CASES IN PROPERTY BATCH 4 (FULL TEXT)

1.Bernardo v. Bataclan 66 Phil. 598

G.R. No. 44606

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.
LAUREL, J.:
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.

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 dueo 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 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.

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.

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 defendantappellant not being entitled, after all, to recover from the plaintiff the sum of P2,212.

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.

2.Spouses Del Ocampo v. Abesia 160 SCRA 379

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

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 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:

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 PLAINTIFFSAPPELLEES.

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 coowner 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 coowner 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.

3. Ignao v. Intermediate Appellate Court (193 SCRA 17)

FLORENCIO IGNAO, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT, JUAN
IGNAO, substituted by his Legal Heirs, and ISIDRO IGNAO, respondents.
Dolorfino and Dominguez Law Offices for petitioner.
Ambrosio Padilla, Mempin & Reyes Law Offices for private respondents.

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 partition 2 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."

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 coowner 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 coowner 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.

4. Manotok Realty, Inc. v. Tecson (164 SCRA 587)

MANOTOK REALTY, INC., petitioner, vs. THE HONORABLE JOSE H. TECSON, Judge of
the Court of First Instance of Manila and NILO MADLANGAWA, respondents.
Ceferino V. Argueza for petitioner.
Magtanggol C. Gunigundo for respondents.
In a complaint filed by the petitioner for recovery of possession and damages against the
private respondent, the then Court of First Instance of Manila rendered judgment, the
dispositive portion of which provides inter alia:
WHEREFORE, judgment is hereby rendered:
xxx

xxx

xxx

xxx

xxx

xxx

(c) In Civil Case No. 72872, declaring the defendant Nilo Madlangawa as a builder or
possessor in good faith; ordering the plaintiff to recognize the right of said defendant to
remain in Lot No. 345, Block 1, of the Clara Tambunting Subdivision until after he shall have
been reimbursed by the plaintiff the sum of P7,500.00, without pronouncement as to costs.
(p. 24, Rollo)
Not satisfied with the trial court's decision, the petitioner appealed to the Court of Appeals
and upon affirmance by the latter of the decision below, the petitioner elevated its case to
this Court.
On July 13, 1977, we issued a resolution dated July 11, 1977 denying the petitioner's petition
for lack of merit. Hence, on August 5, 1977, the petitioner filed with the trial court, presided
over by respondent Judge Jose H. Tecson, a motion for the approval of petitioner's exercise of
option and for satisfaction of judgment, praying that the court issue an order: a) approving
the exercise of petitioner's option to appropriate the improvements introduced by the private
respondent on the property; b) thereafter, private respondent be ordered to deliver
possession of the property in question to the petitioner.

On October 7, 1977, the respondent judge issued the disputed order, to wit:

Acting on the motion for approval of plaintiffs exercise of option and for satisfaction of
judgment filed by the plaintiff, and the opposition thereto interposed by the defendant, both
through counsels, and after a judicious review of all the facts and circumstances obtaining in
this case, in the light of statutory provisions (Art. 6, New Civil Code) and jurisprudential
doctrines (Vide, Benares v. Capitol Subdivision, Inc., L-7330 (Nov. 29, 1960), and considering
further the definitive ruling of our Supreme Tribunal in the case of Jose C. Cristobal v.
Alejandro Melchor, G.R. No. L-43203 promulgated on July 29, 1977, wherein the Court says:

"This Court, applying the principle of equity, need not be bound to a rigid application of the
law but rather its action should conform to the conditions or exigencies of a given problem or
situation in order to grant relief that it will serve the ends of justice."
xxx

xxx

xxx

the Court is of the considered view that under the peculiar circumstances which supervened
after the institution of this case, like, for instance, the introduction of certain major repairs of
and other substantial improvements on the controverted property, the instant motion of the
plaintiff is not well-taken and therefore not legally proper and tenable.
WHEREFORE, and for lack of merit, the instant motion for approval of the plaintiff's fai-rn of
option and for satisfaction of judgment should be, as hereby it is, denied. (pp. 45-46, Rollo)
After a denial of its motion for reconsideration, the petitioner filed the present petition for
mandamus alleging that the respondent judge committed grave abuse of discretion in
denying his motion to exercise option and for execution of judgment on the grounds that
under Articles 448 and 546 of the Civil Code, the exercise of option belongs to the owner of
the property, who is the petitioner herein, and that upon finality of judgment, the prevailing
party is entitled, as a matter of right, to its execution which is only a ministerial act on the
part of the respondent judge.
On April 15, 1978, the private respondent filed his comment on the petition alleging that the
same has already become moot and academic for two reasons: first, fire gutted not only the
house of the private respondent but the majority of the houses in Tambunting Estate; and
second, as a result of the said fire, the then First Lady and Metro Manila Governor Imelda R.
Marcos has placed the disputed area under her Zonal Improvement Project, thereby allowing
the victims of the fire to put up new structures on the premises, so that the willingness and
readiness of the petitioner to exercise the alleged option can no longer be exercised since
the subject-matter thereof has been extinguished by the fire. Furthermore, the President of
the Philippines has already issued a Presidential Decree for the expropriation of certain
estates in Metro Manila including the Tambunting Estate. Therefore, the beneficient and
humanitarian purpose of the Zonal Improvement Project and the expropriation proceeding
would be defeated if petitioner is allowed to exercise an option which would result in the
ejectment of the private respondent.
On December 28, 1980, Presidential Decree (P.D.) No. 1669 was issued providing for the
expropriation of the Tambunting Estate. However, this decree was challenged before this
Court in G.R. No, 55166 entitled The "Elisa R. Manotok, et al. v. National Housing Authority,
et al." Hence, we decided to hold the decision on this petition pending the resolution of the
above entitled case.
On May 21, 1987, the Court rendered a decision in the Elisa Manotok case (Manotok v.
National Housing Authority, 150 SCRA 89) ruling that P.D. 1669 is unconstitutional for being
violative of the due process clause. Thus, since the present petition has not been rendered
moot and academic by the decision in said case, we will now decide on its merits.
As stated earlier, the petitioner argues that since the judgment of the trial court has already
become final, it is entitled to the execution of the same and that moreover, since the house
of the private respondent was gutted by fire, the execution of the decision would now involve
the delivery of possession of the disputed area by the private respondent to the petitioner.

We find merit in these arguments.

When the decision of the trial court became final and executory, it became incumbent upon
the respondent judge to issue the necessary writ for the execution of the same. There is,
therefore, no basis for the respondent judge to deny the petitioner's motion to avail of its
option to approriate the improvements made on its property.

In the case of Duenas v. Mandi (151 SCRA 530, 545), we said:

xxx

xxx

xxx

...Likewise settled is the rule that after a judgment has become final, no additions can be
made thereto, and nothing can be done therewith except its execution, otherwise there
would be no end to legal processes. (Fabular v. Court of Appeals, 11 9 SCRA 329)
Neither can the respondent judge deny the issuance of a writ of execution because the
private respondent was adjudged a builder in good faith or on the ground of "peculiar
circumstances which supervened after the institution of this case, like, for instance, the
introduction of certain major repairs of and other substantial improvements..." because the
option given by law either to retain the premises and pay for the improvements thereon or to
sell the said premises to the builder in good faith belongs to the owner of the property. As we
have in Quemel v. Olaes (1 SCRA 1159,1163):
xxx

xxx

xxx

...The plaintiffs claim that their second cause of action is based on Article 448 in connection
with Art. 546, of the new Civil Code. A cursory reading of these provisions, however, will
show that they are not applicable to plaintiff's case. Under Article 448, the right to
appropriate the works or improvements or to oblige the one who built or planted to pay the
price of the land' belongs to the owner of the land. The only right given to the builder in good
faith is the right to reimbursement for the improvements; the builder, cannot compel the
owner of the land to sell such land to the former. ...
Again, in the recent case of Paz Mercado, et al. v. Hon. Court of Appeals, et al., (G.R. No. L44001, June 10, 1988), we said:
... To be deemed a builder in good faith, it is essential that a person assert title to the land on
which he builds; i.e., that he be a possessor in concept of owner (Art. 525, Civil Code; Lopez,
Inc. v. Phil. Eastern Trading Co., Inc., 98 Phil. 348) and that he be unaware 'that there exists
in his title or mode of acquisition any flaw which invalidates it.' (Art. 526, Civil Code;
Granados v. Monton, 86 Phil. 42; Arriola v. Gomez de la Serna, 14 Phil. 627; See also Manotok
Realty, Inc. v. C.A., 134 SCRA 329, citing Caram v. Laureta, 103 SCRA 7) It is such a builder in
good faith who is given the 1ight to retain the thing, even as against the real owner, until he
has been reimbursed in full not only for the necessary expenses but also for useful expenses.
(Art. 546, Civil Code; Policarpio v. CA., 129 SCRA 51; Sarmiento v. Agana, 129 SCRA 1221; cf,
Queto v. C.A., 122 SCRA 206) ...

Furthermore, the private respondent's good faith ceased after the filing of the complaint
below by the petitioner. In the case of Mindanao Academy, Inc. v. Yap (13 SCRA 190,196), we
ruled:
xxx

xxx

xxx

...Although the bad faith of one party neutralizes that of the other and hence as between
themselves their rights would be as if both of them had acted in good faith at the time of the
transaction, this legal fiction of Yap's good faith ceased when the complaint against him was
filed, and consequently the court's declaration of liability for the rents thereafter is correct
and proper . A possessor in good faith is entitled to the fruits only so long as his possession
is not legally interrupted, and such interruption takes place upon service of judicial summons
(Arts. 544 and 1123, Civil Code).

Thus, the repairs and improvements introduced by the said respondents after the complaint
was filed cannot be considered to have been built in good faith, much less, justify the denial
of the petitioner's fai-rn of option.

Since the improvements have been gutted by fire, and therefore, the basis for private
respondent's right to retain the premises has already been extinguished without the fault of
the petitioner, there is no other recourse for the private respondent but to vacate the
premises and deliver the same to herein petitioner.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is GRANTED and the respondent
judge is hereby ordered to immediately issue a writ of execution ordering the private
respondent to vacate the disputed premises and deliver possession of the same to the
petitioner.

5.Filipinas Colleges Inc. v. Garcia Timbang et. al. (106 Phil. 247)
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, plaintiffappellant, 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.

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:1wphl.nt

(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.

(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.1wphl.nt

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.

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.

6.Agustin v. Intermediate Appellate Court (187 SCRA 218)

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.

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. 3Binayug; 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. EMelad), 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.

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;
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).
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 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

7. Heirs of Navarro v. Intermediate Appellate Court (268 SCRA 74)

HEIRS OF EMILIANO NAVARRO, petitioner, vs. INTERMEDIATE APPELLATE COURT & HEIRS OF
SINFOROSO PASCUAL, respondents.
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-ininterest, 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, 1958, 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 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 be bad 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, assisted 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 land in 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:

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

xxx

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 . . . .

xxx

xxx

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 . . . . 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 . . . 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 . . . . sandwitched [sic] by two big rivers . . . . 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 . . . . 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] . . . .

