRA 502 [1978]; Alavado v. City Gov't. of Tacloban, 139 SCRA 230 [1985]; Reyes v. Court
of Appeals, 135 SCRA 439 [1985]).

Courts look upon the presumption of marriage with great favor as it is founded on the following
rationale:

The basis of human society throughout the civilized world is that of marriage.
Marriage in this jurisdiction is not only a civil contract, but it is a new relation, an
institution in the maintenance of which the public is deeply interested.
Consequently, every intendment of the law leans toward legalizing matrimony.
Persons dwelling together in apparent matrimony are presumed, in the absence of
any counterpresumption or evidence special to that case, to be in fact married. The
reason is that such is the common order of society and if the parties were not what
they thus hold themselves out as being, they would be living in the constant
violation of decency and of
law . . . (Adong vs. Cheong Seng Gee, 43 Phil. 43, 56 [1922] quoted in Alavado vs.
City Government of Tacloban, 139 SCRA 230 [1985]).

Property 365
So much so that once a man and a woman have lived as husband and wife and such relationship is
not denied nor contradicted, the presumption of their being married must be admitted as a fact
(Alavado v. City Gov't. of Tacloban,supra).

The Civil Code provides for the manner under which legitimate filiation may be proven. However,
considering the effectivity of the Family Code of the Philippines, the case at bar must be decided
under a new if not entirely dissimilar set of rules because the parties have been overtaken by events,
to use the popular phrase (Uyguangco vs. Court of Appeals, G.R. No. 76873, October 26, 1989).
Thus, under Title VI of the Family Code, there are only two classes of children — legitimate and
illegitimate. The fine distinctions among various types of illegitimate children have been
eliminated (Castro vs. Court of Appeals, 173 SCRA 656 [1989]).

Article 172 of the said Code provides that the filiation of legitimate children may be established
by the record of birth appearing in the civil register or a final judgment or by the open and
continuous possession of the status of a legitimate child.

Evidence on record proves the legitimate filiation of the private respondents. Jacinto's birth
certificate is a record of birth referred to in the said article. Again, no evidence which tends to
disprove facts contained therein was adduced before the lower court. In the case of the two other
private respondents, Julian and Paulina, they may not have presented in evidence any of the
documents

Property 366
required by Article 172 but they continuously enjoyed the status of children of Lupo Mariategui
in the same manner as their brother Jacinto.

While the trial court found Jacinto's testimonies to be inconsequential and lacking in substance as
to certain dates and names of relatives with whom their family resided, these are but minor details.
The nagging fact is that for a considerable length of time and despite the death of Felipa in 1941,
the private respondents and Lupo lived together until Lupo's death in 1953. It should be noted that
even the trial court mentioned in its decision the admission made in the affidavit of Cresenciana
Mariategui Abas, one of the petitioners herein, that " . . . Jacinto, Julian and Paulina Mariategui ay
pawang mga kapatid ko sa
ama . . ." (Exh. M, Record on Appeal, pp. 65-66).

In view of the foregoing, there can be no other conclusion than that private respondents are
legitimate children and heirs of Lupo Mariategui and therefore, the time limitation prescribed in
Article 285 for filing an action for recognition is inapplicable to this case. Corollarily, prescription
does not run against private respondents with respect to the filing of the action for partition so long
as the heirs for whose benefit prescription is invoked, have not expressly or impliedly repudiated
the co- ownership. In other words, prescription of an action for partition does not lie except when
the co- ownership is properly repudiated by the co-owner (Del Banco vs. Intermediate Appellate
Court, 156 SCRA 55 [1987] citing Jardin vs. Hollasco, 117 SCRA 532 [1982]).

Otherwise stated, a co-owner cannot acquire by prescription the share of the other co-owners
absent a clear repudiation of co-ownership duly communicated to the other co-owners (Mariano
vs. De Vega, 148 SCRA 342 [1987]). Furthermore, an action to demand partition is imprescriptible
and cannot be barred by laches (Del Banco vs. IAC, 156 SCRA 55 [1987]). On the other hand, an
action for partition may be seen to be at once an action for declaration of co-ownership and for
segregation and conveyance of a determinate portion of the property involved (Roque vs. IAC, 165
SCRA 118 [1988]).

Petitioners contend that they have repudiated the co-ownership when they executed the
extrajudicial partition excluding the private respondents and registered the properties in their own
names (Petition, p. 16; Rollo, p. 20). However, no valid repudiation was made by petitioners to the
prejudice of private respondents. Assuming petitioners' registration of the subject lot in 1971 was
an act of repudiation of the co-ownership, prescription had not yet set in when private respondents
filed in 1973 the present action for partition (Ceniza vs. C.A., 181 SCRA 552 [1990]).

In their complaint, private respondents averred that in spite of their demands, petitioners, except
the unwilling defendants in the lower court, failed and refused to acknowledge and convey their
lawful shares in the estate of their father (Record on Appeal, p. 6). This allegation, though denied
by the petitioners in their answer (Ibid, p. 14), was never successfully refuted by them. Put
differently, in spite of petitioners' undisputed knowledge of their relationship to private
respondents who are therefore their co-heirs, petitioners fraudulently withheld private respondent's
share in the estate of Lupo Mariategui. According to respondent Jacinto, since 1962, he had been
inquiring from petitioner Maria del Rosario about their (respondents) share in the property left by
their deceased father and had been assured by the latter (Maria del Rosario) not to worry because
they will get some shares. As a matter of fact, sometime in 1969, Jacinto constructed a house where
he now resides on Lot No. 163 without any complaint from petitioners.

Property 367
Petitioners' registration of the properties in their names in 1971 did not operate as a valid
repudiation of the co-ownership. In Adille vs. Court of Appeals (157 SCRA 455, 461-462 [1988]),
the Court held:

Prescription, as a mode of terminating a relation of co-ownership, must have been

preceded by repudiation (of the co-ownership). The act of repudiation, in turn, is
subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such
an act of repudiation is clearly made known to the other co-owners; (3) the evidence
thereon is clear and conclusive; and (4) he has been in possession through open,
continuous, exclusive, and notorious possession of the property for the period
required by law.

xxx xxx xxx

It is true that registration under the Torrens system is constructive notice of title,
but it has likewise been our holding that the Torrens title does not furnish shield for
fraud. It is therefore no argument to say that the act of registration is equivalent to
notice of

Property 368
 repudiation, assuming there was one, notwithstanding the long-standing rule that
registration operates as a universal notice of title.

Inasmuch as petitioners registered the properties in their names in fraud of their co-heirs
prescription can only be deemed to have commenced from the time private respondents discovered
the petitioners' act of defraudation (Adille vs. Court of Appeals, supra). Hence, prescription
definitely may not be invoked by petitioners because private respondents commenced the instant
action barely two months after learning that petitioners had registered in their names the lots
involved.

WHEREFORE, the petition is DENIED and the assailed decision of the Court of Appeals dated
December 24, 1980 is Affirmed.

SO ORDERED.

Property 369
G.R. No. L-3404 April 2, 1951

ANGELA I. TUASON, plaintiff-appellant, vs.

ANTONIO TUASON, JR., and GREGORIO ARANETA, INC., defendants-appellees.

Alcuaz & Eiguren for appellant.

Araneta & Araneta for appellees.

MONTEMAYOR, J.:

In 1941 the sisters Angela I. Tuason and Nieves Tuason de Barreto and their brother Antonio
Tuason Jr., held a parcel of land with an area of 64,928.6 sq. m. covered by Certificate of Title No.
60911 in Sampaloc, Manila, in common, each owning an undivided 1/3 portion. Nieves wanted
and asked for a partition of the common property, but failing in this, she offered to sell her 1/3
portion. The share of Nieves was offered for sale to her sister and her brother but both declined to
buy it. The offer was later made to their mother but the old lady also declined to buy, saying that
if the property later increased in value, she might be suspected of having taken advantage of her
daughter. Finally, the share of Nieves was sold to Gregorio Araneta Inc., a domestic corporation,
and a new Certificate of Title No. 61721 was issued in lieu of the old title No. 60911 covering the
same property. The three co-owners agreed to have the whole parcel subdivided into small lots and
then sold, the proceeds of the sale to be later divided among them. This agreement is embodied in
a document (Exh. 6) entitled "Memorandum of Agreement" consisting of ten pages, dated June 30,
1941.

Before, during and after the execution of this contract (Exh. 6), Atty. J. Antonio Araneta was acting
as the attorney-in-fact and lawyer of the two co-owners, Angela I. Tuason and her brother Antonio
Tuason Jr. At the same time he was a member of the Board of Director of the third co-owner,
Araneta, Inc.

The pertinent terms of the contract (Exh. 6) may be briefly stated as follows: The three co-owners
agreed to improve the property by filling it and constructing roads and curbs on the same and then
subdivide it into small lots for sale. Araneta Inc. was to finance the whole development and
subdivision; it was prepare a schedule of prices and conditions of sale, subject to the subject to the
approval of the two other co-owners; it was invested with authority to sell the lots into which the
property was to be subdivided, and execute the corresponding contracts and deeds of sale; it was
also to pay the real estate taxes due on the property or of any portion thereof that remained unsold,
the expenses of surveying, improvements, etc., all advertising expenses, salaries of personnel,
commissions, office and legal expenses, including expenses in instituting all actions to eject all
tenants or occupants on the property; and it undertook the duty to furnish each of the two co-
owners, Angela and Antonio Tuason, copies of the subdivision plans and the monthly sales and
rents and collections made thereon. In return for all this undertaking and obligation assumed by
Araneta Inc., particularly the financial burden, it was to receive 50 per cent of the gross selling
price of the lots, and any rents that may be collected from the property, while in the process of sale,
the remaining 50 per cent to be divided in equal portions among the three co-owners so that each
will receive 16.33 per cent of the gross receipts.