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. . . ."

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" . . . . 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 Psu175181. . . . 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 fact of the case and to have gravely misapplied statutory and case law
relating to accretion, specifically, Article 457 of the Civil Code.

We find no 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, petitioners 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 petitioners' 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.

Petitioners' claim of ownership over the disputed property under the principle of accretion, is
misplaced.
First, the title of petitioners' own tract of land reveals its northeastern boundary to be Manila
Bay. Petitioners' land, therefore, used to adjoin, border or front the Manila Bay and not any of
the two rivers whose torrential action, petitioners insist, is to account for the accretion on
their land. In fact, one of the petitioners, Sulpicio Pascual, testified in open court that the
waves of Manila 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) petitioners' own
tract of land; (c) the Manila Bay; and, (d) the Talisay and Bulacan Rivers. Petitioners' 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
petitioners' 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 petitioners' 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 . . . . Manila Bay cannot be considered as a sea. We find said
contention untenable. A bay is part of the sea, being a mere indentatiom 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 petitioners' own tract of land on the
northern side. As such, the applicable law is not Article 457 of to 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 . . . . 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 . . . . 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 aforegoing 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 petitioners' 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 petitioners' 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 . . . . 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 . . . . 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 . . . . 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 crossexamination 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. . . . .

. . . . 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 . . . . 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 petitioners' 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 controversy, 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 petitioners as
owners of the estates adjacent thereto.

WHEREFORE, the instant Petition for Review is hereby DENIED and DISMISSED.

Costs against petitioners.

8.Tecnogas Philippines v. Court of Appeals (268 SCRA 5)
TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, petitioner,
vs.
COURT OF APPEALS (FORMER SPECIAL SEVENTEENTH DIVISION) and EDUARDO UY,
respondents.

The parties in this case are owners of adjoining lots in Paraaque, Metro Manila. It was
discovered in a survey, that a portion of a building of petitioner, which was presumably
constructed by its predecessor-in-interest, encroached on a portion of the lot owned by
private respondent. What are the rights and obligations of the parties? Is petitioner
considered a builder in bad faith because, as held by respondent Court, he is "presumed to
know the metes and bounds of his property as described in his certificate of title"? Does
petitioner succeed into the good faith or bad faith of his predecessor-in-interest which
presumably constructed the building?

These are the questions raised in the petition for review of the Decision 1 dated August 28,
1992, in CA-G.R. CV No. 28293 of respondent Court 2 where the disposition reads: 3

WHEREFORE, premises considered, the Decision of the Regional Trial Court is hereby
reversed and set aside and another one entered

1.

Dismissing the complaint for lack of cause of action;

2.
Ordering Tecnogas to pay the sum of P2,000.00 per month as reasonable rental from
October 4, 1979 until appellee vacates the land;

3.

To remove the structures and surrounding walls on the encroached area;

4.

Ordering appellee to pay the value of the land occupied by the two-storey building;

5.

Ordering appellee to pay the sum of P20,000.00 for and as attorney's fees;

6.

Costs against appellee.

Acting on the motions for reconsideration of both petitioner and private respondent,
respondent Court ordered the deletion of paragraph 4 of
the dispositive portion in an Amended Decision dated February 9, 1993, as follows: 4

WHEREFORE, premises considered, our decision of August 28, 1992 is hereby modified
deleting paragraph 4 of the dispositive portion of our decision which reads:

4.

Ordering appellee to pay the value of the land occupied by the two-storey building.

The motion for reconsideration of appellee is hereby DENIED for lack of merit.

The foregoing Amended Decision is also challenged in the instant petition.

The Facts

The facts are not disputed. Respondent Court merely reproduced the factual findings of the
trial court, as follows: 5

That plaintiff (herein petitioner) which is a corporation duly organized and existing under and
by virtue of Philippine laws is the registered owner of a parcel of land situated in Barrio San
Dionisio, Paraaque, Metro Manila known as Lot 4331-A (should be 4531-A) of Lot 4531 of the
Cadastral Survey of Paraaque, Metro Manila, covered by Transfer Certificate of Title No.
409316 of the Registry of Deeds of the Province of Rizal; that said land was purchased by
plaintiff from Pariz Industries, Inc. in 1970, together with all the buildings and improvements
including the wall existing thereon; that the defendant (herein private respondent) is the
registered owner of a parcel of land known as Lot No. 4531-B of Lot 4531 of the Cadastral
Survey of Paraaque, LRC (GLRO) Rec. No. 19645 covered by Transfer Certificate of Title No.
279838, of the Registry of Deeds for the Province of Rizal; that said land which adjoins
plaintiff's land was purchased by defendant from a certain Enrile Antonio also in 1970; that in
1971, defendant purchased another lot also adjoining plaintiffs land from a certain Miguel
Rodriguez and the same was registered in defendant's name under Transfer Certificate of
Title No. 31390, of the Registry of Deeds for the Province of Rizal; that portions of the
buildings and wall bought by plaintiff together with the land from Pariz Industries are
occupying a portion of defendant's adjoining land; that upon learning of the encroachment or
occupation by its buildings and wall of a portion of defendant's land, plaintiff offered to buy
from defendant that particular portion of defendant's land occupied by portions of its
buildings and wall with an area of 770 square meters, more or less, but defendant, however,
refused the offer. In 1973, the parties entered into a private agreement before a certain Col.
Rosales in Malacaang, wherein plaintiff agreed to demolish the wall at the back portion of
its land thus giving to defendant possession of a portion of his land previously enclosed by

plaintiff's wall; that defendant later filed a complaint before the office of Municipal Engineer
of Paraaque, Metro Manila as well as before the Office of the Provincial Fiscal of Rizal
against plaintiff in connection with the encroachment or occupation by plaintiff's buildings
and walls of a portion of its land but said complaint did not prosper; that defendant dug or
caused to be dug a canal along plaintiff's wall, a portion of which collapsed in June, 1980,
and led to the filing by plaintiff of the supplemental complaint in the above-entitled case and
a separate criminal complaint for malicious mischief against defendant and his wife which
ultimately resulted into the conviction in court of defendant's wife for the crime of malicious
mischief; that while trial of the case was in progress, plaintiff filed in Court a formal proposal
for settlement of the case but said proposal, however, was ignored by defendant.

After trial on the merits, the Regional Trial Court 6 of Pasay City, Branch 117, in Civil Case No.
PQ-7631-P, rendered a decision dated December 4, 1989 in favor of petitioner who was the
plaintiff therein. The dispositive portion
reads: 7
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant and
ordering the latter to sell to plaintiff that portion of land owned by him and occupied by
portions of plaintiff's buildings and wall at the price of P2,000.00 per square meter and to
pay the former:

1.
The sum of P44,000.00 to compensate for the losses in materials and properties
incurred by plaintiff through thievery as a result of the destruction of its wall;
2.

The sum of P7,500.00 as and by way of attorney's fees; and

3.

The costs of this suit.

Appeal was duly interposed with respondent Court, which as previously stated, reversed and
set aside the decision of the Regional Trial Court and rendered the assailed Decision and
Amended Decision. Hence, this recourse under Rule 45 of the Rules of Court.

The Issues
The petition raises the following issues: 8
(A)
Whether or not the respondent Court of Appeals erred in holding the petitioner a builder in
bad faith because it is "presumed to know the metes and bounds of his property."
(B)
Whether or not the respondent Court of Appeals erred when it used the amicable settlement
between the petitioner and the private respondent, where both parties agreed to the
demolition of the rear portion of the fence, as estoppel amounting to recognition by
petitioner of respondent's right over his property including the portions of the land where the
other structures and the building stand, which were not included in the settlement.
(C)

Whether or not the respondent Court of Appeals erred in ordering the removal of the
"structures and surrounding walls on the encroached area" and in withdrawing its earlier
ruling in its August 28, 1992 decision for the petitioner "to pay for the value of the land
occupied" by the building, only because the private respondent has "manifested its choice to
demolish" it despite the absence of compulsory sale where the builder fails to pay for the
land, and which "choice" private respondent deliberately deleted from its September 1, 1980
answer to the supplemental complaint in the Regional Trial Court.

In its Memorandum, petitioner poses the following issues:

A.
The time when to determine the good faith of the builder under Article 448 of the New Civil
Code, is reckoned during the period when it was actually being built; and in a case where no
evidence was presented nor introduced as to the good faith or bad faith of the builder at that
time, as in this case, he must be presumed to be a "builder in good faith," since "bad faith
cannot be presumed." 9
B.
In a specific "boundary overlap situation" which involves a builder in good faith, as in this
case, it is now well settled that the lot owner, who builds on the adjacent lot is not charged
with "constructive notice" of the technical metes and bounds contained in their torrens titles
to determine the exact and precise extent of his boundary perimeter. 10
C.
The respondent court's citation of the twin cases of Tuason & Co. v. Lumanlan and Tuason &
Co. v. Macalindong is not the "judicial authority" for a boundary dispute situation between
adjacent torrens titled lot owners, as the facts of the present case do not fall within nor
square with the involved principle of a dissimilar case. 11
D.
Quite contrary to respondent Uy's reasoning, petitioner Tecnogas continues to be a builder in
good faith, even if it subsequently built/repaired the walls/other permanent structures
thereon while the case a quo was pending and even while respondent sent the petitioner
many letters/filed cases thereon. 12
D.(E.)
The amicable settlement between the parties should be interpreted as a contract and
enforced only in accordance with its explicit terms, and not over and beyond that agreed
upon; because the courts do not have the power to create a contract nor expand its scope.
13
E.(F.)
As a general rule, although the landowner has the option to choose between: (1) "buying the
building built in good faith", or (2) "selling the portion of his land on which stands the
building" under Article 448 of the Civil Code; the first option is not absolute, because an

exception thereto, once it would be impractical for the landowner to choose to exercise the
first alternative, i.e. buy that portion of the house standing on his land, for the whole building
might be rendered useless. The workable solution is for him to select the second alternative,
namely, to sell to the builder that part of his land on which was constructed a portion of the
house. 14
Private respondent, on the other hand, argues that the petition is "suffering from the
following flaws: 15
1.
It did not give the exact citations of cases decided by the Honorable Supreme Court
that allegedly contradicts the ruling of the Hon. Court of Appeals based on the doctrine laid
down in Tuason vs. Lumanlan case citing also Tuason vs. Macalindong case (Supra).
2.
Assuming that the doctrine in the alleged Co Tao vs. Chico case is contradictory to the
doctrine in Tuason vs. Lumanlan and Tuason vs. Macalindong, the two cases being more
current, the same should prevail.
Further, private respondent contends that the following "unmistakably" point to the bad faith
of petitioner: (1) private respondent's purchase of the two lots, "was ahead of the purchase
by petitioner of the building and lot from Pariz Industries"; (2) the declaration of the General
Manager of Tecnogas that the sale between petitioner and Pariz Industries "was not
registered" because of some problems with China Banking Corporation; and (3) the Deed of
Sale in favor of petitioner was registered in its name only in "the month of May 1973." 16
The Court's Ru1ing
The petition should be granted.
Good Faith or Bad Faith
Respondent Court, citing the cases of J.M. Tuason & Co., Inc. vs. Vda. de Lumanlan 17 and
J.M. Tuason & Co., Inc. vs. Macalindong, 18 ruled that petitioner "cannot be considered in
good faith" because as a land owner, it is "presumed to know the metes and bounds of his
own property, specially if the same are reflected in a properly issued certificate of title. One
who erroneously builds on the adjoining lot should be considered a builder in (b)ad (f)aith,
there being presumptive knowledge of the Torrens title, the area, and the extent of the
boundaries." 19