Property 370
Because of the importance of paragraphs 9, 11 and 15 of the contract (Exh. 6), for purposes of
reference we are reproducing them below:

(9) This contract shall remain in full force and effect during all the time that it may be
necessary for the PARTY OF THE SECOND PART to fully sell the said property in small
and subdivided lots and to fully collect the purchase prices due thereon; it being understood
and agreed that said lots may be rented while there are no purchasers thereof;

(11) The PARTY OF THE SECOND PART (meaning Araneta Inc.) is hereby given full
power and authority to sign for and in behalf of all the said co-owners of said property all
contracts of sale and deeds of sale of the lots into which this property might be subdivided;
the powers

Property 371
 herein vested to the PARTY OF THE SECOND PART may, under its own responsibility
and risk, delegate any of its powers under this contract to any of its officers, employees or
to third persons;

(15) No co-owner of the property subject-matter of this contract shall sell, alienate or
dispose of his ownership, interest or participation therein without first giving preference to
the other co-owners to purchase and acquire the same under the same terms and conditions
as those offered by any other prospective purchaser. Should none of the co-owners of the
property subject-matter of this contract exercise the said preference to acquire or purchase
the same, then such sale to a third party shall be made subject to all the conditions, terms,
and dispositions of this contract; provided, the PARTIES OF THE FIRST PART (meaning
Angela and Antonio) shall be bound by this contract as long as the PARTY OF THE
SECOND PART, namely, the GREGORIO ARANETA, INC. is controlled by the members
of the Araneta family, who are stockholders of the said corporation at the time of the signing
of this contract and/or their lawful heirs;

On September 16, 1944, Angela I. Tuason revoked the powers conferred on her attorney-in-fact
and lawyer, J. Antonio Araneta. Then in a letter dated October 19, 1946, Angela notified Araneta,
Inc. that because of alleged breach of the terms of the "Memorandum of Agreement" (Exh. 6) and
abuse of powers granted to it in the document, she had decided to rescind said contract and she
asked that the property held in common be partitioned. Later, on November 20, 1946, Angela filed
a complaint in the Court of First Instance of Manila asking the court to order the partition of the
property in question and that she be given 1/3 of the same including rents collected during the time
that the same including rents collected during the time that Araneta Inc., administered said
property.

The suit was administered principally against Araneta, Inc. Plaintiff's brother, Antonio Tuason Jr.,
one of the co-owners evidently did not agree to the suit and its purpose, for he evidently did not
agree to the suit and its purpose, for he joined Araneta, Inc. as a co-defendant. After hearing and
after considering the extensive evidence introduce, oral and documentary, the trial court presided
over by Judge Emilio Peña in a long and considered decision dismissed the complaint without
pronouncement as to costs. The plaintiff appealed from that decision, and because the property is
valued at more than P50,000, the appeal came directly to this Court.

Some of the reasons advanced by appellant to have the memorandum contract (Exh. 6) declared
null and void or rescinded are that she had been tricked into signing it; that she was given to
understand by Antonio Araneta acting as her attorney-in-fact and legal adviser that said contract
would be similar to another contract of subdivision of a parcel into lots and the sale thereof entered
into by Gregorio Araneta Inc., and the heirs of D. Tuason, Exhibit "L", but it turned out that the
two contracts widely differed from each other, the terms of contract Exh. "L" being relatively much
more favorable to the owners therein the less favorable to Araneta Inc.; that Atty. Antonio Araneta
was more or less disqualified to act as her legal adviser as he did because he was one of the officials
of Araneta Inc., and finally, that the defendant company has violated the terms of the contract (Exh.
6) by not previously showing her the plans of the subdivision, the schedule of prices and conditions
of the sale, in not introducing the necessary improvements into the land and in not delivering to
her her share of the proceeds of the rents and sales.

Property 372
We have examined Exh. "L" and compared the same with the contract (Exh. 6) and we agree with
the trial court that in the main the terms of both contracts are similar and practically the same.
Moreover, as correctly found by the trial court, the copies of both contracts were shown to the
plaintiff Angela and her husband, a broker, and both had every opportunity to go over and compare
them and decide on the advisability of or disadvantage in entering into the contract (Exh. 6); that
although Atty. Antonio Araneta was an official of the Araneta Inc.; being a member of the Board
of Directors of the Company at the time that Exhibit "6" was executed, he was not the party with
which Angela contracted, and that he committed no breach of trust. According to the evidence
Araneta, the pertinent papers, and sent to her checks covering her receive the same; and that as a
matter of fact, at the time of the trial, Araneta Inc., had spent about P117,000 in improvement and
had received as proceeds on the sale of the lots the respectable sum of P1,265,538.48. We quote
with approval that portion of the decision appealed from on these points:

The evidence in this case points to the fact that the actuations of J. Antonio Araneta in
connection with the execution of exhibit 6 by the parties, are above board. He committed
nothing that is violative of the fiduciary relationship existing between him and the plaintiff.
The act of J. Antonio Araneta in giving the plaintiff a copy of exhibit 6 before the same
was

Property 373
 executed, constitutes a full disclosure of the facts, for said copy contains all that appears
now in exhibit 6.

Plaintiff charges the defendant Gregorio Araneta, Inc. with infringing the terms of the
contract in that the defendant corporation has failed (1) to make the necessary
improvements on the property as required by paragraphs 1 and 3 of the contract; (2) to
submit to the plaintiff from time to time schedule of prices and conditions under which the
subdivided lots are to be sold; and to furnish the plaintiff a copy of the subdivision plans,
a copy of the monthly gross collections from the sale of the property.

The Court finds from the evidence that he defendant Gregorio Araneta, Incorporated has
substantially complied with obligation imposed by the contract exhibit 6 in its paragraph
1, and that for improvements alone, it has disbursed the amount of P117,167.09. It has
likewise paid taxes, commissions and other expenses incidental to its obligations as denied
in the agreement.

With respect to the charged that Gregorio Araneta, Incorporated has failed to submit to
plaintiff a copy of the subdivision plains, list of prices and the conditions governing the
sale of subdivided lots, and monthly statement of collections form the sale of the lots, the
Court is of the opinion that it has no basis. The evidence shows that the defendant
corporation submitted to the plaintiff periodically all the data relative to prices and
conditions of the sale of the subdivided lots, together with the amount corresponding to
her. But without any justifiable reason, she refused to accept them. With the indifferent
attitude adopted by the plaintiff, it was thought useless for Gregorio Araneta, Incorporated
to continue sending her statement of accounts, checks and other things. She had shown on
various occasions that she did not want to have any further dealings with the said
corporation. So, if the defendant corporation proceeded with the sale of the subdivided lots
without the approval of the plaintiff, it was because it was under the correct impression that
under the contract exhibit 6 the decision of the majority co-owners is binding upon all the
three.

The Court feels that recission of the contract exhibit 6 is not minor violations of the terms
of the agreement, the general rule is that "recission will not be permitted for a slight or
casual breach of the contract, but only for such breaches as are so substantial and
fundamental as to defeat the object of the parties in making the agreement" (Song Fo & Co.
vs. Hawaiian- Philippine Co., 47 Phil. 821).

As regards improvements, the evidence shows that during the Japanese occupation from 1942 and
up to 1946, the Araneta Inc. although willing to fill the land, was unable to obtain the equipment
and gasoline necessary for filling the low places within the parcel. As to sales, the evidence shows
that Araneta Inc. purposely stopped selling the lots during the Japanese occupantion, knowing that
the purchase price would be paid in Japanese military notes; and Atty. Araneta claims that for this,
plaintiff should be thankfull because otherwise she would have received these notes as her share
of the receipts, which currency later became valueles.

Property 374
But the main contention of the appellant is that the contract (Exh. 6) should be declared null and
void because its terms, particularly paragraphs 9, 11 and 15 which we have reproduced, violate the
provisions of Art. 400 of the Civil Code, which for the purposes of reference we quote below:

ART. 400. No co-owner shall be obliged to remain a party to the community. Each may,
at any time, demand the partition of the thing held in common.

Nevertheless, an agreement to keep the thing undivided for a specified length of time, not
exceeding ten years, shall be valid. This period may be a new agreement.

We agree with the trial court that the provisions of Art. 400 of the Civil Code are not applicable.
The contract (Exh., 6) far from violating the legal provision that forbids a co-owner being obliged
to remain a party to the community, precisely has for its purpose and object the dissolution of the
co- ownership and of the community by selling the parcel held in common and dividing the
proceeds of the sale among the co-owners. The obligation imposed in the contract to preserve the
co-ownership until all the lots shall have been sold, is a mere incident to the main object of
dissolving the co- owners. By virtue of the document Exh. 6, the parties thereto practically and
substantially entered into a contract of partnership as the best and most expedient means of
eventually dissolving the co- ownership, the life of said partnership to end when the object of its
creation shall have been attained.

Property 375
This aspect of the contract is very similar to and was perhaps based on the other agreement or
contract (Exh. "L") referred to by appellant where the parties thereto in express terms entered into
partnership, although this object is not expressed in so many words in Exh. 6. We repeat that we
see no violation of Art. 400 of the Civil Code in the parties entering into the contract (Exh. 6) for
the very reason that Art. 400 is not applicable.

Looking at the case from a practical standpoint as did the trial court, we find no valid ground for
the partition insisted upon the appellant. We find from the evidence as was done by the trial court
that of the 64,928.6 sq. m. which is the total area of the parcel held in common, only 1,600 sq. m.
or 2.5 per cent of the entire area remained unsold at the time of the trial in the year 1947, while the
great bulk of 97.5 per cent had already been sold. As well observed by the court below, the
partnership is in the process of being dissolved and is about to be dissolved, and even assuming
that Art. 400 of the Civil Code were applicable, under which the parties by agreement may agree
to keep the thing undivided for a period not exceeding 10 years, there should be no fear that the
remaining 1,600 sq. m. could not be disposed of within the four years left of the ten-years period
fixed by Art. 400.

We deem it unnecessary to discuss and pass upon the other points raised in the appeal and which
counsel for appellant has extensively and ably discussed, citing numerous authorities. As we have
already said, we have viewed the case from a practical standpoint, brushing aside technicalities
and disregarding any minor violations of the contract, and in deciding the case as we do, we are
fully convinced that the trial court and this Tribunal are carrying out in a practical and expeditious
way the intentions and the agreement of the parties contained in the contract (Exh. 6), namely, to
dissolve the community and co-ownership, in a manner most profitable to the said parties.

In view of the foregoing, the decision appealed from is hereby affirmed. There is no
pronouncement as to costs.

So ordered.

Property 376
G.R. No. L-45142 April 26, 1991

SIMPROSA VDA. DE ESPINA, RECAREDO ESPINA, TIMOTEO ESPINA, CELIA ESPINA,

GAUDIOSA ESPINA and NECIFORA ESPINA, petitioners, vs.

THE HON. OTILIO ABAYA and SOFIA ESPINA and JOSE ESPINA, respondents.

Cipriano C. Alvizo, Sr. for private respondents.