We disagree with respondent Court. The two cases it relied upon do not support its main
pronouncement that a registered owner of land has presumptive knowledge of the metes
and bounds of its own land, and is therefore in bad faith if he mistakenly builds on an
adjoining land. Aside from the fact that those cases had factual moorings radically different
from those obtaining here, there is nothing in those cases which would suggest, however
remotely, that bad faith is imputable to a registered owner of land when a part of his building
encroaches upon a neighbor's land, simply because he is supposedly presumed to know the
boundaries of his land as described in his certificate of title. No such doctrinal statement
could have been made in those cases because such issue was not before the Supreme Court.
Quite the contrary, we have rejected such a theory in Co Tao vs. Chico, 20 where we held
that unless one is versed in the science of surveying, "no one can determine the precise
extent or location of his property by merely examining his paper title."

There is no question that when petitioner purchased the land from Pariz Industries, the
buildings and other structures were already in existence. The record is not clear as to who
actually built those structures, but it may well be assumed that petitioner's predecessor-ininterest, Pariz Industries, did so. Article 527 of the Civil Code presumes good faith, and since
no proof exists to show that the encroachment over a narrow, needle-shaped portion of
private respondent's land was done in bad faith by the builder of the encroaching structures,
the latter should be presumed to have built them in good faith. 21 It is presumed that
possession continues to be enjoyed in the same character in which it was acquired, until the
contrary is proved. 22 Good faith consists in the belief of the builder that the land he is
building on is his, and his ignorance of any defect or flaw in his title. 23 Hence, such good
faith, by law, passed on to Pariz's successor, petitioner in this case. Further, "(w)here one
derives title to property from another, the act, declaration, or omission of the latter, while
holding the title, in relation to the property, is evidence against the former." 24 And
possession acquired in good faith does not lose this character except in case and from the
moment facts exist which show that the possessor is not unaware that he possesses the
thing improperly or wrongfully. 25 The good faith ceases from the moment defects in the title
are made known to the possessor, by extraneous evidence or by suit for recovery of the
property by the true owner. 26

Recall that the encroachment in the present case was caused by a very slight deviation of
the erected wall (as fence) which was supposed to run in a straight line from point 9 to point
1 of petitioner's lot. It was an error which, in the context of the attendant facts, was
consistent with good faith. Consequently, the builder, if sued by the aggrieved landowner for
recovery of possession, could have invoked the provisions of Art. 448 of the Civil Code, which
reads:
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 obvious benefit to the builder under this article is that, instead of being outrightly
ejected from the land, he can compel the landowner to make a choice between the two
options: (1) to appropriate the building by paying the indemnity required by law, or (2) sell
the land to the builder. The landowner cannot refuse to exercise either option and compel
instead the owner of the building to remove it from the land. 27

The question, however, is whether the same benefit can be invoked by petitioner who, as
earlier stated, is not the builder of the offending structures but possesses them as buyer.

We answer such question in the affirmative.

In the first place, there is no sufficient showing that petitioner was aware of the
encroachment at the time it acquired the property from Pariz Industries. We agree with the
trial court that various factors in evidence adequately show petitioner's lack of awareness
thereof. In any case, contrary proof has not overthrown the presumption of good faith under
Article 527 of the Civil Code, as already stated, taken together with the disputable
presumptions of the law on evidence. These presumptions state, under Section 3 (a) of Rule
131 of the Rules of Court, that the person is innocent of a crime or wrong; and under Section
3 (ff) of Rule 131, that the law has been obeyed. In fact, private respondent Eduardo Uy
himself was unaware of such intrusion into his property until after 1971 when he hired a
surveyor, following his purchase of another adjoining lot, to survey all his newly acquired
lots. Upon being apprised of the encroachment, petitioner immediately offered to buy the
area occupied by its building a species of conduct consistent with good faith.

In the second place, upon delivery of the property by Pariz Industries, as seller, to the
petitioner, as buyer, the latter acquired ownership of the property. Consequently and as
earlier discussed, petitioner is deemed to have stepped into the shoes of the seller in regard
to all rights of ownership over the immovable sold, including the right to compel the private
respondent to exercise either of the two options provided under Article 448 of the Civil Code.

Estoppel
Respondent Court ruled that the amicable settlement entered into between petitioner and
private respondent estops the former from questioning the private respondent's "right" over
the disputed property. It held that by undertaking to demolish the fence under said
settlement, petitioner recognized private respondent's right over the property, and "cannot
later on compel" private respondent "to sell to it the land since" private respondent "is under
no obligation to sell." 28
We do not agree. Petitioner cannot be held in estoppel for entering into the amicable
settlement, the pertinent portions of which read: 29
That the parties hereto have agreed that the rear portion of the fence that separates the
property of the complainant and respondent shall be demolished up to the back of the
building housing the machineries which demolision (sic) shall be undertaken by the
complainant at anytime.

That the fence which serve(s) as a wall housing the electroplating machineries shall not be
demolished in the mean time which portion shall be subject to negotiation by herein parties.

From the foregoing, it is clear that petitioner agreed only to the demolition of a portion of the
wall separating the adjoining properties of the parties i.e. "up to the back of the building
housing the machineries." But that portion of the fence which served as the wall housing the
electroplating machineries was not to be demolished. Rather, it was to "be subject to
negotiation by herein parties." The settlement may have recognized the ownership of private

respondent but such admission cannot be equated with bad faith. Petitioner was only trying
to avoid a litigation, one reason for entering into an amicable settlement.

As was ruled in Osmea vs. Commission on Audit, 30

A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical
agreement by the Civil Code and is therein dealt with in some detail. "A compromise,"
declares Article 2208 of said Code, "is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced."
xxx

xxx

xxx

The Civil Code not only defines and authorizes compromises, it in fact encourages them in
civil actions. Art. 2029 states that "The Court shall endeavor to persuade the litigants in a
civil case to agree upon some fair compromise." . . .

In the context of the established facts, we hold that petitioner did not lose its rights under
Article 448 of the Civil Code on the basis merely of the fact that some years after acquiring
the property in good faith, it learned about and aptly recognized the right of private
respondent to a portion of the land occupied by its building. The supervening awareness of
the encroachment by petitioner does not militate against its right to claim the status of a
builder in good faith. In fact, a judicious reading of said Article 448 will readily show that the
landowner's exercise of his option can only take place after the builder shall have come to
know of the intrusion in short, when both parties shall have become aware of it. Only then
will the occasion for exercising the option arise, for it is only then that both parties will have
been aware that a problem exists in regard to their property rights.

Options of Private Respondent

What then is the applicable provision in this case which private respondent may invoke as
his remedy: Article 448 or Article 450 31 of the Civil Code?

In view of the good faith of both petitioner and private respondent, their rights and
obligations are to be governed by Art. 448. The essential fairness of this codal provision has
been pointed out by Mme. Justice Ameurfina Melencio-Herrera, citing Manresa and applicable
precedents, in the case of Depra vs. Dumlao, 32 to wit:

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

49167, April 30, 1949; Article applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off. Gaz. 217;
Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050).

The private respondent's insistence on the removal of the encroaching structures as the
proper remedy, which respondent Court sustained in its assailed Decisions, is thus legally
flawed. This is not one of the remedies bestowed upon him by law. It would be available only
if and when he chooses to compel the petitioner to buy the land at a reasonable price but
the latter fails to pay such price. 33 This has not taken place. Hence, his options are limited
to: (1) appropriating the encroaching portion of petitioner's building after payment of proper
indemnity, or (2) obliging the latter to buy the lot occupied by the structure. He cannot
exercise a remedy of his own liking.

Neither is petitioner's prayer that private respondent be ordered to sell the land 34 the
proper remedy. While that was dubbed as the "more workable solution" in Grana and Torralba
vs. The Court of Appeals, et al., 35 it was not the relief granted in that case as the
landowners were directed to exercise "within 30 days from this decision their option to either
buy the portion of the petitioners' house on their land or sell to said petitioners the portion of
their land on which it stands." 36 Moreover, in Grana and Torralba, the area involved was
only 87 square meters while this case involves 520 square meters 37. In line with the case of
Depra vs. Dumlao, 38 this case will have to be remanded to the trial court for further
proceedings to fully implement the mandate of Art. 448. It is a rule of procedure for the
Supreme Court to strive to settle the entire controversy in a single proceeding leaving no
root or branch to bear the seeds of future
litigation. 39

Petitioner, however, must also pay the rent for the property occupied by its building as
prescribed by respondent Court from October 4, 1979, but only up to the date private
respondent serves notice of its option upon petitioner and the trial court; that is, if such
option is for private respondent to appropriate the encroaching structure. In such event,
petitioner would have a right of retention which negates the obligation to pay rent. 40 The
rent should however continue if the option chosen is compulsory sale, but only up to the
actual transfer of ownership.

The award of attorney's fees by respondent Court against petitioner is unwarranted since the
action appears to have been filed in good faith. Besides, there should be no penalty on the
right to litigate. 41

WHEREFORE, premises considered, the petition is hereby GRANTED and the assailed
Decision and the Amended Decision are REVERSED and SET ASIDE. In accordance with the
case of Depra vs. Dumlao, 42 this case is REMANDED to the Regional Trial Court of Pasay
City, Branch 117, for further proceedings consistent with Articles 448 and 546 43 of the Civil
Code, as follows:

The trial court shall determine:

a)

the present fair price of private respondent's 520 square-meter area of land;

b)
the increase in value ("plus value") which the said area of 520 square meters may
have acquired by reason of the existence of the portion of the building on the area;
c)

the fair market value of the encroaching portion of the building; and

d)
whether the value of said area of land is considerably more than the fair market value
of the portion of the building thereon.