MEDIALDEA, J.:

This is a petition for certiorari with prayer for the issuance of a writ of preliminary injunction
seeking the nullification of the orders issued by the respondent Judge Otilio Abaya, in his capacity
as the presiding judge of the Court of First Instance of Surigao del Sur, Branch II, Lianga, Surigao
del Sur in Civil Case No. L-108, entitled "Simprosa Vda. de Espina, et. al. v. Sofia Espina, et. al."
dated May 9, 1975 dismissing the complaint for partition; July 25, 1975 denying the motion for
reconsideration; August 13, 1975 denying the second motion for reconsideration and March 15,
1976 denying plaintiffs' notice of appeal.

The antecedent facts are as follows:

Marcos Espina died on February 14, 1953 and was survived by his spouses, Simprosa Vda. de
Espina and their children namely, Recaredo, Timoteo, Celia, Gaudiosa, Necifora, Sora and Jose,
all surnamed Espina. Decedent's estate comprises of four (4) parcels of land located at the
Municipality of Barobo Province of Surigao del Sur.

On August 23, 1973 an action for partition of the aforementioned parcels of land was filed by
petitioners Simprosa and her children Recaredo, Timoteo, Celia, Gaudencia and Necifora.

The complaint alleges that parcel No. 1 is the exclusive property of the deceased, hence the same
is owned in common by petitioners and private respondents in eight (8) equal parts, while the other
three (3) parcels of land being conjugal properties, are also owned in common, one-half (1/2)
belongs to the widow Simprosa and the other half is owned by her and her children in eight (8)
equal parts.

It also alleges that parcel No. 1 has been subdivided into two lots. Lot No. 994 PL8-44 is covered
by Original Certificate of Title No. 5570 in the name of one of the heirs, Sofia Espina, who acquired
the title as a trustee for the beneficiaries or heirs of Marcos Espina, while lot No. 1329 PCS-44 is
covered by Original Certificate of Title No. 3732 issued in the name of one of the heirs, Jose Espina
as trustee for the heirs of Marcos Espina. Said parcel of land is in the possession of petitioners and
private respondents who have their respective houses thereon.
Property 377
Simprosa presently occupies parcel No. 2 while parcel No. 3 is occupied by Timoteo, although the
same is actually titled in the name of Sofia. Parcel No. 4 is occupied by Recaredo.

Petitioners have several times demanded the partition of the aforementioned properties, but
notwithstanding such demands private respondents refused to accede.

Private respondents alleged in their answer that in or about April, 1951, the late Marcos Espina
and his widow, Simprosa, together with their children made a temporary verbal division and
assignment of shares among their children. After the death of Marcos, the temporary division was
finalized by the heirs. Thereafter the heirs took immediate possession of their respective shares on
April 20, 1952. Private respondents took actual physical possession of their respective shares
including the portions ceded to them by Simprosa upon their payment of P50.00 each per quarter
starting April, 1952 until the latter's death pursuant to their contract of procession The assignment
of shares was as follows:

Property 378
 (a) To the surviving spouses, (sic) Simprosa Vda. de Espina, herein plaintiffs, one-half (1/2) of the
parcel of land adjudicated to each of said plaintiffs-heirs and defendants;

(b) To each of the following compulsory heirs, to wit:

1. To Recaredo (sic) Espina, one-half (1/2) portion which contains an area of one and three- fourths (1
3/4) hectares and which forms part of Parcel 4 whose description is given in paragraph III of the
complaint, the said Parcel IV has been in the possession of both Recaredo Espina and plaintiff Simprosa
Vda. de Espina from April 20, 1952 until the present time;

2. To Timoteo Espina, one half (1/2) portion which contains an area of not less than one-half (1/2)
hectare and which forms part of Parcel 3 whose description is given in paragraph III of the complaint,
the said Parcel III was originally assigned by Marcos Espina who thereupon obtained an Original
Certificate of Title in her (sic) name but was finally adjudicated to said Timoteo Espina in April, 1952,
the other half (1/2) portion of which parcel III was the share of the surviving spouses (sic), Simprosa
Vda. de Espina, and said Parcel III has been in the possession of said Timoteo Espina and Simprosa Vda.
de Espina from April, 1952 until the present time as their share;

3. To Cecilia (sic) Espina, Gaudiosa Espina and Necifora Espina, one-half (1/2) portion, share and share
alike which contains two (2) hectares and which forms part of Parcel II whose description is given in
paragraph III of the complaint, the other half (1/2) of said Parcel III (sic) is the share of the surviving
spouses (sic) Simprosa Vda. de Espina, and said Parcel III (sic) has been in the possession of said Cecilia.
(sic) Espina, Gaudiosa Espina and Necifora Espina and Simprosa Vda. de Espina from April, 1952 until
the present time;

4. To Sofia Espina, one-half (1/2) portion of the parcel of land included in the deception of Parcel 1 in
paragraph III of the complaint, the other half (1/2) of said parcel being the share of the surviving
spouses (sic) Simprosa Vda. de Espina and having been ceded by said Simprosa Vda. de Espina to said
Sofia Espina for a valuable consideration payable quarterly at the rate of P50.00 beginning April, 1952
until her death, and said Sofia Espina has been regularly paying to said Simprosa Vda. de Espina
quarterly from April, 1952 the said amount of P50.00 until the present time, and by virtue of said
agreement, Sofia Espina obtained Original Certificate of Title in her name of said parcel of land which
is included in the description of said parcel 1, as her exclusive property;

5. To Jose Espina, one-half (1/2) portion of the other parcel of land included in the description of
Parcel 1 in paragraph 1 of the complaint, the other half (1/2) of said parcel being the share of the
surviving spouses (sic) Simprosa Vda. de Espina and having been coded (sic) by said Simprosa Vda. de
Espina to said Jose Espina for a valuable consideration payable quarterly at the rate of P50.00
beginning April, 1952 until her death, and said Jose Espina has been regularly quarterly paying to said
Simprosa Vda. de Espina from April, 1952 until the present time, the said amount of P50.00, and by
virtue of said agreement, Jose Espina obtained Original Certificate of Title in his name of said parcel of
land which is included in the description of said Parcel 1 as his exclusive property. (Rollo, pp. 27-28)

On February 13, 1974 private respondents filed a motion to dismiss the complaint alleging the
following grounds, to wit:

Property 379
I

THAT THE FACTS ALLEGED IN THE COMPLAINT FAIL TO CONFER UPON THE
COURT COMPLETE AND LAWFUL JURISDICTION OVER THE CASE FOR NON-
COMPLIANCE WITH THE CONDITION SINE QUA NON CONCERNING SUIT
BETWEEN MEMBERS OF THE SAME FAMILY.

xxx xxxxxx

II

THAT THE CAUSE OF ACTION IS BARRED BY STATUTE OF LIMITATIONS.

Property 380
 xxx xxx xxx

III

THAT THE PLAINTIFFS HAS NO LEGAL CAPACITY TO SUE, (Motion to Dismiss

Complaint, pp. 1-5; Rollo, pp. 34-

38) x x x x x x xxx

On May 9, 1975 the trial court granted the motion and thereafter dismissed the complaint. On May
23, 1975 petitioners filed a motion for reconsideration on the following grounds, to wit:

1. THAT THE ORDER OF DISMISSAL HAS NO LEGAL BASIS IN FACT AND IN LAW.

2. THAT THE STATUTE OF LIMITATIONS IS NOT APPLICABLE IN THE CASE AT BAR. (Rollo, p. 50)

However, petitioners' motion was denied in an order dated July 23, 1975. On August 11, 1975
petitioners filed another motion for reconsideration stressing that they were denied due process
when their motion was not heard. Again said motion was denied on August 13, 1975.

Thereafter, petitioners filed their notice of appeal on September 11, 1975 and a motion for
extension of time to file their Record on Appeal on September 18, 1975.

On March 15, 1976, the respondent judge disapproved petitioners' Record on Appeal and appeal
bond on the ground that the notice of appeal was filed out of time. Hence, this petition. The
petitioners raised four (,41) assignment of errors:

1. Whether or not an action for partition among co-heirs prescribes.

2. Whether or not an oral partition among co-heirs is valid.

3. Whether or not a hearing on a motion for reconsideration is indispensable the lack of which is a
deal of due process.

4. Whether or not the second motion for reconsideration is pro forma Rollo, p. 10)

Property 381
Petitioners maintain that the present action is not for reconveyance but one for partition. Hence,
the rule insisted by the private respondents on prescriptibility of an action for reconcile conveyance
of real property based on an implied trust is not applicable in the case at bar. In addition, petitioners,
argue that private respondents cannot set up the defense of prescription or laches because their
possession of the property no matter how long cannot ripen into ownership. (Memorandum for
Petitioners, p. 7)

However, the private respondents stress that 'any supposed right of the petitioners to demand a
new division or partition of said estate of Marcos Espina has long been barred by the Statute of
Limitations and has long prescribed." (Memorandum for Private Respondents, p. 5)

The petitioners claim that the alleged oral partition is invalid and strictly under the coverage of the
statute of Frauds on two grounds, to wit:

Firstly, parcel No. 1 being an exclusive property of the deceased should have been divided into eight

(8) equal parts. Therefore, Simprosa . could only cede her share of the land which is 1/8 portion
thereof and cannot validly cede the shares of her then minor children without being duly appointed
as guardian.

Secondly, under Article 1358 of the New Civil Code, Simprosa could not have ceded her right and
that of her other children except by a public document. (Memorandum of Petitioners, pp. 8-9)

On the other hand, private respondents insist that the oral partition is valid and binding and does
not fall under the coverage of the Statute of Frauds.

Property 382
Petitioners claim that they were denied due process when the motion for reconsideration was
denied without any hearing.

However, private respondents maintain that the hearing of a motion for reconsideration in oral
argument is a matter which rest upon the sound discretion of the Court.

Finally, petitioners stress that the second motion for reconsideration is not pro forma, thus, it
suspends the running of the period of appeal. Hence, the notice of appeal was timely filed.

On this point, private respondent maintain that the order of respondent judge dated March 1 5,
1976 disapproving petitioners' Record on Appeal and appeal bond may not properly be a subject
of a petition for certiorari. (Memorandum of Private Respondents, p. 13)

We find the petition devoid of merit.

We already ruled in Lebrilla, et al. v. Intermediate Appellate Court (G.R. No. 72623, December
18, 1989, 180 SCRA 188; 192) that an action for partition is imprescriptible. However, an action
for partition among co-heirs ceases to be such, and becomes one for title where the defendants
allege exclusive ownership.

In the case at bar, the imprescriptibility of the action for partition cannot be invoked because two
of the co-heirs, namely private respondents Sora and Jose Espina possessed the property as
exclusive owners and their possession for a period of twenty one (21) years is sufficient to acquire
it by prescription. Hence, from the moment these co-heirs claim that they are the absolute and
exclusive owners of the properties and deny the others any share therein, the question involved is
no longer one of partition but of ownership.

Anent the issue of oral partition, We sustain the validity of said partition. "An agreement of
partition may be made orally or in writing. An oral agreement for the partition of the property
owned in common is valid and enforceable upon the parties. The Statute of Frauds has no operation
in this kind of agreements, for partition is not a conveyance of property but simply a segregation
and designation of the part of the property which belong to the co-owners." (Tolentino,
Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. II, 1983
Edition, 182- 183 citing Hernandez v. Andal, et. al., G.R. No. L275, March 29, 1957)

Time and again, the Court stresses that the hearing of a motion for reconsideration in oral argument
is a matter which rests upon the sound discretion of the Court. Its refusal does not constitute a
denial of due process in the absence of a showing of abuse of discretion. (see Philippine
Manufacturing Co. v. Ang Bisig ng PMC et. al., 118 Phil. 431, 434)

Property 383
The absence of a formal hearing on the petitioners' motion for reconsideration is thoroughly
explained in the order of the respondent judge dated August 13, 1975, which is hereunder quoted
as follows:

When the court issued its order of June 5, 1975 requiring counsel for defendants to answer
plaintiffs' motion for reconsideration, the court opted to resolve plaintiffs' motion based on
the pleadings of the parties, without further oral arguments. The court considered the
arguments of the parties stated in their pleadings as already sufficient to apprise the court
of the issues involved in said motion.

Plaintiffs' allegation that the Clerk of Court failed to calendar their motion for
reconsideration for oral argument has not deprived the plaintiffs of any substantial right or
his right to due process.

SO ORDERED. (Memorandum of Private Respondents, pp. 1213)

A cursory reading of the aforequoted order will show that there was indeed no formal hearing on
the motion for reconsideration. There is no question however, that the motion is grounded on the
lack of basis in fact and in law of the order of dismissal and the existence or lack of it is determined
by a reference to the facts alleged in the challenged pleading. The issue raised in the motion was
fully discussed therein and in the opposition thereto. Under such circumstances, oral argument on
the motion is reduced to an unnecessary ceremony and should be overlooked (see Ethel Case, et
al. v. Jugo, 77 Phil. 517, 522).

Property 384
We adhere to the findings of the trial court that the second motion for reconsideration dated August
11, 1975 is pro forma, to it

The grounds stated in said motion being in reiteration of the same grounds alleged in his
first motion, the same is pro-forma. (Order dated March 15, 1976, p. 2, Rollo, p. 74)

xxx xxx xxx

Furthermore, the second motion for reconsideration has not stated new grounds considering
that the alleged failure of the Clerk of Court to set plaintiffs' motion for reconsideration,
although seemingly a different ground than those alleged in their first motion for
reconsideration, is only incidental to the issues raised in their first motion for
reconsideration, as it only refers to the right of plaintiffs' counsel to argue his motion in
court just to amplify the same grounds already deed by the court. (Ibid, p. 3, Rollo, p. 75)

Therefore, it is very evident that the second motion for reconsideration being pro-forma did not
suspend the running of the period of appeal. Thus, the lower court committed no error when it held
that the notice of appeal was filed after the lapse of thirty five (35) days, which is clearly beyond
the period of thirty (30) days allowed by the rules.

Finally, it has been a basic rule that certiorari is not a substitute for appeal which had been lost.
(see Edra v. Intermediate Appellate Court, G.R. No. 75041, November 13, 1989, 179 SCRA 344)
A special civil action under Rule 65 of the Rules of Court will not be a substitute or cure for failure
to file a timely petition for review on certiorari(appeal) under Rule 45 of the Rules of Court.
(Escudero v. Dulay, G.R. No. 60578, February 23, 1988, 158 SCRA 69, 77)

The application of the abovecited rule should be relaxed where it is shown that it will result in a
manifest failure or miscarriage of justice. (Ibid, p. 77) However, as emphasized earlier, the case at
bar is totally devoid of merit, thus, the strict application of the said file will not in any way override
sub-substantial justice.

Therefore, the delay of five (5) days in filing a notice of appeal and a motion for extension to file
a record on appeal cannot be excused on the basis of equity.

All premises considered, the Court is convinced that the acts of respondent judge, in dismissing
the action for partition and in subsequently denying the motions for reconsideration of the
petitioners, does not amount to grave abuse of discretion.

ACCORDINGLY, the petition is

DISMISSED. SO ORDERED.

Property 385
G.R. No. L-29727 December 14, 1988

PEDRO OLIVERAS, TEODORA GASPAR, MELECIO OLIVERAS and ANICETA MINOR, plaintiffs-

appellees,
vs.

CANDIDO LOPEZ, SEVERO LOPEZ, HIPOLITO LOPEZ, EUGENIA LOPEZ, PRIMITIVO GASPAR, CORAZON
LOPEZ, ALEJANDRO CACAYURIN, FAUSTINA BOTUYAN, MODESTO SALAZAR, ADORACION BOTUYAN,
CLAUDIO GANOTICE and ENONG BOTUYAN, defendants-

appellants.

Venancio B. Fernando for defendants-appellants.

FERNAN, C.J.:

This case exemplifies the Filipino custom of keeping inherited property in a prolonged juridical condition of co-owner ship.

Lorenzo Lopez owned Lot 4685 of the Cadastral survey of Villasis, Pangasinan with an area of
69,687 square meters as evidenced by Original Certificate of Title No. 15262. In December, 1

1931, Lorenzo Lopez died, leaving said property to his wife, Tomasa Ramos and six (6) children.
2

From that time on, the heirs of Lorenzo Lopez did not initiate any moves to legally partition the
property.

More than twenty-one years later, or on February 11, 1953, Tomasa Ramos and her eldest son,
Candido Lopez, executed a deed of absolute sale of the "eastern undivided four thousand two
hundred and fifty seven-square meters (4,257) more or less, of the undivided portion of (their)
interests, rights and participation" over Lot 4685, in favor of the spouses Melecio Oliveras and
Aniceta Minor, in consideration of the amount of one thousand pesos (P1,000). 3

On the same day, Tomasa and Candido executed another deed of absolute sale of the "undivided"
four thousand two hundred and fifty-seven (4,257) square meters of the "eastern part" of Lot 4685
in favor of the spouses Pedro Oliveras and Teodora Gaspar, also in consideration of P1,000. Each 4

of the said documents bear the thumbmark of Tomasa and the signature of Candido.

In his affidavit also executed on February 11, 1953, Candido stated that a month prior to the
execution of the deed of sale in favor of Melecio Oliveras, he offered his: "undivided portion" of
Lot 4685 to his "adjacent owners" but none of them was "in a position to purchase" said property.
5

Property 386
Since the execution of the two deeds of absolute sale, the vendees, brothers Melecio and Pedro,
had been paying the real property taxes for their respectively purchased properties. They also had
6

been in possession of their purchased properties which, being planted to palay and peanuts, were
segregated from the rest of Lot 4685 by dikes. 7

More than thirteen years later or on November 21, 1966, the counsel of the Oliveras brothers wrote
the heirs of Lorenzo Lopez reminding them of the Oliverases' demands to partition the property so
that they could acquire their respective titles thereto without resorting to court action, and that,
should they fail to respond, he would be forced to file a case in court. Apparently, the Lopezes did
8

not answer said letter since on December 15, 1966, the Oliveras brothers and their wives filed a
complaint for partition and damages in the Court of First Instance of Pangasinan.
9 10

The Oliverases stated in their complaint that possession of the disputed properties was delivered
to them with the knowledge and consent of the defendants; that they had been paying the real estate
taxes thereon; that prior to the sale, said properties were offered to the other co-owners for sale but
they refused to buy them; that on February 18, 1953, the transactions were duly annotated and
entered in the Memorandum of encumbrances of OCT No. 15262 as adverse claims; and that their
desire to segregate the portions of Lot 4685 sold to them was frustrated by defendants' adamant

Property 387
refusal to lend them the owner's duplicate of OCT No. 15262 and to execute a deed of partition of
the whole lot.

In claiming moral damages in the amount of P2,000.00 plaintiffs alleged that defendants also
refused to allow them to survey and segregate the portions bought by them. Plaintiffs prayed that
the court order the defendants to partition Lot 4685 and to allow them to survey and segregate the
portions they had purchased. They also demanded payment of P800.00 as attorney's fees and cost
of the suit.

In their answer, the defendants alleged that no sale ever transpired as the alleged vendors could not
have sold specific portions of the property; that plaintiffs' possession and occupation of specific
portions of the properties being illegal, they could not ripen into ownership; and that they were not
under any obligation to lend their copy of the certificate of title or to accede to plaintiffs' request
for the partition or settlement of the property. As special and affirmative defenses, the defendants
contended that the deeds of sale were null and void and hence, unenforceable against them; that
the complaint did not state a cause of action and that the cause or causes of action if any, had
prescribed.

Defendants averred in their counterclaim that despite repeated demands, plaintiffs refused and
failed to vacate the premises; that the properties occupied by the plaintiffs yielded an average net
produce in palay and peanuts in the amount of P1,600.00 annually, and that the complaint was
filed to harass them. They prayed for the dismissal of the complaint and the payment of P1,600.00
per year from 1953 until plaintiffs shall have vacated the premises and P1,000.00 for attorney's
fees.

Plaintiffs filed an answer to defendants' counterclaim, denying all the allegations therein and
stating that defendants never demanded that plaintiffs vacate the portions of Lot 4685 they had
bought.

The lower court explored the possibility of an amicable settlement between the parties without
success. Hence, it set the case for trial and thereafter, it rendered a decision
declaring valid the deeds of absolute sale and ordering the defendants to allow the segregation
11 12

of the sold portions of Lot 4685 by a licensed surveyor in order that the plaintiffs could obtain their
respective certificates of title over their portions of said lot.

In resolving the case, the lower court passed upon the issue of whether the two deeds of absolute
sale were what they purported to be or merely mortgage documents. It considered as indicia of
plaintiffs' absolute dominion over the portions sold to them their actual possession thereof without
any opposition from the defendants until the filing of the complaint, their payment of taxes thereon
and their having benefited from the produce of the land. The court ruled that the defendants'
testimonial evidence that the deeds in question were merely mortgage documents cannot overcome
the evidentiary value of the public instruments presented by the plaintiffs.