2.
After said amounts shall have been determined by competent evidence, the regional
trial court shall render judgment as follows:
a)
The private respondent shall be granted a period of fifteen (15) days within which to
exercise his option under the law (Article 448, Civil Code), whether to appropriate the portion
of the building as his own by paying to petitioner its fair market value, or to oblige petitioner
to pay the price of said area. The amounts to be respectively paid by petitioner and private
respondent, in accordance with the option thus 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 trial court in favor of the party entitled to receive it;
b)
If private respondent exercises the option to oblige petitioner 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 portion of the building, petitioner shall give
written notice of such rejection to private respondent and to the trial court within fifteen (15)
days from notice of private respondent'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 trial court formal written notice of the
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 two thousand pesos (P2,000.00) 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
1970 that petitioner has occupied the subject area. The rental thus fixed shall be increased
by ten percent (10%) for the second year of the forced lease. Petitioner shall not make any
further constructions or improvements on the building. Upon expiration of the two-year
period, or upon default by petitioner in the payment of rentals for two (2) consecutive
months, private respondent shall be entitled to terminate the forced lease, to recover his
land, and to have the portion of the building removed by petitioner or at latter's expense.
The rentals herein provided shall be tendered by petitioner to the trial court for payment to
private respondent, and such tender shall constitute evidence of whether or not compliance
was made within the period fixed by the said court.

c)
In any event, petitioner shall pay private respondent an amount computed at two
thousand pesos (P2,000.00) per month as reasonable compensation for the occupancy of
private respondent's land for the period counted from October 4, 1979, up to the date
private respondent serves notice of its option to appropriate the encroaching structures,

otherwise up to the actual transfer of ownership to petitioner or, in case a forced lease has
to be imposed, up to the commencement date of the forced lease referred to in the
preceding paragraph;

d)
The periods to be fixed by the trial court in its decision shall be non-extendible, 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.

9.Vda. De Nazareno v. Court of Appeals (257 SCRA 589)

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.

ROMERO, J.:p
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 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 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.
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 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 Hilario's decision, he was acting
on said motion as an Undersecretary on behalf of the Secretary of the Department. In the case ofHamoy
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 Rabayas 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 his
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.
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 of 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.

10. Ballatan v. Court of Appeals G.R. No. 125683, March 2, 1999, 304 SCRA 34
EDEN BALLATAN and SPS. BETTY MARTINEZ and CHONG CHY LING, petitioners,
vs.
COURT OF APPEALS, GONZALO GO, WINSTON GO, LI CHING YAO, ARANETA INSTITUTE OF
AGRICULTURE and JOSE N. QUEDDING, respondents.

This is a petition for review on certiorari of the decision of the Court of Appeals dated March 25, 1996 in CA-G.R. CV
No. 32472 entitled "Eden Ballatan., et. al., plaintiffs-appellees v. Gonzalo Go and Winston Go, appellants and thirdparty plaintiffs-appellants v. Li Ching Yao, et. al., third-party defendants." 1
The instant case arose from a dispute over forty-two (42) square meters of residential land belonging to petitioners.
The parties herein are owners of adjacent lots located at Block No. 3, Poinsettia Street, Araneta University Village,
Malabon, Metro Manila. Lot No. 24, 414 square meters in area, is registered in the name of petitioners Eden
Ballatan and spouses Betty Martinez and Chong Chy Ling. 2 Lots Nos. 25 and 26, with an area of 415 and 313 square
meters respectively, are registered in the name of respondent Gonzalo Go, Sr. 3 On Lot No. 25, respondent Winston Go,
son of Gonzalo Go, Sr., constructed his house. Adjacent to Lot No. 26 is Lot No. 27, 417 square meters in area, and is
registered in the name of respondent Li Ching Yao. 4
In 1985, petitioner Ballatan constructed her house on Lot No. 24. During the construction, she noticed that the
concrete fence and side pathway of the adjoining house of respondent Winston Go encroached on the entire length
of the eastern side of her property. 5 Her building contractor formed her that the area of her lot was actually less than
that described in the title. Forthwith, Ballatan informed respondent Go of this discrepancy and his encroachment on her
property. Respondent Go, however, claimed that his house, including its fence and pathway, were built within the
parameters of his father's lot; and that this lot was surveyed by Engineer Jose Quedding, the authorized surveyor of the
Araneta Institute of Agriculture (AIA), the owner-developer of the subdivision project.
Petitioner Ballatan called the attention of the IAI to the discrepancy of the land area in her title and the actual land
area received from them. The AIA authorized another survey of the land by Engineer Jose N. Quedding.
In a report dated February 28, 1985, Engineer Quedding found that the lot area of petitioner Ballatan was less by
few meters and that of respondent Li Ching Yao, which was three lots away, increased by two (2) meters. Engineer
Quedding declared that he made a verification survey of Lots Nos. 25 and 26 of respondents Go in 1983 and
allegedly found the boundaries to have been in their proper position. He, however, could not explain the reduction in
Ballatan's area since he was not present at the time respondents Go constructed their boundary walls. 6
On June 2, 1985, Engineer Quedding made a third relocation survey upon request of the parties. He found that Lot
No. 24 lost approximately 25 square meters on its eastern boundary that Lot No. 25, although found to have
encroached on Lot No. 24, did not lose nor gain any area; that Lot No. 26 lost some three (3) square meters which,
however, were gained by Lot No. 27 on its western boundary. 7 In short, Lots Nos. 25, 26 and 27 moved westward to
the eastern boundary of Lot No. 24.
On the basis of this survey, on June 10, 1985, petitioner Ballatan made a written demand on respondents Go to
remove and dismantle their improvements on Lot No. 24. Respondents Go refused. The parties including Li Ching
Yao, however, met several times to reach an agreement one matter.

Failing to agree amicably, petitioner Ballatan brought the issue before the barangay. Respondents Go did not
appear. Thus, on April 1, 1986, petitioner Ballatan instituted against respondents Go Civil Case No. 772-MN for
recovery of possession before the Regional Trial Court, Malabon, Branch 169. The Go' s filed their "Answer with
Third-Party Complaint" impleading as third-party defendants respondents Li Ching Yao, the AIA and Engineer
Quedding.
On August 23, 1990, the trial court decided in favor of petitioners. It ordered the Go's to vacate the subject portion of
Lot No. 24, demolish their improvements and pay petitioner Ballatan actual damages, attorney's fees and the costs
of the suit. It dismissed the third-party complaint against: (1) AIA after finding that the lots sold to the parties were in
accordance with the technical description a verification plan covered by their respective titles; (2) Jose N. Quedding,
there being no privity of relation between him and respondents Go and his erroneous survey having been made at
the instance of AIA, not the parties; and (3) Li Ching Yao for failure to prove that he committed any wrong in the
subject encroachment. 8 The court made the following disposition:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants,
ordering the latter:
1. To demolish and remove all improvements existing and encroaching on plaintiff's lot;
2. To clear, vacate and deliver possession of the encroached area to the plaintiffs;
3. To pay plaintiffs jointly and severally the following:
a) P7,800.00 for the expenses paid to the surveyors;
b) P5,000.00 for plaintiffs' transportation;
4. To pay plaintiffs, jointly and severally, attorney's fees equivalent to 25% of the current market
value of the subject matter in litigation at the time of execution; and
5. To pay the costs of suit.
The third-party complaint filed by third-party plaintiff Gonzalo Go and Winston Go against third-party
defendants Araneta Institute of Agriculture, Jose N. Quedding and Li Ching Yao is hereby
DISMISSED, without pronouncement as to costs.
SO ORDERED.
Respondents Go appealed. On March 25, 1996, the Court of Appeals modified the decision of the trial court. It
affirmed the dismissal of the third-party complaint against the AIA but reinstated the complaint against Li Ching Yao
and Jose Quedding. Instead of ordering respondents Go to demolish their improvements on the subject land, the
appellate court ordered them to pay petitioner Ballatan, and respondent Li Ching Yao to pay respondents Go, a
reasonable amount for that portion of the lot which they encroached, the value to be fixed at the time of taking. It
also ordered Jose Quedding to pay respondents Go attorney's fees of P5,000.00 for his erroneous survey. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, the decision appealed from is hereby AFFIRMED insofar as
the dismissal of the third-party complaint against Araneta Institute of Agriculture is concerned but
modified in all other aspects as follows:
1) Defendants-appellants are hereby ordered to pay plaintiffs-appellees the reasonable value of the
forty-two (42) square meters of their lot at the time of its taking;

2) Third-party defendant Li Ching Yao is hereby ordered to pay defendants-appellants the

reasonable value of the thirty-seven (37) square meters of the latter's lot at the time of its taking; and
3) Third-party defendant Jose N. Quedding is hereby ordered to pay to defendants-appellants the
amount of P5,000.00 as attorney's fees.
LET THE RECORD of the case be remanded to the Regional Trial Court of Malabon for further
proceedings and reception of evidence for the determination of the reasonable value of Lots Nos. 24
and 26.
SO ORDERED. 9
Hence, this petition. Petitioners allege that:

RESPONDENT COURT OF APPEALS ERRED ON QUESTIONS OF LAW AND GRAVELY ABUSED

ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN:
1. IT APPLIED EQUITY OR EQUITABLE SOLUTIONS TO THE INSTANT CASE IN UTTER
DISREGARD AND IN VIOLATION OR GROSS IGNORANCE OF EXISTING LAWS AND
JURISPRUDENCE VESTING BASIC PROPERTY RIGHTS TO HEREIN PETITIONERS.
RESPONDENT COURT HAS NO POWER TO APPLY/USE EQUITY IN THE PRESENCE OF
EXISTING LAWS TO THE CONTRARY.
2. UNDER THE GUISE OF APPLYING EQUITY BUT IN EFFECT A VERY APPARENT PARTIALITY
AND FAVOR TO RESPONDENTS GO, IT ORDERED PAYMENT OF THE ENCROACHED AREA AT
THE VALUE AT THE TIME OF ITS TAKING AND NOT THE VALUE AT THE TIME OF PAYMENT,
THEREBY ENRICHING THE GO'S BUT DEPRIVING PETITIONERS OF THE FRUITS OR
INCREASE IN VALUE OF THEIR PROPERTY TO WHICH THEY ARE ENTITLED UNDER THE
LAW AS THE REGISTERED OWNERS WITH TORRENS TITLE IN THEIR NAMES.
3. WHEN IT DID NOT DISMISS THE THIRD-PARTY COMPLAINT DUE TO NON-PAYMENT OF
ANY FILING OR DOCKET FEE.
4. WHEN IT DENIED PETITIONERS THE RECOVERY OF THE NECESSARY EXPENSES IN
PROTECTING THEIR RIGHTS IN THIS CASE. 10
Petitioners question the admission by respondent Court of Appeals of the third-party complaint by respondents Go
against the AIA, Jose Quedding and Li Ching Yao. Petitioners claim that the third-party complaint should not have
been considered by the Court of Appeals for lack of jurisdiction due to third-party plaintiffs' failure to pay the docket
and filing fees before the trial court.
The third-party complaint in the instant case arose from the complaint of petitioners against respondents Go. The
complaint filed was for accion publiciana, i.e., the recovery of possession of real property which is a real action. The
rule in this jurisdiction is that when an action is filed in court, the complaint must be accompanied the payment of the
requisite docket and filing fees. 11 In real actions, the docket and filing fees are based on the value of the property and
the amount of damages claimed, if any 12 If the complaint is filed but the fees are not paid at the time of filing, the court
acquires jurisdiction upon full payment of the fees within a reasonable time as the court may grant, barring
prescription. 13 Where the fees prescribed for the real action have been paid but the fees of certain related damages are
not, the court, although having jurisdiction over the real action, may not have acquired jurisdiction over the accompnying
claim for damages. 14 Accordingly, the court may expunge those claims for damages, or allow, on motion, a reasonable
time for amendment of the complaint so as to allege the precise amount of damages and accept payment of the requisite
legal fee. 15 If there are unspecified claims, the determination of which may arise after the filing of the complaint or similar
pleading, the additional filing fee thereon shall constitute a lien on the judgment award. 16 The same rule also applies to
third-party claims and other similar pleadings. 17