Property 388
On the issue of whether the two deeds of absolute sale were null and void considering that the land
subject thereof had not yet been partitioned, the court observed that the total area of 8,514 square
meters sold to plaintiffs by Candido was less than his share should Lot 4685 with an area of 69,687
square meters be divided among the six children of Lorenzo Lopez and their mother. In this
connection, the lower court also found that during his lifetime, and before Candido got married,
Lorenzo Lopez had divided Lot 4685 among his children who then took possession of their
respective shares. *

The defendants appealed said decision to this Court contending that the lower court erred in declaring the two deeds of absolute sale as valid, in ordering
the segregation of the sold portions of Lot 4685 to enable the plaintiffs to obtain their respective certificates of title, and in not considering their defense
of prescription.

The extrinsic validity of the two deeds of absolute sale is not in issue in this case in view of the
finding of the trial court that the defendants admittedly do not question their due execution. 13

What should pre-occupy the Court is the intrinsic validity of said deeds insofar as they pertain to
sales of designated portions of an undivided, co-owned property.

In a long line of decisions, this Court has held that before the partition of a land or thing held in
common, no individual co-owner can claim title to any definite portion thereof. All that the co-
owner has is an Ideal or abstract quota or proportionate share in the entire land or thing. 14

However, the duration of the juridical condition of co-ownership is not limitless. Under Article
494 and 1083 of the Civil Code, co-ownership of an estate should not exceed the period of twenty
(20) years.

Property 389
And, under the former article, any agreement to keep a thing or property undivided should be for
a ten-year period only. Where the parties stipulate a definite period of in division which exceeds
the maximum allowed by law, said stipulation shall be void only as to the period beyond such
maximum. 15

Although the Civil Code is silent as to the effect of the in division of a property for more than
twenty years, it would be contrary to public policy to sanction co-ownership beyond the period set
by the law. Otherwise, the 20-year limitation expressly mandated by the Civil Code would be
rendered meaningless.

In the instant case, the heirs of Lorenzo Lopez maintained the co-ownership for more than twenty
years. We hold that when Candido and his mother (who died before the filing of the complaint for
partition) sold definite portions of Lot 4685, they validly exercised dominion over them because,
by operation of law, the co-ownership had ceased. The filing of the complaint for partition by the
Oliverases who, as vendees, are legally considered as subrogated to the rights of Candido over
portions of Lot 4685 in their possession, merely served to put a stamp of formality on Candido's
16

otherwise accomplished act of terminating the co-ownership.

The action for partition has not prescribed. Although the complaint was filed thirteen years from
the execution of the deeds of sale and hence, as contended by the defendants-appellants,
prescription might have barred its filing under the general provision of Article 1144 (a) of the Civil
Code, Article

494 specifically mandates that each

co-owner may demand at any time the partition of the thing owned in common insofar as his share
is concerned. Hence, considering the validity of the conveyances of portions of Lot 4685 in their
favor and as subrogees of Candido Lopez, the Oliverases' action for partition was timely and
properly filed. 17

We cannot write finis to this decision without commenting on the compliance with the resolution
of September 1, 1986 of counsel for defendants-appellants. In said resolution, the court required
the parties to move in the premises "considering the length of time that this case has remained
pending in this Court and to determine whether or not there might be supervening events which
may render the case moot and academic. In his manifestation and motion dated August 12, 1987,
18

said counsel informed the Court that he had contacted the defendants-appellants whom he advised
"to move in the premises which is the land in question and to maintain the status quo with respect
to their actual possession thereon" and that he had left a copy of said resolution with the defendants-
appellants" for their guidance in the compliance of their obligations (sic) as specified in
said resolution." 19

Obviously, said counsel interpreted literally the Court's directive "to move in the premises." For
the enlightenment of said counsel and all others of similar perception, a "move in the premises"
resolution is not a license to occupy or enter the premises subject of litigation especially in cases
involving real property. A "move in the premises" resolution simply means what is stated therein:
the parties are obliged to inform the Court of developments pertinent to the case which may be of
help to the Court in its immediate disposition.

Property 390
WHEREFORE, the decision of the lower court insofar as it declares the validity of the two deeds
of sale and directs the partition of Lot 4685, is AFFIRMED. The lower court is hereby ordered to
facilitate with dispatch the preparation of a project of partition which it should thereafter approve.
This decision is immediately executory. No costs.

SO ORDERED

Property 391
G.R. No. L-62251 July 29, 1985

IRENE TAC-AN-DANO, FELIPE G. TAC-AN, DIOSDADO G. TAC-AN and SOCORRO TAC-AN

GENOBATEN, petitioners, vs.

THE COURT OF APPEALS and ALFONSO G. TAC-AN, respondents.

Felipe G. Tac-an for petitioners. Adelino B.

Sitoy for private respondent.

MELENCIO-HERRERA, J.:

Petitioners herein seek to reverse the Decision of the then Court of Appeals in CA-G.R. No.
1

63057- R, as well as its Resolution which denied their Motion for Reconsideration, and to
reinstate in toto the Decision of the then Court of First Instance of Misamis Occidental, Branch
III, Oroquieta City, in Civil Case No. 3092, for Recovery of Ownership of Coconut Trees and
Damages filed by private respondent against them.

Petitioners Irene Tac-an Dano, Felipe G. Tac-an, Diosdado G. Tac-an and Socorro Tac-an
Genobaten, and private respondent ALFONSO G. Tac-an, are brothers and sisters, children of the
deceased spouses Pio Tac-an and Luisa Guzman. Upon the demise of Pio Tac-an on March 12,
1948, his wife, Luisa, managed the entire estate, including an agricultural land of approximately
89 hectares at San Isidro, Misamis Occidental, until her death on April 18, 1971.

On September 28, 1971, intestate proceedings for the settlement of Luisa's estate were instituted
by petitioner Diosdado Tac-an before the Court of First instance of Misamis Occidental, Branch
III, docketed as Special Proceedings No. 615. ALFONSO opposed the petition contending that
one-half of the new 6,159 coconut trees at the San Isidro property belonged to him in accordance
with his agreement with his late mother. Ultimately, on January 29, 1973, partition was ordered by
the intestate Court pursuant to a Compromise Agreement arrived at among the heirs. ALFONSO
claimed, however, that the partition was without prejudice to the prosecution of his claim in a
separate suit.

On January 31, 1975, ALFONSO filed a complaint for Recovery of Ownership of Coconut Trees
and Damages against petitioners with the then Court of First Instance of Misamis Occidental,
Branch III, Oroquieta City, docketed as Civil Case No. 3092, which he amended on April 3, 1975.
He alleged that sometime in 1944, upon the request of his late mother, and with the consent of
petitioners, he planted coconut trees on an agricultural land of their late father at San Isidro Señor
Sinacaban, Misamis Occidental, with an area of 89.7033 hectares: that part of the land was planted
with sugar cane which he gradually replaced with coconut trees, completing the work in 1957; that
he and his mother, during her lifetime, agreed, without objection from petitioners, that the coconut
Property 392
trees including the fruits and produce thereof, would be equally divided between them; that their
equal sharing continued for fifteen (15) years; that upon the death of their mother, petitioner
Diosdado Tac- an filed in September 1971, Special Proceeding No. 615 with the Court of First
Instance of Misamis Occidental, Branch III, for the partition of the real and personal properties left
by their parents, which he opposed.

Petitioners, in their Answer, stated that ALFONSO's claim for improvements is barred by prior
judgment in Special Proceedings No. 615 rendered by the intestate Court on the basis of the
amicable compromise agreement entered into by the parties after concessions were given to
respondent for the settlement of said claim; that by virtue of said Decision, the land in San Isidro
was subdivided and adjudicated in equal shares among them; that the claim of respondent for one-
half (½) of the produce of the coconut trees was denied by the intestate Court in its Order of April
18, 1972, which had already became final; that the complaint states no cause of action; that the
claim is

Property 393
unenforceable under the Statute of Frauds, and is barred by the Statute of Limitations and/or
prescription.

On September 12, 1977, the trial Court, through Judge Mariano M. Florido, dismissed
ALFONSO's Complaint and rendered judgment, thus:

ACCORDINGLY, judgment is hereby rendered dismissing the plaintiff's complaint

for lack of merit; and ordering the plaintiff, under the Counterclaim, to pay and
deliver to the defendants:

1. The amount of P21,000.00, representing the share of the defendants which the plaintiff
failed to give and deliver to the defendants from May, 1971 to September, 1971, with interest
thereon at six (6) per cent per annum from the filing of defendants' Counterclaim on July 3,
1975, until the amount is fully paid;

2. The forty (40) heads of cows representing the shares of the defendants in the amicable
settlement dated January 29, 1973 in Special Proc. No. 615, and the additional forty (40) heads
of cows representing the offsprings, which the cows of the defendants would ordinarily have
produced but which they failed to do so, to the prejudice of the defendants, on account of the
default of the plaintiff, or for a total of eighty (80) heads of cows; or in case of failure of plaintiff
to deliver the eighty (80) heads of cows to the defendants, to pay to the defendants the
amount of P80,000.00, representing the value of the eighty (80) heads of cows at P1,000.00
per head. plus interest thereon at six (6%) per cent per annum from the filing of defendants'
counterclaim on July 3, 1975, until fully paid;

3. The amount of P15,000.00 as moral damages;

4. The amount of P20,000.00 as attorney's fees; and in the further amount of P5,000.00, as
expenses of litigation; and

5. With costs against the plaintiff.

On appeal, the then Court of Appeals modified the judgment of the trial Court by allowing
ALFONSO to receive one-half of the produce of the coconut trees, reducing the number of cows,
and eliminating the award of damages and attorney's fees, as follows:

WHEREFORE, with the modifications that the plaintiff is entitled to receive one-
half (1/2) of the produce of coconuts in the land at San Isidro, Sinacaban, Misamis
Occidental to resume upon finality of this decision; that plaintiff should only return
to defendants 40 cows and if not possible the equivalent in value at the rate of
P500.00 per head or a total of P20,000.00 with legal rate of interest at 6% from the
filing of defendants' counterclaim on July 3, 1975 until fully paid; the elimination
Property 394
 of moral damages, attorney's fees and expenses of litigation; the decision appealed
from is hereby AFFIRMED in all other respects, without pronouncement as to costs
in this instance.

Before us now, petitioners, as defendants below, impugn the Decision of the Appellate Court
assigning to it the following errors:

The Court of Appeals committed serious error of law and grave abuse of discretion
amounting to lack of jurisdiction in not holding that the claim for improvements of
Alfonso Tac-an is barred by a prior final order in Special Proceeding No. 615 —
Res Judicata.

II

The Court of Appeals committed serious error of law and grave abuse of discretion
amounting to want of jurisdiction in not holding that the claim for improvements of
Alfonso Tac-an was likewise settled and adjudicated by the final decision
embodying

Property 395
the amicable compromise agreement of the parties for the partition of the estate in
Special Proceeding No. 615 — Res Judicata.

III

The Court of Appeals committed grave abuse of discretion amounting to lack of

jurisdiction when it sanctioned the filing of this present independent civil action
relying mainly on the clarificatory orders (erroneously referred to by the Court of
Appeals as "decision") of Judge Melecio Genato which are contrary to the amicable
compromise agreement embodied and approved in the decision of Judge Mariano
Florido.

IV

The Court of Appeals committed grave abuse of discretion amounting to lack of

jurisdiction in modifying the lower court decision by declaring that Alfonso Tac-an
is entitled to receive one-half (½) of the produce despite the fact that it emphatically
declared and held that no agreement existed between plaintiff and his mother.

Assuming arguendo that there was such agreement the Court of Appeals gravely
erred in enforcing it against petitioners.

VI

The Court of Appeals committed grave abuse of discretion amounting to lack of

jurisdiction in resolving the claim of Alfonso Tac-an by entitling him to one-half
(½) of the produce based on equity, justice and human considerations instead of
applying clear and specific provisions of law (positive laws).

VII

The Court of Appeals committed grave abuse of discretion amounting to lack of

jurisdiction in applying laches and estoppel against defendants.

Property 396
VIII

The Court of Appeals gravely erred in not resolving the issue that this action is
barred by prescription relying on the illegal clarificatory orders of Judge Melecio
Genato.

IX

The Court of Appeals likewise gravely erred in resolving the issue that this action
is barred by the Statute of Frauds also relying on the clarificatory orders of Judge
Genato.

The Court of Appeals gravely erred in modifying the decision of the lower Court
by ordering plaintiff to return to defendants only 40 heads of cows or if not possible
the equivalent in value at the rate of P500.00 per head or a total sum of P20,000.00
instead of the valuation of the trial Court.

XI

The Court of Appeals gravely erred in eliminating the award of P21,000.00

representing the share of petitioners which plaintiff failed to give or deliver for the
period from May 1971 to September 1971.

XII

Property 397
 The Court of Appeals gravely erred in deleting the award of moral damages,
attorney's fees and expenses of litigation.

On July 27, 1983, we denied the petition for lack of merit, and likewise denied on January 11,
1984, petitioners' Motion for Reconsideration of said Resolution. However, upon petitioners'
Second Motion for Reconsideration, we resolved to reconsider our Resolutions of July 27, 1983
and January 11, 1984 and gave due course to the Petition.

On res judicata and prescription

Petitioners contend that ALFONSO's suit for recovery of ownership of coconut trees is barred by
prior judgment in Special Proceedings No. 615. While it may be that the said intestate proceedings
did attain finality, it was subject to the clarificatory Order, dated April 24, 1973, issued by Judge
Melecio Genato reading:

The decision dated January 29, 1973, rendered by this Court based on the amicable
settlement of the heirs in this case is amended to be without prejudice to whatever
claim oppositor Alfonso Tac-an has over the improvements he had personally
introduced or caused to be introduced into the estate situated at Señor Sinacaban,
Misamis Occidental.

In his Order, dated June 19, 1973, resolving petitioners' Motion for Reconsideration, the same
Judge held that there was "no amendment" to the Decision dated January 29, 1973. 2

Those Orders were elevated on certiorari to this Court in G.R. No. L-37298 entitled Irene Tac-an
Dano, etc. vs. Hon. Melecio Genato, et al., which petition this Court dismissed for lack of merit on
February 12, 1974. 3

Premised on the foregoing, the defense of res judicata must fail and it has to be held that the right
was reserved to ALFONSO to pursue his claim for recovery of ownership of coconut trees.

Prescription can neither be invoked as against ALFONSO by reason of that reservation in his favor.
He filed suit two years after the Decision in the intestate proceedings had been rendered. Under
Article 1144 of the Civil Code, he had ten (10) years from the time the right of action accrued
within which to file suit upon a judgment.

On the Alleged Agreement

Property 398
ALFONSO's complaint, filed in the trial Court, was completely based on an alleged oral agreement
between himself, as co- owner, and his mother as another co-owner, whereby he would be
receiving benefits from the mentioned coconut land more than he would be entitled to as co-owner.
Both the trial Court and the Appellate Court made the factual finding that the arrangement if at all,
could have referred only to the produce, with the difference that the former Court held that its
effectivity ceased after the mother's death and could not bind the other heirs; whereas the latter
Court ruled that since petitioners acquiesced in the arrangement during their mother's lifetime, they
are now estopped from asserting the contrary.

It is not disputed that the San Isidro property was the capital property of the father of the opposing
parties, and that Luisa, their mother, was not authorized by petitioners upon the death of their
father, to enter into contract with ALFONSO concerning the produce of their respective shares of
said property. It has been established, too, that the expenses incurred in planting coconut trees in
said land came from the common fund and that concessions were given ALFONSO in the partition
4

for his work in converting the property into coconut land. So, whatever agreement the mother had
with ALFONSO regarding the produce of the coconut trees, could legally bind her share only, and
chased upon her death. Petitioners merely tolerated such sharing arrangement in deference to their
mother's commitment. This is shown by the fact that five months after her death, petitioners
instituted the proceedings for the partition of the estate of their deceased parents including the San
Isidro property. Accordingly, the doctrine of laches and estoppel as against petitioners cannot be
successfully invoked. Absent was any element of turpitude or negligence connected with the
silence by which another is misled to his injury. 5

Moreover, the agreement between mother and son must be deemed superseded, for, on September
29, 1953, even during the lifetime of the mother, Original Certificate of Title No. 28 (Lot No. 1)
in the

Property 399
name of the deceased father, was cancelled and replaced by TCT No. RT-121 issued in the names
of "Felipe Tac-An Irene Tac-an, Alfonso Tac-an, Catalina Tac-an, Diosdado Tac-an, Socorro Tac-
an and Luisa Guzman, in pro indiviso share of one- seventh (1/7) each", the last named being the
surviving spouse (Exhibit "12"). It will be seen, therefore, that, after 1953, it was expressly made
of record that ALFONSO, his mother, and five (5) siblings (Catalina has since passed away) were
co- owners in equal shares. If, in fact, ALFONSO, had an agreement as to ownership of the trees
and produce with his mother, that was the time for him to have insisted on a lien to be specifically
included in the title. His mother, too, would have been in a position to confirm or deny the existence
of the agreement.

Additionally, as petitioners contend, to give ALFONSO the right to receive one-half (½) of the
produce of coconuts, as respondent Court did, would be to perpetuate a state of co-ownership,
contrary to Article 494 of the Civil Code, which limits co-ownership to a period of ten (10) years
or at most twenty (20) years.

On the Partition

It follows that ALFONSO's claim for recovery of ownership of the coconut trees and of the produce
thereof must fail. He should only be entitled to the share alloted to him in the "share raffle"
embodied in their compromise agreement and approved by the Court in Special Proceeding No.
615, dated January 29, 1973, as follows:

5. The share raffle was conducted with respect to the "Coconut Lands" mentioned
on page 3 of the said partition proposal and the following result was registered:

1. Lot 1 was drawn in favor of Mrs. Socorro Tac-an Genobatan; Lot 2 was drawn
in favor of Mrs. Irene Tac-an Dano; Lot 3 was drawn in favor of oppositor Alfonso
Tac- an; Lot 4 was drawn in favor of Atty. Felipe Tac-an, and Lot 5 was drawn in
favor of Diosdado Tac-an.

xxx xxx xxx

7. The administrator of the estate is hereby ordered to make a tentative partition

of

the coconut land located at Señor Sinacaban into five (5) shares based not only on
the area, but also on the value of the improvements thereon within a period of
ten

(10) days from today, and that the heirs hereby agree to draw another raffle in order to
determine the share that would correspond to them in the drawing of lots, except the share
of Alfonso Tac-an, the oppositor, which is agreed by the heirs to be that area where his house
is standing and that the farm house be adjudicated to him. 6 (Emphasis ours)

Property 400
The sharing in the Compromise Agreement submitted before the intestate Court with respect to the
partition of the cows should also be maintained. The Courts, as a rule may not impose upon the
parties a judgment different from their Compromise Agreement. The pertinent sharing agreement
7

reads:

7. With respect to the number of cows, as of today, there are seventy-one (71) heads
of cows. It has been agreed by the parties and their counsel that Alfonso Tac-an will
get 3/7 of this number or of whatever number of cows there are belonging to the
estate, and the remainder 4/7 of the cows shall be divided equally by the four (4)
remaining heirs which would give them the equivalent of 1/7 share of the said cows.
If actually the number of cows as counted by the administrator is only 71, let it be
divided in accordance with the agreement of the parties and the remaining one head
of cow be turned over to the administrator for evaluation and the administrator may
sell it and distribute the actual proceeds among the heirs. 8

Consonant, therefore, with our finding that ALFONSO is not entitled to one-half (½) of the produce
of the San Isidro property, he should give to petitioners, as ruled by the trial court, their share
which he failed to deliver from May 1971 to September 1971, or the amount of P21,000.00 plus
interest thereon at six (6) per cent per annum from the filing of petitioners' counterclaim on July 3,
1975, until the amount is fully paid.

Property 401
As to the award of damages, there being no evidence of fraud and bad faith committed by
ALFONSO, the elimination by respondent Appellate Court of the award of moral damages,
attorney's fees and expenses of litigation to petitioners should be affirmed.

WHEREFORE, modifying the judgment under review, this court RESOLVES:

1] The elimination of the award of moral damages, attorney's fees and expenses of litigation to
petitioners is hereby AFFIRMED.

2] The award in favor of private respondent, Alfonso G. Tac-an, of one-half of the produce of the
coconut trees from the coconut lands situated at San Isidro Señor Sinacaban, Misamis Occidental,
is hereby SET ASIDE;

3] Private respondent, Alfonso G. Tac-an, is hereby ordered to pay to petitioners the amount of
P21,000.00 representing the latter's share in the produce of the coconuts from May 1971 to
September 1971 with six (6) per cent interest thereon per annum from the filing of the counterclaim
on July 3, 1975 until the amount is fully paid; and

4] The parties are enjoined to abide by the terms of their Compromise Agreement in the partition
of the heads of cattle.

No costs.