In the case at bar, the third-party complaint filed by respondents Go was incorporated in their answer to the
complaint. The third-party complaint sought the same remedy as the principal complaint but added a prayer for
attorney's fees and costs without specifying their amounts, thus:
ON THE THIRD PARTY COMPLAINT
1. That summons be issued against Third-Party Defendants Araneta Institute of Agriculture, Jose N.
Quedding and Li Ching Yao;
2. That after hearing, they be sentenced to indemnify the Third-Party Plaintiffs for whatever is
adjudged against the latter in favor of the Plaintiffs;
3. That Third-Party Defendants be ordered to pay attorney's fees as may be proved during trial;
4. That Third-Party Defendants be ordered to pay the costs.
Other just and equitable reliefs are also prayed for. 18
The Answer with Third-Party Complaint was admitted by the trial court without the requisite payment of filing fees,
particularly on the Go's prayer for damages. 19 The trial court did not award the Go's any damages. It dismissed the
third-party complaint. The Court of Appeals, however, granted the third-party complaint in part by ordering third-party
defendant Jose N. Quedding to pay the Go's the sum of P5,000.00 as attorney's fees.
Contrary to petitioners' claim, the Court of Appeal did not err in awarding damages despite the Go's failure to specify
the amount prayed for and pay the corresponding additional filing fees thereon. The claim for attorney's fees refers
to damages arising after the filing of the complaint against the Go's. The additional filing fee on this claim is deemed
to constitute a lien on the judgment award. 20
The Court of Appeals found that the subject portion is actually forty-two (42) square meters in area, not forty-five
(45), as initially found by the trial court; that this forty-two (42) square meter portion is on the entire eastern side of
Lot No. 24 belonging to petitioners; that this said portion is found the concrete fence and pathway that extends from
respondent Winston Go's house on adjacent Lot No. 25; that inclusive of the subject portion, respondents Go did not
gain nor lose any portion of Lots Nos. 25 and 26; that instead, Lot No. 27, on which respondent Li Ching Yao built
his house, encroached on the land of respondents Go, gaining in the process thirty-seven (37) square meters of the
latter's land. 21
We hold that the Court of Appeals correctly dismissed the third-party complaint against AIA.. The claim that the
discrepancy in the lot areas was due to AIA's fault was not proved. The appellate court, however, found that it was
the erroneous survey by Engineer Quedding that triggered these discrepancies. And it was this survey that
respondent Winston Go relied upon in constructing his house on his father's land. He built his house in the belief
that it was entirely within the parameters of his father's land. In short, respondents Go had no knowledge that they
encroached petitioners' lot. They are deemed builders in good faith 22 until the time petitioner Ballatan informed them of
their encroachment on her property. 23
Respondent Li Ching Yao built his house on his lot before any of the other parties did. 24 He constructed his house in
1982, respondents Go in 1983, and petitioners in 1985. 25 There is no evidence, much less, any allegation that respondent
Li Ching Yao was aware that when he built his house he knew that a portion thereof encroached on respondents Go's
adjoining land. Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the
burden of proof. 26
All the parties are presumed to have acted in good faith. Their rights must, therefore, be determined in accordance
with the appropriate provisions of the Civil Code on property.
Art. 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, 27 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 owner of the land on which anything has been built, sown or planted in good faith shall have the right to
appropriate as his own the building, planting or sowing, after payment to the builder, planter or sower of the
necessary and useful expenses, and in the proper case, expenses for pure luxury or mere pleasure. The
owner of the land may also oblige the builder, planter or sower to purchase and pay the price of the land. If
the owner chooses to sell his land, the builder, planter or sower must purchase the land, otherwise the
owner may remove the improvements thereon. The builder, planter or sower, however, is not obliged to
purchase the land if its value considerably more than the building, planting or sowing. In such case, the
builder, planter or sower must pay rent to the owner of the land. If the parties cannot come to terms over the
conditions of the lease, the court must fix the terms thereof. The right to choose between appropriating the
improvement or selling the land on which the improvement stands to the builder, planter or sower, is given to
the owner of the land. 28
Art. 448 has been applied to improvements or portions of improvements built by mistaken belief on land belonging
to the adjoining owner. 29 The facts of the instant case are similar to those in Cabral v. Ibanez, 30 to wit:
[P]laintiffs Geronima Zabala and her husband Justino Bernardo, constructed their house in the belief
that it was entirely within the area of their own land without knowing at that time that part of their
house was occupying a 14-square meter portion of the adjoining lot belonging to the defendants,
and that the defendants Bernardo M. Cabral and Mamerta M. Cabral were likewise unaware of the
fact that a portion of plaintiff's house was extending and occupying a portion of their lot with an area
of 14 square meters. The parties came to know of the fact that part of the plaintiff's house was
occupying part of defendant's land when the construction of plaintiff's house was about to be
finished, after a relocation of the monuments of the two properties had been made by the U.S. Army
through the Bureau of Lands, according to their "Stipulation of Facts," dated August 17, 1951.
On the basis of these facts, we held that:
The court, therefore, concludes that the plaintiffs are builders in good faith and the relative rights of
the defendant Mamerta Cabral as owner of the land and of the plaintiffs as owners of the building is
governed by Article 361 of the Civil Code (Co Tao v. Joaquin Chan Chico, 46 Off. Gaz.5514). Article
361 of the old Civil Code has been reproduced with an additional provision in Article 448 of the new
Civil Code, approved June 18, 1949. 31
Similarly, in Grana and Torralba v. Court of Appeals, 32 we held that:
Although without any legal and valid claim over the land in question, petitioners, however, were
found by the Court of Appeals to have constructed a portion of their house thereon in good faith.
Under Article 361 of the old Civil Code (Article 448 of the new), the owner of the land on which
anything has been built in good faith shall have the right to appropriate as his own the building, after
payment to the builder of necessary or useful expenses, and in the proper case, expenses for pure
luxury or mere pleasure, or to oblige the builder to pay the price of the land. Respondents, as
owners of the land, have therefore the choice of either appropriating the portion of petitioners' house
which is on their land upon payment of the proper indemnity to petitioners, or selling to petitioners
that part of their land on which stands the improvement. It may here be pointed out that it would be
impractical for respondents to choose to exercise the first alternative, i.e., buy that portion of the
house standing on their land, for in that event the whole building might be rendered useless. The

more workable solution, it would seem, is for respondents to sell to petitioners that part of their land
on which was constructed a portion of the latter's house. If petitioners are unwilling or unable to buy,
then they must vacate the land and must pay rentals until they do so. Of course, respondents cannot
oblige petitioners to buy the land if its value is considerably more than that of the aforementioned
portion of the house. If such be the case, then petitioners must pay reasonable rent. The parties
must come to an agreement as to the conditions of the lease, and should they fail to do so, then the
court shall fix the same. 33
In light of these rulings, petitioners, as owners of Lot No. 24, may choose to purchase the improvement made by
respondents Go on their land, or sell to respondents Go the subject portion. If buying the improvement is impractical
as it may render the Go's house useless, then petitioners may sell to respondents Go that portion of Lot No. 24 on
which their improvement stands. If the Go's are unwilling or unable to buy the lot, then they must vacate the land
and, until they vacate, they must pay rent to petitioners. Petitioners, however, cannot compel respondents Go to buy
the land if its value is considerably more than the portion of their house constructed thereon. If the value of the land
is much more than the Go's improvement, the respondents Go must pay reasonable rent. If they do not agree on the
terms of the lease, then they may go to court to fix the same.
In the event that petitioners elect to sell to respondents Go the subject portion of their lot, the price must be fixed at
the prevailing market value at the time of payment. The Court of Appeals erred in fixing the price at the time of
taking, which is the time the improvements were built on the land. The time of taking is determinative of just
compensation in expropriation proceedings. The instant case is not for expropriation. It is not a taking by the state of
private property for a public purpose upon payment of just compensation. This is a case of an owner who has been
paying real estate taxes on his land but has been deprived of the use of a portion of this land for years. It is but fair
and just to fix compensation at the time of payment. 34
Art. 448 and the same conditions abovestated also apply to respondents Go as owners and possessors of their land
and respondent Li Ching Yao as builder of the improvement that encroached on thirty-seven (37) square meters of
respondents Go's land.
IN VIEW WHEREOF, the decision of respondent Court of Appeals is modified as follows:
(1) Petitioners are ordered to exercise within thirty (30) days from finality of this decision their option to either buy
the portion of respondents Go's improvement on their Lot No. 24, or sell to said respondents the portion of their land
on which the improvement stands. If petitioners elect to sell the land or buy the improvement, the purchase price
must be at the prevailing market price at the time of payment. If buying the improvement will render respondents
Go's house useless, then petitioners should sell the encroached portion of their land to respondents Go. If
petitioners choose to sell the land but respondents Go are unwilling or unable to buy, then the latter must vacate the
subject portion and pay reasonable rent from the time petitioners made their choice up to the time they actually
vacate the premises. But if the value of the land is considerably more than the value of the improvement, then
respondents Go may elect to lease the land, in which case the parties shall agree upon the terms, the lease. Should
they fail to agree on said terms, the court of origin is directed to fix the terms of the lease.
From the moment petitioners shall have exercised their option, respondents Go shall pay reasonable monthly rent
up to the time the parties agree on the terms of the lease or until the court fixes such terms.
(2) Respondents Go are likewise directed to exercise their rights as owners of Lots Nos. 25 and 26, vis-avisrespondent Li Ching Yao as builder of the improvement that encroached on thirty seven (37) square meters of
respondents Go 's land in accordance with paragraph one abovementioned.
(3) The Decision of the Court of Appeals ordering Engineer Quedding, as third-party defendant, to pay attorney's
fees of P5,000.00 to respondents Go is affirmed. The additional filing fee on the damages constitutes a lien on this
award.
(4) The Decision of the Court of Appeals dismissing third-party complaint against Araneta Institute of Agriculture is
affirmed.

SO ORDERED.

11. Development Corporation v. Court of Appeals G.R. No. 79688, February 1, 1996
G.R. No. 79688

February 1, 1996

PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS, WILSON KEE, C.T.
TORRES ENTERPRISES, INC. and ELDRED JARDINICO,respondents.
DECISION

Is a lot buyer who constructs improvements on the wrong property erroneously delivered by the owner's agent, a
builder in good faith? This is the main issue resolved in this petition for review on certiorari to reverse the
Decision1 of the Court of Appeals2 in CA-G.R. No. 11040, promulgated on August 20, 1987.
By resolution dated November 13, 1995, the First Division of this Court resolved to transfer this case (along with
several others) to the Third Division. After due deliberation and consultation, the Court assigned the writing of this
Decision to the undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II and located at Taculing Road,
Pleasantville Subdivision, Bacolod City. In 1975, respondent Eldred Jardinico bought the rights to the lot from
Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of Deeds of Bacolod City on December 19,
1978 Transfer Certificate of Title No. 106367 in his name. It was then that he discovered that improvements had
been introduced on Lot 9 by respondent Wilson Kee, who had taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same subdivision from C.T. Torres
Enterprises, Inc. (CTTEI), the exclusive real estate agent of petitioner. Under the Contract to Sell on Installment,
Kee could possess the lot even before the completion of all installment payments. On January 20, 1975, Kee paid
CTTEI the relocation fee of P50.00 and another P50.00 on January 27, 1975, for the preparation of the lot plan.
These amounts were paid prior to Kee's taking actual possession of Lot 8. After the preparation of the lot plan and a

copy thereof given to Kee, CTTEI through its employee, Zenaida Octaviano, accompanied Kee's wife, Donabelle
Kee, to inspect Lot 8. Unfortunately, the parcel of land pointed by Octaviano was Lot 9. Thereafter, Kee proceeded
to construct his residence, a store, an auto repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried to reach an amicable
settlement, but failed.
On January 30, 1981, Jardinico's lawyer wrote Kee, demanding that the latter remove all improvements and vacate
Lot 9. When Kee refused to vacate Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch 3, Bacolod
City (MTCC), a complaint for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI. It further ruled that petitioner
and CTTEI could not successfully invoke as a defense the failure of Kee to give notice of his intention to begin
construction required under paragraph 22 of the Contract to Sell on Installment and his having built a sari-sari store
without the prior approval of petitioner required under paragraph 26 of said contract, saying that the purpose of
these requirements was merely to regulate the type of improvements to be constructed on the Lot. 3
However, the MTCC found that petitioner had already rescinded its contract with Kee over Lot 8 for the latter's
failure to pay the installments due, and that Kee had not contested the rescission. The rescission was effected in
1979, before the complaint was instituted. The MTCC concluded that Kee no longer had any right over the lot
subject of the contract between him and petitioner. Consequently, Kee must pay reasonable rentals for the use of
Lot 9, and, furthermore, he cannot claim reimbursement for the improvements he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:
1. Defendant Wilson Kee is ordered to vacate the premises of Lot 9, covered by TCT No. 106367 and to
remove all structures and improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P15.00 a day computed from
the time this suit was filed on March 12, 1981 until he actually vacates the premises. This amount shall bear
interests (sic) at the rate of 12 per cent (sic) per annum.
3. Third-Party Defendant C.T. Torres Enterprises, Inc. and Pleasantville Subdivision are ordered to pay the
plaintiff jointly and severally the sum of P3,000.00 as attorney's fees and P700.00 as cost and litigation
expenses.4
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that petitioner and CTTEI were not at fault
or were not negligent, there being no preponderant evidence to show that they directly participated in the delivery of
Lot 9 to Kee5. It found Kee a builder in bad faith. It further ruled that even assuming arguendo that Kee was acting in
good faith, he was, nonetheless, guilty of unlawfully usurping the possessory right of Jardinico over Lot 9 from the
time he was served with notice to vacate said lot, and thus was liable for rental.
The RTC thus disposed:
WHEREFORE, the decision appealed from is affirmed with respect to the order against the defendant to
vacate the premises of Lot No. 9 covered by Transfer Certificate of Title No. T-106367 of the land records of
Bacolod City; the removal of all structures and improvements introduced thereon at his expense and the
payment to plaintiff (sic) the sum of Fifteen (P15.00) Pesos a day as reasonable rental to be computed from
January 30, 1981, the date of the demand, and not from the date of the filing of the complaint, until he had
vacated (sic) the premises, with interest thereon at 12% per annum. This Court further renders judgment
against the defendant to pay the plaintiff the sum of Three Thousand (P3,000.00) Pesos as attorney's fees,
plus costs of litigation.

The third-party complaint against Third-Party Defendants Pleasantville Development Corporation and C.T.
Torres Enterprises, Inc. is dismissed. The order against Third-Party Defendants to pay attorney's fees to
plaintiff and costs of litigation is reversed.6
Following the denial of his motion for reconsideration on October 20, 1986, Kee appealed directly to the Supreme
Court, which referred the matter to the Court of Appeals.
The appellate court ruled that Kee was a builder in good faith, as he was unaware of the "mix-up" when he began
construction of the improvements on Lot 8. It further ruled that the erroneous delivery was due to the negligence of
CTTEI, and that such wrong delivery was likewise imputable to its principal, petitioner herein. The appellate court
also ruled that the award of rentals was without basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and judgment is rendered
as follows:
1. Wilson Kee is declared a builder in good faith with respect to the improvements he introduced on Lot 9,
and is entitled to the rights granted him under Articles 448, 546 and 548 of the New Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are
solidarily liable under the following circumstances:
A.
If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these
structures, the third-party defendants shall answer for all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount
representing the value of Lot 9 that Kee should pay to Jardinico.
3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are
ordered to pay in solidum the amount of P3,000.00 to Jardinico as attorney's fees, as well as litigation
expenses.
4. The award of rentals to Jardinico is dispensed with.
Furthermore, the case is REMANDED to the court of origin for the determination of the actual value of the
improvements and the property (Lot 9), as well as for further proceedings in conformity with Article 448 of
the New Civil Code.7
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the respondent Court's Decision, as follows:
1. The Court of Appeals has decided the case in a way probably not in accord with law or the the (sic)
applicable decisions of the Supreme Court on third-party complaints, by ordering third-party defendants to
pay the demolition expenses and/or price of the land;
2. The Court of Appeals has so far departed from the accepted course of judicial proceedings, by granting to
private respondent-Kee the rights of a builder in good faith in excess of what the law provides, thus enriching
private respondent Kee at the expense of the petitioner;

3. In the light of the subsequent events or circumstances which changed the rights of the parties, it becomes
imperative to set aside or at least modify the judgment of the Court of Appeals to harmonize with justice and
the facts;
4. Private respondent-Kee in accordance with the findings of facts of the lower court is clearly a builder in
bad faith, having violated several provisions of the contract to sell on installments;
5. The decision of the Court of Appeals, holding the principal, Pleasantville Development Corporation (liable)
for the acts made by the agent in excess of its authority is clearly in violation of the provision of the law;
6. The award of attorney's fees is clearly without basis and is equivalent to putting a premium in (sic) court
litigation.
From these grounds, the issues could be re-stated as follows:
(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises, Inc.? and
(3) Is the award of attorney's fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the RTC's ruling that Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and conclusions of the Court of Appeals that Kee was
a builder in good faith. We agree with the following observation of the Court of Appeals:
The roots of the controversy can be traced directly to the errors committed by CTTEI, when it pointed the
wrong property to Wilson Kee and his wife. It is highly improbable that a purchaser of a lot would knowingly
and willingly build his residence on a lot owned by another, deliberately exposing himself and his family to
the risk of being ejected from the land and losing all improvements thereon, not to mention the social
humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent man in ascertaining the identity of his
property. Lot 8 is covered by Transfer Certificate of Title No. T-69561, while Lot 9 is identified in Transfer
Certificate of Title No. T-106367. Hence, under the Torrens system of land registration, Kee is presumed to
have knowledge of the metes and bounds of the property with which he is dealing. . . .
xxx

xxx

xxx

But as Kee is a layman not versed in the technical description of his property, he had to find a way to
ascertain that what was described in TCT No. 69561 matched Lot 8. Thus, he went to the subdivision
developer's agent and applied and paid for the relocation of the lot, as well as for the production of a lot plan
by CTTEI's geodetic engineer. Upon Kee's receipt of the map, his wife went to the subdivision site
accompanied by CTTEI's employee, Octaviano, who authoritatively declared that the land she was pointing
to was indeed Lot 8. Having full faith and confidence in the reputation of CTTEI, and because of the
company's positive identification of the property, Kee saw no reason to suspect that there had been a
misdelivery. The steps Kee had taken to protect his interests were reasonable. There was no need for him to
have acted ex-abundantia cautela, such as being present during the geodetic engineer's relocation survey
or hiring an independent geodetic engineer to countercheck for errors, for the final delivery of subdivision
lots to their owners is part of the regular course of everyday business of CTTEI. Because of CTTEI's
blunder, what Kee had hoped to forestall did in fact transpire. Kee's efforts all went to naught. 8
Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or
flaw in his title 9. And as good faith is presumed, petitioner has the burden of proving bad faith on the part of Kee 10.