SO ORDERED.

Property 402
G.R. No. 72694 December 1, 1987

AURORA DEL BANCO, EVELYN DEL BANCO, FEDERICO TAINO, SOLEDAD TAINO, JOVENCIO
TAINO, SAMSON TAINO, NOE TAINO, SOCORRO TAINO and CLEOFAS

TAINO, petitioners,
vs.

INTERMEDIATE APPELLATE COURT (Second Civil Cases Division), ALEJANDRA

PANSACOLA, LEONILA ENCALLADO, VEDASTO ENCALLADO, JOSE YEPES, et
al., respondents.

PARAS, J.:

This is a petition for review on certiorari by way of appeal from: (a) the decision of respondent Court of
Appeals (Intermediate Appellate Court) * promulgated on May 17, 1985 in AC-G.R. CV No. 70460, entitled "Alejandra Pansacola, et al.
vs. Domen Villabona del Banco, et al." which reversed and set aside the judgment ** of the trial court; and (b) its resolution ** of October 15, 1985 in
the same case, denying petitioners' motion for reconsideration of the aforementioned decision and their supplement to motion for reconsideration.

The dispositive portion of the questioned decision (Rollo, p. 97) reads, as follows:

ACCORDINGLY, the decision appealed from is hereby SET ASIDE insofar

as it dismisses the complaint, and another one entered —

(1) Declaring plaintiffs-appellants and defendants-appellees, in their respective

capacities as described in par. V of the complaint, as co-owners of the property in
dispute, but subject to the four-part pro-indiviso division already made by said property;

(2) Ordering the cancellation of all certificates of title that may have been issued to any
of the parties hereto; and

(3) Ordering the complete and final partition of the subject property in conformity with law.

For this purpose, this case is hereby remanded to the Court of origin so that a
final partition shall be made in accordance with Sections 2, 3, et. seq., Rule 69
of the Rules of Court.
Property 403
 Let a copy of this decision be furnished to the Register of Deeds for the
Province of Quezon.

The facts of the case are taken from the decision of the Appellate Court (Rollo, p. 39) as follows:

In a document executed in the Municipality of San Rafael, Bulacan, on February 11, 1859, three
brothers, Benedicto Pansacola, Jose Pansacola and Manuel Pansacola (known as Fr. Manuel
Pena) entered into an agreement which provided, among others:

(1) That they will purchase from the Spanish Government the lands comprising the Island of Cagbalite which
is located within the boundaries of the Municipality of Mauban, Province of Tayabas (now Quezon) and has
an approximate area of 1,600 hectares;

(2) That the lands shall be considered after the purchase as their common property;

Property 404
(3) That the co-ownership includes Domingo Arce and Baldomera Angulo, minors at that time represented
by their father, Manuel Pansacola (Fr. Manuel Pena) who will contribute for them in the proposed purchase
of the Cagbalite Island;

(4) That whatever benefits may be derived from the Island shall be shared equally by the co-owners in the
following proportion: Benedicto Pansacola-1/4 share; Jose Pansacola-1/4 share; and, Domingo Arce and
Baldomera Angulo-2/4 shares which shall be placed under the care of their father, Manuel Pansacola (Fr.
Manuel Pena).

On August 14, 1866, co-owners entered into the actual possession and enjoyment of the
Island purchased by them from the Spanish Government. On April 11, 1868 they agreed to
modify the terms and conditions of the agreement entered into by them on February 11,
1859. The new agreement provided for a new sharing and distribution of the lands,
comprising the Island of Cagbalite and whatever benefits may be derived therefrom, as
follows:

(a) The first one-fourth (1/4) portion shall belong to Don Benedicto Pansacola;

(b) The second one-fourth (1/4) portion shall belong to Don Jose Pansacola;

(c) The third one-fourth(1/4) portion shall henceforth belong to the children of their
deceased brother, Don Eustaquio Pansacola, namely: Don Mariano Pansacola,- Maria
Pansacola and Don Hipolito Pansacola;

(d) The fourth and last one-fourth (1/4) portion shall belong to their nephews and nieces
(1) Domingo Arce, (2) Baldomera Angulo, (3) Marcelina Flores, (4) Francisca Flores, (5)
Candelaria dela Cruz, and (6) Gervasio Pansacola who, being all minors, are still under the
care of their brother, Manuel Pansacola (Fr. Manuel Pena). The latter is the real father of
said minors.

About one hundred years later, on November 18, 1968, private respondents brought a special
action for partition in the Court of First Instance of Quezon, under the provisions of Rule 69 of
the Rules of Court, including as parties the heirs and successors-in-interest of the co-owners of
the Cagbalite Island in the second contract of co-ownership dated April 11, 1968. In their answer
some of the defendants, petitioners herein, interposed such defenses as prescription, res judicata,
exclusive ownership, estoppel and laches.

After trial on the merits, the trial court rendered a decision *** dated November 6, 1981 dismissing the complaint, the
dispositive portion of which reads as follows:

WHEREFORE, and in the fight of all the foregoing this Court finds and so holds
that the Cagbalite Island has already been partitioned into four (4) parts among
the original co-owners or their successors-in-interest.
Property 405
 Judgment is therefore rendered for the defendants against the plaintiffs
dismissing the complaint in the above entitled case.

Considering that the cross claims filed in the above entitled civil case are not
compulsory cross claims and in order that they may be litigated individually the
same are hereby dismissed without prejudice.

IT IS SO ORDERED.

The motion for reconsideration filed by the plaintiffs, private respondents herein, was denied
by the trial court in an order dated February 25, 1982 (Record on Appeal, p. 241).

On appeal, respondent Court reversed and set aside the decision of the lower court (Rollo, p.
117). It also denied the motion for reconsideration and the supplement to motion for
reconsideration filed by private respondents, in its resolution dated October 15, 1983 (Rollo, p.
86).

Instant petition was filed with the Court on December 5, 1985 (Rollo, p. 12). Petitioners
Josefina Pansacola, et al. having filed a separate petition (G.R. No. 72620) on the same subject
matter and issues raised in the instant 'petition, the counsel for private respondents filed a
consolidated comment on the separate petitions for review on February 24, 1986 with the First
Division of the

Property 406
Court (Rollo, p. 119). It appears that counsel for petitioners also filed a consolidated reply to the
consolidated comment of private respondents as required by the Second Division of the Court
(Rollo,

p. 151). However, petitioners filed a separate reply in the instant case on February 18,1987
(Rollo, p. 168)as required by the Court in a Resolution of the Second Division dated November
24, 1986 (Rollo, p. 160).

On May 19, 1987, private respondents in the instant petition filed a manifestation praying for
the denial of the instant petition in the same manner that G.R. No. 72620 was denied by the
Court in its Resolution dated July 23, 1986 (Rollo, p. 151). Their rejoinder to the reply of
petitioners was filed on May 25,1987 (Rollo, p. 179).

On June 8, 1987, the Court resolved to give due course to the petition (Rollo, p. 192). The
memorandum of private respondents was mailed on July 18, 1987 and received in the Court on
July 29, 1987 (Rollo, p. 112); the memorandum for petitioners was mailed on August 18, 1987
and received in the Court on September 7, 1987 (Rollo, p. 177).

The sole issue to be resolved by the Court is the question of whether or not Cagbalite Island is
still undivided property owned in common by the heirs and successors-in-interest of the
brothers, Benedicto, Jose and Manuel Pansacola.

The Pansacola brothers purchased the Island in 1859 as common property and agreed on how
they would share in the benefits to be derived from the Island. On April 11, 1868, they modified
the terms and conditions of the agreement so as to include in the co-ownership of the island the
children of their deceased brothers Eustaquio and the other children of Manuel Pansacola (Fr.
Manuel Pena) who were committed in the agreement of February 11, 1859. The new agreement
provided for a new sharing proportion and distribution of the Island among the co-owners.

On January 20, 1907, the representative of the heirs of all the original owners of Cagbalite
Island entered into an agreement to partition the Island, supplemented by another agreement
dated April 18, 1908. The contract dated January 20, 1907 provides as follows:

Sa Mauban, Tayabas, ika 20 ng Enero ng 1907 caming mga quinatawan ng mga

ibang co-herederos na hindi caharap, sa pulong na ito, sa nasa naming lahat na
magcaroon na ng catahimikan ang aming-aming cabahagui sa Pulong Kagbalete
sumacatuid upang mapagtoos ang hangahan ng apat na sapul na pagcacabahagui
nitong manang ito, pagcacausap na naming lahat at maihanay at mapagtalonan
ang saysay ng isa't isa, ay cusa naming pinagcasunduan at pinasiya ang
nangasosonod:—

Una: Ang malaquing calupaan, alis ang lahat na pacatan ay babahaguin

alinsunod sa pagcabaki na guinawa sa croquis na niyari ng practico agrimensor
Don Jose Garcia.
Property 407
Icalawa: Ang Lomingoy, doon ang tuid na guhit sa ilong ng Pait ay pagaapatin
ding sinlaqui ayon sa dating pagkakabaki.

Icatlo: Cung magawa na ang tunay na piano at icapit na sa lupa, paglalagay ng

nadarapat na mojon, ang masacupan ng guhit, sumacatuid ang caingin at pananim
ng isa na nasacupan ng pucto na noocol sa iba, ay mapapasulit sa dapat mag-ari,
na pagbabayaran nito ang nagtanim sa halagang:- bawat caponong niog na
nabunga, P

1.00 'un peso); cung ang bias ay abot sa isang vara, P 0.50; cung bagong tanim
o locloc P 0. 50 ang capono.

Icapat: Ang lahat na pacatan ay bacod na pagaapatin at bawat bahagui ay noocol

sa isat-isa sa apat na sanga ng paganacang nagmana.

Icalima: Upang ang naipatanim ng bawat isa ay matama sa canya ng mailagan

ang hirap ng loob ng nagatikha; ay pagtotolong-tolongan ng lahat naiba na
mahusay ang dalawang partes na magcalapit na mapa ayong tumama, hangang
may pagluluaran, sa nagsikap at maoyanam, maidaco sa lugar na walang
cailangang pagusapan.

Icanim: Ang casulatang ito, cung mapermahan na na magcacaharap sampong

ng mga ibang co-herederos na notipicahan nitong lahat na pinagcasundoan ay

Property 408
 mahahabilin sa camay ng agrimensor, Amadeo Pansacola, upang
canyang mapanusugan ang maipaganap ang dito'y naootos.