At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from petitioner. He was
not aware that the lot delivered to him was not Lot 8. Thus, Kee's good faith. Petitioner failed to prove otherwise.
To demonstrate Kee's bad faith, petitioner points to Kee's violation of paragraphs 22 and 26 of the Contract of Sale
on Installment.
We disagree. Such violations have no bearing whatsoever on whether Kee was a builder in good faith, that is, on his
state of mind at the time he built the improvements on Lot 9. These alleged violations may give rise to petitioner's
cause of action against Kee under the said contract (contractual breach), but may not be bases to negate the
presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of Sale on Installment covering Lot 8 between
it and Kee was rescinded long before the present action was instituted. This has no relevance on the liability of
petitioner, as such fact does not negate the negligence of its agent in pointing out the wrong lot. to Kee. Such
circumstance is relevant only as it gives Jardinico a cause of action for unlawful detainer against Kee.
Petitioner next contends that Kee cannot "claim that another lot was erroneously pointed out to him" because the
latter agreed to the following provision in the Contract of Sale on installment, to wit:
13. The Vendee hereby declares that prior to the execution of his contract he/she has personally examined
or inspected the property made subject-matter hereof, as to its location, contours, as well as the natural
condition of the lots and from the date hereof whatever consequential change therein made due to erosion,
the said Vendee shall bear the expenses of the necessary fillings, when the same is so desired by him/her.11
The subject matter of this provision of the contract is the change of the location, contour and condition of the lot due
to erosion. It merely provides that the vendee, having examined the property prior to the execution of the contract,
agrees to shoulder the expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee contracted away his right to recover damages resulting
from petitioner's negligence. Such waiver would be contrary to public policy and cannot be allowed. "Rights may be
waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a
third person with a right recognized by law." 12
The Second Issue: Petitioner's Liability
Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed by the RTC after ruling that
there was no evidence from which fault or negligence on the part of petitioner and CTTEI can be inferred. The Court
of Appeals disagreed and found CTTEI negligent for the erroneous delivery of the lot by Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the erroneous delivery of Lot 9 to
Kee was an act which was clearly outside the scope of its authority, and consequently, CTTEI I alone should be
liable. It asserts that "while [CTTEI] was authorized to sell the lot belonging to the herein petitioner, it was never
authorized to deliver the wrong lot to Kee" 13.
Petitioner's contention is without merit.
The rule is that the principal is responsible for the acts of the agent, done within the scope of his authority, and
should bear the damage caused to third persons 14. On the other hand, the agent who exceeds his authority is
personally liable for the damage 15
CTTEI was acting within its authority as the sole real estate representative of petitioner when it made the delivery to
Kee. In acting within its scope of authority, it was, however, negligent. It is this negligence that is the basis of
petitioner's liability, as principal of CTTEI, per Articles 1909 and 1910 of the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico and Kee on July 24, 1987 entered into a deed
of sale, wherein the former sold Lot 9 to Kee. Jardinico and Kee did not inform the Court of Appeals of such deal.

The deed of sale contained the following provision:

1. That Civil Case No. 3815 entitled "Jardinico vs. Kee" which is now pending appeal with the Court of
Appeals, regardless of the outcome of the decision shall be mutually disregarded and shall not be pursued
by the parties herein and shall be considered dismissed and without effect whatso-ever; 16
Kee asserts though that the "terms and conditions in said deed of sale are strictly for the parties thereto" and that
"(t)here is no waiver made by either of the parties in said deed of whatever favorable judgment or award the
honorable respondent Court of Appeals may make in their favor against herein petitioner Pleasantville Development
Corporation and/or private respondent C.T. Torres Enterprises; Inc." 17
Obviously, the deed of sale can have no effect on the liability of petitioner. As we have earlier stated, petitioner's
liability is grounded on the negligence of its agent. On the other hand, what the deed of sale regulates are the
reciprocal rights of Kee and Jardinico; it stressed that they had reached an agreement independent of the outcome
of the case.
Petitioner further assails the following holding of the Court of Appeals:
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are
solidarily liable under the following circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these
structures, the third-party defendants shall answer for all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount
representing the value of Lot 9 that Kee should pay to Jardinico. 18
Petitioner contends that if the above holding would be carried out, Kee would be unjustly enriched at its expense. In
other words, Kee would be able to own the lot, as buyer, without having to pay anything on it, because the
aforequoted portion of respondent Court's Decision would require petitioner and CTTEI jointly and solidarily to
"answer" or reimburse Kee therefor.
We agree with petitioner.
Petitioner' s liability lies in the negligence of its agent CTTEI. For such negligence, the petitioner should be held
liable for damages. Now, the extent and/or amount of damages to be awarded is a factual issue which should be
determined after evidence is adduced. However, there is no showing that such evidence was actually presented in
the trial court; hence no damages could flow be awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and owner in good faith, respectively,
are regulated by law (i.e., Arts. 448, 546 and 548 of the Civil Code). It was error for the Court of Appeals to make a
"slight modification" in the application of such law, on the ground of "equity". At any rate, as it stands now, Kee and
Jardinico have amicably settled through their deed of sale their rights and obligations with regards to Lot 9. Thus, we
delete items 2 (a) and (b) of the dispositive portion of the Court of Appeals' Decision [as reproduced above] holding
petitioner and CTTEI solidarily liable.
The Third Issue: Attorney's Fees
The MTCC awarded Jardinico attorney's fees and costs in the amount of P3,000.00 and P700.00, respectively, as
prayed for in his complaint. The RTC deleted the award, consistent with its ruling that petitioner was without fault or
negligence. The Court of Appeals, however, reinstated the award of attorney's fees after ruling that petitioner was
liable for its agent's negligence.
The award of attorney's fees lies within the discretion of the court and depends upon the circumstances of each
case 19. We shall not interfere with the discretion of the Court of Appeals. Jardinico was compelled to litigate for the

protection of his interests and for the recovery of damages sustained as a result of the negligence of petitioner's
agent 20.
In sum, we rule that Kee is a builder in good faith. The disposition of the Court of Appeals that Kee "is entitled to the
rights granted him under Articles 448, 546 and 548 of the New Civil Code" is deleted, in view of the deed of sale
entered into by Kee and Jardinico, which deed now governs the rights of Jardinico and Kee as to each other. There
is also no further need, as ruled by the appellate Court, to remand the case to the court of origin "for determination
of the actual value of the improvements and the property (Lot 9), as well as for further proceedings in conformity
with Article 448 of the New Civil Code."
WHEREFORE , the petition is partially GRANTED. The Decision of the Court of Appeals is hereby MODIFIED as
follows:
(1) Wilson Kee is declared a builder in good faith;
(2) Petitioner Pleasantville Development Corporation and respondent C.T. Torres Enterprises, Inc. are
declared solidarily liable for damages due to negligence; however, since the amount and/or extent of such
damages was not proven during the trial, the same cannot now be quantified and awarded;
(3) Petitioner Pleasantville Development Corporation and respondent C.T. Torres Enterprises, Inc. are
ordered to pay in solidum the amount of P3,000.00 to Jardinico as attorney's fees, as well as litigation
expenses; and
(4) The award of rentals to Jardinico is dispensed with.
SO ORDERED.

12. Cureg v. Intermediate Appellate Court G.R. No. 73465, September 7, 1989
G.R. No. 73465 September 7, 1989
LEONIDA CUREG, ROMEO, PEPITO, HERNANDO, MANUEL, ANTONIO AND ELPIDIO (ALL SURNAMED
CARNIYAN) petitioner,
vs.
INTERMEDIATE APPELLATE COURT, (4TH CIVIL CASES DIVISION), DOMINGO APOSTOL, SOLEDAD
GERARDO, ROSA GERARDO, NIEVES GERARDO, FLORDELIZA GERARDO, AND LILIA
MAQUINAD,respondent.
Josefin De Alban Law Office for petitioners.
Silvestre Br. Bello for private respondents.
This petition under Rule 45 of the Rules of Court, seeks the reversal of the decision of the Intermediate Appellate
Court (now Court of Appeals) dated October 15,1985 in AC-G.R. CV No. 03852 entitled "Domingo Apostol, et al.,
Plaintiffs-Appellees, v. Leonida Cureg, et al., Defendants-Appellants", which affirmed the decision of the Regional
Trial Court of Isabela, Branch XXII declaring private respondent Domingo Apostol the absolute owner of a parcel of
land, situated in Barangay Casibarag-Cajel, Cabagan, Isabela, more particularly described as follows:
... containing an area of 5.5000 hectares, and bounded, on the north, by Cagayan River; on the east,
by Domingo Guingab; on the south, by Antonio Carniyan; and on the west, by Sabina Mola, with an
assessed value of P3,520. (par. 9 of complaint, p. 4, Record; Emphasis supplied)
On November 5, 1982, private respondents Domingo Apostol, Soledad Gerardo, Rosa Gerardo, Nieves Gerardo,
Flordeliza Gerardo and Lilia Maquinad, filed a complaint for quieting of title and damages with preliminary injunction
against herein petitioners Leonida, Romeo, Pepito, Hernando, Manuel, Antonio and Elpidio, all surnamed Carniyan

with the Regional Trial Court of Isabela and docketed as Civil Case No. Br. 111-373. A temporary restraining order
was issued by the trial court on November 12, 1982.
The complaint alleged that private respondents, except Domingo Apostol, are the legal and/or the forced heirs of the
late Domingo Gerardo, who died in February 1944, the latter being the only issue of the late Francisco Gerardo,
who died before the outbreak of the second world war; that since time immemorial and/or before July 26, 1894, the
late Francisco Gerardo, together with his predecessors-in-interest have been in actual, open, peaceful and
continuous possession, under a bona fide claim of ownership and adverse to all other claimants, of a parcel of land
(referred to as their "motherland"), situated in Casibarag-Cajel, Cabagan, Isabela, more particularly described as
follows:
... containing an area of 2.5000 hectares, more or less, and bounded on the North, by Cagayan
River; on the East, by Domingo Guingab (formerly Rosa Cureg); on the south by Antonio
Carniyan;and on the West by Sabina Mola, ... (p. 2, Record)
that said land was declared for taxation purposes under Tax Declaration No. 08-3023 in the name of Francisco
Gerardo, which cancels Tax Declaration No. C-9669, also in the name of Francisco Gerardo; that upon the death of
Francisco Gerardo, the ownership and possession of the "motherland" was succeeded by his only issue, Domingo
Gerardo who, together with three (3) legal or forced heirs, namely Soledad Gerardo, one of private respondents
herein, Primo Gerardo and Salud Gerardo, both deceased, have also been in actual, open, peaceful and continuous
possession of the same; that Primo Gerardo is survived by herein respondents, Rosa, Nieves and Flordeliza, all
surnamed Gerardo and Salud Gerardo is survived by respondent Lilia Maquinad; that in 1979, respondents Soledad
Gerardo, Rosa Gerardo, Nieves Gerardo, Flordeliza Gerardo and Lilia Maquinad verbally sold the "motherland" to
co-respondent Domingo Apostol; that on September 10, 1982, the verbal sale and conveyance was reduced into
writing by the vendors who executed an "Extra-Judicial Partition with Voluntary Reconveyance (Exhibit "Q", p.
206, Rollo); that about the time of the execution of the Extra-Judicial Partition, their "motherland" already
showed/manifested signs of accretion of about three (3) hectares on the north caused by the northward movement
of the Cagayan River; that Domingo Apostol declared the motherland and its accretion for tax purposes under Tax
Declaration No. 08-13281 on September 15, 1982.
The complaint also stated that sometime about the last week of September and/or the first week of October 1982,
when private respondents were about to cultivate their "motherland" together with its accretion, they were prevented
and threatened by defendants (petitioners herein) from continuing to do so. Named defendants in said case are
herein petitioners Leonida Cureg and Romeo, Pepito, Hernando, Manuel, Antonio and Elpidio, all surnamed
Carniyan, surviving spouse and children, respectively, of Antonio Carniyan. Further, the complaint stated that
Antonio Carniyan was the owner of a piece of land situated in Casibarag-Cajel, Cabagan, Isabela and more
particularly described as follows:
... containing an area of 2,790 sq. m., more or less bounded on the north by Domingo Gerardo; on
the East, by Domingo Guingab; on the south, by Pelagio Camayo; and on the west by Marcos
Cureg, declared for taxation purposes under Tax Declaration No. 13131, with an assessed value of
P70.00. (P. 5, Record)
that deceased Antonio Carniyan revised on November 28, 1968 his Tax Declaration No. 13131 dated July 24, 1961
to conform with the correct area and boundaries of his Original Certificate of Title No. P-19093 issued on November
25, 1968; that the area under the new Tax Declaration No.15663 was increased from 2,790 square meters to 4,584
square meters and the boundary on the north became Cagayan River, purposely eliminating completely the original
boundary on the north which is Domingo Gerardo.
Petitioners' answer alleged that the "motherland" claimed by private respondents is non-existent; that Antonio
Carniyan, petitioners' predecessor-in-interest, was the owner of a piece of land bounded on the north by Cagayan
River and not by the land of Francisco Gerardo as claimed by private respondents; that the "subject land" is an
accretion to their registered land and that petitioners have been in possession and cultivation of the "accretion" for
many years now.