Na sa catunayan at catibayan ng lahat na nalalagda dito, sa pag galang at

pag ganap dito sa paingacaisahan ay pumirma sampo ng mga sacsing
caharap at catanto ngayong fecha ayon sa itaas.

The contract dated April 18, 1908 provides as follows:

Sa Mauban, ika 18 ng Abril ng 1908, sa pagcacatipon ng lahat na firmantes nito

ay pinagcaisahan itong nangasosonod:—

Una — Pinagtitibay ang mga pinagcasundoan sa itaas noong 20 ng Enero ng

1907, liban na lamang sa mga pangcat na una at icapat at tongcol doon pinasiya
naming bahaguinin ng halohalo at paparejo ang calupaan at pacatan.

Ycalawa — Sa pagsucat ng agrimensor na si Amadeo at paggawa ng piano at

descripcion ay pagbabayaran siya ng sa bawat isa naoocol sa halagang isang
piso sa bawat hectares.

Icatlo — Ang counting pucto sa 'Mayanibulong' na may caingin ni G. Isidro

Altamarino, asawa ni Restitute ay tutumbasan naman cay G. Norberto Pansacola
sa lugar ng Dapo calapit ng Pinangalo ng gasing sucat.

Icapat — Sa inilahad na piano ay pinasiya nang itoloy at upang maca

pagparehistro ang isa't isa ay pinagcaisahang magcacagastos na parepareho para
sa tablang pangmohon at ibat iba pang cagastusan.

Sa catunayan at catibayan ay cami, pumirma. (Record on Appeal, p. 224)

There is nothing in all four agreements that suggests that actual or physical partition of the
Island had really been made by either the original owners or their heirs or successors-in-interest.
The agreement entered into in 1859 simply provides for the sharing of whatever benefits can be
derived from the island. The agreement, in fact, states that the Island to be purchased shall be
considered as their common property. In the second agreement entered in 1868 the co-owners
agreed not only on the sharing proportion of the benefits derived from the Island but also on the
distribution of the Island each of the brothers was allocated a 1/4 portion of the Island with the
children of the deceased brother, Eustaquio Pansacola allocated a 1/4 portion and the children of
Manuel Pansacola (Fr. Manuel Pena) also allocated a 1/4 portion of the Island. With the
distribution agreed upon each of the co-owner is a co-owner of the whole, and in this sense,
Property 409
over the whole he exercises the right of dominion, but he is at the same time the sole owner of a
portion, in the instant case, a 1/4 portion (for each group of co-owners) of the Island which is
truly abstract, because until physical division is effected such portion is merely an Ideal share,
not concretely determined (3 Manresa, Codigo Civil, 3rd Ed., page 486, cited in Lopez vs.
Cuaycong, 74 Phil. 601; De la Cruz vs. Cruz, 32 SCRA 307 [1970]; Felices vs. Colegado, 35
SCRA 173 [1970],; Dultra vs. CFl 70 SCRA

465 [1976]; Gatchalian vs. Arlegui, 75 SCRA 234 [1977].)

In the agreement of January 20, 1907, the heirs that were represented agreed on how the Island
was to be partitioned. The agreement of April 18, 1908 which supplements that of January 20,
1907 reveals that as of the signing of the 1908 agreement no actual partition of the Island had as
yet been done. The second and fourth paragraphs of the agreement speaks of a survey yet to be
conducted by a certain Amadeo and a plan and description yet to be made. Virgilio Pansacola, a
son of the surveyor named Amadeo who is referred to in the contract dated April 18, 1908 as the
surveyor to whom the task of surveying Cagbalite Island pursuant to said agreement was
entrusted, however, testified that said contracts were never implemented because nobody
defrayed the expenses for surveying the same (Record on Appeal, p. 225).

Petitioners invoke res judicata to bar this action for partition in view of the decision of the Court
in

G.R. No. 21033, "Domingo Arce vs. Maria Villabona, et al.," 21034, "Domingo Arce vs. Francisco
Pansacola, et al.," and 21035, "Domingo Arce vs. Emiliano Pansacola, et al." promulgated on February 20,
1958 (Rollo, p. 141) and Brief for Defendants-Appellees, p. 87 Appendix 1), wherein the Court said:

Property 410
 Considering the facts that he waited for a period of nearly 23 years after the
return from his deportation before taking any positive action to recover his
pretended right in the property in question, gives great credit, in our opinion, to
the declaration of the witnesses for the defense (a) that the original parcel of land
was partitioned as they claim, and (b) that the plaintiff had disposed of all the
right and interest which he had in the portion which had been given to him.

The issue in the aforementioned case which were tried together is not whether there has
already been a partition of the Cagbalite Island. The actions were brought by the plaintiff to
recover possession of three distinct parcels of land, together with damages. In fact the word
partition was used in the metaphysical or Ideal sense (not in its physical sense).

Commenting on the above ruling of the Court in connection with the instant case, the
respondent Court said:

Concededly, the Supreme Court decision in G.R. Nos. 21033-35 (Exh. X) did
use or employ the word "partition." A careful reading of the said decision will,
however, reveal, and we so hold, that the employment or use of the word
"partition" therein was made not in its technical and legal meaning or sense
adverted to above, but, rather in its Ideal, abstract and spiritual sense, this is (at)
once evident from the bare statement in said decision to the effect that the
property was divided into four parts, without any reference to the specific parts
of the property that may have been adjudicated to each owner. There being no
such reference in the decision and in the judgment affirmed therein to the
adjudication of specific and definite portions of the property to each co-owner,
there is a clear and logical inference that there was indeed no adjudication of
specific and definite portions of the property made to each co-owner.

It must be admitted that the word "partition" is not infrequently used both in popular and
technical parlance (Fule vs. Fule, 52 Phil. 750 [1929]). For purposes of the aforementioned case,
evidently the Court used the word "partition" to refer to the distribution of the Cagbalite Island
agreed upon by the original owners and in the later agreements, by the heirs and their subsequent
successors-in- interest. There need not be a physical partition; a distribution of the Island even in
a state of indiviso or was sufficient in order that a co-owner may validly sell his portion of the
co-owned property. The sale of part of a particular lot thus co-owned by one co-owner was
within his right pro-indivisois valid in its entirety (Pamplona vs. Moreto, 96 SCRA 775 [1980])
but he may not convey a physical portion with boundaries of the land owned in common
(Mercado vs. Liwanag, 5 SCRA 472 [1962]).

Definitely, there was no physical partition of the Island in 1859. Neither could there have been
one in 1894 because the manner of subdividing the Island was only provided for in the later
agreements entered into by the heirs in 1907 and 1908. There was a distribution of the Island in
1868 as agreed upon by the original co-owners in their agreement of April 11, 1868. Any
agreement entered into by the parties in 1894 could be no more than another agreement as to the
distribution of the Island among the heirs of the original co-owners and the preparation of a
tentative plan by a practical surveyor, a Mr. Jose Garcia, mentioned in the first paragraph of the
1907 agreement, preparatory to the preparation of the real plan to be prepared by the surveyor
Amadeo, mentioned in the agreement of April 18, 1908.

Property 411
What is important in the Court's ruling in the three aforementioned cases is that, the fact that
there was a distribution of the Island among the co-owners made the sale of Domingo Arce of
the portion allocated to him though pro-indiviso, valid. He thus disposed of all his rights and
interests in the portion given to him.

It is not disputed that some of the private respondents and some of the petitioners at the time the
action for partition was filed in the trial court have been in actual possession and enjoyment of
several portions of the property in question (Rollo, p. 148). This does not provide any proof that
the Island in question has already been actually partitioned and co-ownership terminated. A co-
owner cannot, without the conformity of the other co-owners or a judicial decree of partition
issued pursuant to the provision of Rule 69 of the Rules of Court (Rule 71 of the Old Rules),
adjudicate to himself in fee simple a determinate portion of the lot owned in common, as his
share therein, to the exclusion of other co-owners (Santos, Jr. vs. Buenconsejo, 14 SCRA 407
[1965]; Carvajal vs. Court of Appeals, 112 SCRA 237 [1982]). It is a basic principle in the law
of co-ownership both under the present Civil Code as in the Code of 1889 that no individual co-
owner can claim any definite portion thereof (Diversified Credit Corporation vs. Rosada 26
SCRA 470 [1968]). lt is therefore of no

Property 412
 moment that some of the co-owners have succeeded in securing cadastral titles in their names to some
portions of the Island occupied by them (Rollo, p. 10).

It is not enough that the co-owners agree to subdivide the property. They must have a subdivision plan
drawn in accordance with which they take actual and exclusive possession of their respective portions in
the plan and titles issued to each of them accordingly (Caro vs. Court of Appeals, 113 SCRA 10 [1982]).
The mechanics of actual partition should follow the procedure laid down in Rule 69 of the Rules of Court.
Maganon vs. Montejo, 146 SCRA 282 [1986]).

Neither can such actual possession and enjoyment of some portions of the Island by some of the
petitioners herein be considered a repudiation of the co-ownership. It is undisputed that the Cagbalite
Island was purchased by the original co-owners as a common property and it has not been proven that the
Island had been partitioned among them or among their heirs. While there is co-ownership, a co-owner's
possession of his share is co-possession which is linked to the possession of the other co-owners
(Gatchalian vs. Arlegui, 75 SCRA 234 [1977]).

Furthermore, no prescription shall run in favor of a co-owner against his co-owners or co-heirs so long as he
expressly or impliedly recognizes the co-ownership (Valdez vs. Olonga, 51 SCRA 71 [1973], Tero vs. Tero,
131 SCRA 100 [1984]). Co-owners cannot acquire by prescription the share of the other co-owners, absent a
clear repudiation of the co-ownership clearly communicated to the other co-owners (Mariano vs. De Vega,
148 SCRA 342 [1987]).

An action for partition does not prescribe. Article 403 of the Old Civil Code, now Article 497, provides that
the assignees of the co-owners may take part in the partition of the common property, and Article 400 of the
Old Code, now Article 494 provides that each co-owner may demand at any time the partition of the common
property, a provision which implies that the action to demand partition is imprescriptible or cannot be barred
by laches (Budlong vs. Pondoc, 79 SCRA 24 [1977]). An action for partition does not lie except when the co-
ownership is properly repudiated by the co- owner (Jardin vs. Hollasco, 117 SCRA 532 [1982]).

On July 23, 1986, the Court through its Second Division denied the petition for the review of G.R. No.
72620, the petition for review on certiorari separately filed by Josefina Pansacola (Rollo, p. 151).

PREMISES CONSIDERED, the instant petition is likewise DENIED for lack of merit. SO

ORDERED.

Property 413