The application for the issuance of a writ of preliminary injunction was denied on July 28,1983 (pp. 244-250,Rollo)
on the ground that the defendants were in actual possession of the land in litigation prior to September 1982. In a
decision rendered on July 6, 1984, the trial court held that respondent Domingo Apostol, thru his predecessors-ininterest had already acquired an imperfect title to the subject land and accordingly, rendered judgment: 1. declaring
Domingo Apostol its absolute owner; 2. ordering the issuance of a writ of preliminary injunction against herein
petitioners; 3. ordering that the writ be made permanent; and 4. ordering herein petitioners to pay private
respondents a reasonable attorney's fee of P5,000.00, litigation expenses of P1,500.00 and costs (pp. 143145, Rollo).
On July 17, 1984, petitioners appealed to the then Intermediate Appellate Court which affirmed the decision of the
trial court on October 15, 1985. Petitioners' Motion for Reconsideration was denied on January 8, 1986. Hence, this
petition for review on the following assigned errors:
A. It erred in ruling that the subject land or "accretion" (which is bounded on the north by the
Cagayan River) belongs to the private respondents and not to the petitioners when the petitioners
"Original Certificate of " Title No. 19093 states clearly that the petitioners' land is bounded on its
north by the Cagayan River.
B. It erred in construing the tax declarations against the interest of the herein petitioners who are
only the heirs of the late Antonio Carniyan since the late Francisco (supposed predecessor of the
respondents) could not have executed the recently acquired tax declarations (Exhibits "A" to "A-2")
as he died long before World War II and since the late Antonio Carniyan could no longer stand up to
explain his side.
C. Contrary to the evidence and the finding of the Regional Trial Court, it wrongly ruled that
petitioners have never been in possession of the land (p. 7 of Annex "A", ibid.).
D. It erred in awarding the accretion of 3.5 hectares to the private respondents who incredibly
claimed that the accretion occurred only in 1982 and is a "gift from the Lord. (pp. 24-25, Rollo)
This petition is impressed with merit.
The object of the controversy in this case is the alleged "motherland" of private respondents together with the
accretion of about 3.5 hectares, the totality of which is referred to in this decision as the "subject land."
In this case, petitioners claimed to be riparian owners who are entitled to the "subject land" which is an accretion to
the registered land while private respondents claimed to be entitled to the 3.5 hectares accretion attached to their
"motherland."
It should be noted that the herein private respondents' claim of ownership of their alleged two and a half (2 & )
hectare "motherland" is anchored mainly on four (4) tax declarations (Exhibits "A", "A-1", "A-2" and "B", pp. 191,
192, 193, 194, Rollo). This Court has repeatedly held that the declaration of ownership for purposes of assessment
on the payment of the tax is not sufficient evidence to prove ownership. (Evangelista v. Tabayuyong, 7 Phil. 607;
Elumbaring v. Elumbaring, 12 Phil. 384; cited in Camo v. Riosa Bayco, 29 Phil. 437, 444). For their part, petitioners
relied on the indefeasibility and incontrovertibility of their Original Certificate of Title No. P-19093, dated November
25, 1968 (Exhibit "3", p. 189, Rollo) issued in the name of Antonio Carniyan (petitioners' predecessor-in-interest)
pursuant to Free Patent No. 399431 dated May 21, 1968, clearly showing that the boundary of petitioners' land on
the north is Cagayan River and not the "motherland" claimed by respondents. The said registered land was bought
by the late Antonio Carniyan from his father-in-law, Marcos Cureg, on October 5, 1956, as evidenced by an Absolute
Deed of Sale (Exhibit "8", p. 195, Rollo) which states that the land is bounded on the north by Cagayan River.
In the case of Ferrer-Lopez v. Court of Appeals, G.R. No. 50420, May 29, 1987, 150 SCRA 393,401-402, We ruled
that as against an array of proofs consisting of tax declarations and/or tax receipts which are not conclusive
evidence of ownership nor proof of the area covered therein, an original certificate of title indicates true and legal
ownership by the registered owners over the disputed premises. Petitioners' OCT No.P-19093 should be accorded

greater weight as against the tax declarations (Exhibit "A', dated 1979; Exhibit "A-1 " undated and Exhibit "A2" dated
1967, pp. 191, 192, 193, Rollo) offered by private respondents in support of their claim, which declarations are all in
the name of private respondents' predecessor-in-interest, Francisco Gerardo, and appear to have been subscribed
by him after the last war, when it was established during the trial that Francisco Gerardo died long before the
outbreak of the last war.
Anent Tax Declaration No. 13131, in the name of Antonio Carniyan (Exhibit "C", p. 203, Rollo), which the appellate
court considered as an admission by him that his land is bounded on the north by the land of Domingo Gerardo and
that he (Carniyan) is now estopped from claiming otherwise, We hold that said tax declaration, being of an earlier
date cannot defeat an original certificate of title which is of a later date. Since petitioner's original certificate of title
clearly stated that subject land is bounded on the north by the Cagayan River, private respondents" claim over their
"motherland," allegedly existing between petitioners" land and the Cagayan River, is deemed barred and nullified
with the issuance of the original certificate of title.
It is an elemental rule that a decree of registration bars all claims and rights which arose or may have existed prior
to the decree of registration (Ferrer-Lopez v. CA, supra., p. 404). By the issuance of the decree, the land is bound
and title thereto quieted, subject only to exceptions stated in Section 39, Act 496 (now Sec. 44 of PD No. 1529).
Moreover, the tax declarations of the late Antonio Camiyan subsequent to the issuance of OCT P-19093 (Exhibit
"D", p. 204, Rollo) already states that its northern boundary is Cagayan River. In effect, he has repudiated any
previous acknowledgment by him, granting that he caused the accomplishment of the tax declarations in his name
before the issuance of OCT No. P- 19093, of the existence of Francisco Gerardo's land.
Finally, the trial court concluded that petitioners have never been in possession of the "subject land" but the
evidence on record proves otherwise. First, the trial court on page 11 of its Decision (p. 121, Rollo), stated the
reason for denying private respondents' petition for the issuance of a preliminary injunction, that is, "... the
defendants (petitioners herein) were in actual possession of the land in litigation prior to September, 1982" (p.
121, Rollo). Second, witness for private respondents, Esteban Guingab, boundary owner on the east of the land in
question and whose own land is bounded on the north of Cagayan River, on cross-examination, revealed that when
his property was only more than one (1) hectare in 1958, (now more than 4 hectares) his boundary on the west is
the land of Antonio Carniyan (T.S.N., 5 May 1983, pp. 19-20). Third, witness Rogelio C. Albano, a geodetic engineer,
on direct examination stated that in 1974, the late Antonio Carniyan requested him to survey the land covered by his
title and the accretion attached to it, but he did not pursue the same because he learned from the Office of the
Director of the Bureau of Lands that the same accretion is the subject of an application for homestead patent of one
Democrata Aguila, (T.S.N., May 18, 1984, pp. 12-13) contrary to the statement of the trial court and the appellate
court that Albano "made three attempts to survey the land but he did not continue to survey because persons other
than defendants were in possession of the land," which statement appears only to be a conclusion (p. 7, Rollo).
Fourth, We note Exhibit "20" (p. 273, Rollo) for petitioners which is an order by the Director of Lands dated August
14,1980 in connection with the Homestead Application of Democrata Aguila of an accretion situated in
Catabayungan, Cabagan, Isabela. Aguila's application was disapproved because in an investigation conducted by
the Bureau of Lands of the area applied for which is an accretion, the same was found to be occupied and cultivated
by, among others, Antonio Carniyan, who claimed it as an accretion to his land. It is worthy to note that none of the
private respondents nor their predecessors-in-interest appeared as one of those found occupying and cultivating
said accretion.
On the other hand, the allegation of private respondents that they were in possession of the "motherland" through
their predecessors- in-interest had not been proved by substantial evidence. The assailed decision of the
respondent court, which affirmed the decision of the trial court, stated that since the "motherland" exists, it is
alsopresumed that private respondents were in possession of the "subject land" through their predecessors- ininterest since prior to July 26, 1894. The trial court relied on the testimony of Soledad Gerardo, one of the private
respondents in this case, an interested and biased witness, regarding their possession of the "motherland." From
her testimony on pedigree, the trial court presumed that the source of the property, the late Francisco Gerardo, was
in possession of the same since prior to July 26, 1894 (pp. 137-140, Rollo).

The foregoing considerations indubitably show that the alleged "motherland" claimed by private respondents is
nonexistent. The "subject land" is an alluvial deposit left by the northward movement of the Cagayan River and
pursuant to Article 457 of the New Civil Code:
To the owners of land adjoining the banks of river belong the accretion which they gradually receive
from the effects of the current of the waters.
However, it should be noted that the area covered by OCT No. P-19093 is only four thousand five hundred eighty
four (4,584) square meters. The accretion attached to said land is approximately five and a half (5.5) hectares. The
increase in the area of petitioners'land, being an accretion left by the change of course or the northward movement
of the Cagayan River does not automatically become registered land just because the lot which receives such
accretion is covered by a Torrens title. (See Grande v. Court of Appeals, L-17652, June 30, 1962). As such, it must
also be placed under the operation of the Torrens System. ACCORDINGLY, the petition is hereby GRANTED. The
decision appealed from is REVERSED and SET ASIDE and judgment is hereby rendered DISMISSING Civil Case
No. Br. III-373 for quieting of title and damages.
Costs against private respondents.
SO ORDERED.