EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners,

vs.
HONORABLE COURT OF APPEALS, FORENCIA BULING Vda
de TINAGAN, DEMOSTHENES TINAGAN, JESUS TINAGAN,
ZENAIDA T., JOSEP and JOSEPHINE TINAGAN, respondents.

MARTINEZ, J.:
In this petition for review on certiorari, petitioners assail the
decision 1 of the Court of Appeals dated April 8, 1994 which
affirmed the decision of the lower court ordering petitioners to
peacefully vacate and surrender the possession of the disputed
properties to the private respondents.
Culled from the record are the following antecedent facts of this
case to wit:
On April 1, 1950, Victoria Sonjaconda Tinagan purchased from
Mauro Tinagan two (2) parcels of land situated at Barangay
Bongbong, Valencia, Negros Oriental. 2 One parcel of land
contains an area of 5,704 square meters, more or less; 3 while
the other contains 10,860 square meters. 4 Thereafter, Victoria
and her son Agustin Tinagan, took possession of said parcels of
land.
Sometime in 1960, petitioners occupied portions thereof whereat
they built a copra dryer and put up a store wherein they engaged
in the business of buying and selling copra.
On June 23, 1975, Victoria died. On October 26, 1975, Agustin
died, survived by herein private respondents, namely his wife,

Florencia Buling Vda. de Tinagan and their children

Demosthenes, Jesus, Zenaida and Josephine, all surnamed
Tinagan.
On December 24, 1976, petitioner Editha assisted by her
husband filed a complaint for partition and damages before the
then Court of First Instance of Negros Oriental, Branch 1,
Dumaguete City, docketed as Civil Case No. 6634, claiming to be
an acknowledged natural child of deceased Agustin Tinagan and
demanding the delivery of her shares in the properties left by the
deceased. 5
On October 4, 1979, the aforesaid case was dismissed by the
trial court on the ground that recognition of natural children may
be brought only during the lifetime of the presumed parent and
petitioner Editha did not fall in any of the exceptions enumerated
in Article 285 of the Civil Code. 6
Petitioners assailed the order of dismissal by filing a petition
for certiorari and mandamus before this Court. 7 On August 9,
1982, this Court dismissed the petition for lack of
merit. 8 Petitioners filed a motion for reconsideration but the
same was denied on October 19, 1982. 9
On March 29, 1988, private respondents filed a complaint for
recovery of possession against Editha and her husband Porferio
Alviola before the Regional Trial Court of Negros Oriental, Branch
35, Dumaguete City, docketed as Civil Case No. 9148, praying,
among others, that they be declared absolute owners of the said
parcels of land, and that petitioners be ordered to vacate the
same, to remove their copra dryer and store, to pay actual
damages (in the form of rentals), moral and punitive damages,
litigation expenses and attorney's fees. 10

In their answer, petitioners contend that they own the

improvements in the disputed properties which are still public
land; that they are qualified to be beneficiaries of the
comprehensive agrarian reform program and that they are
rightful possessors by occupation of the said properties for more
than twenty years. 11
After trial, the lower court rendered judgment in favor of the
private respondents, the dispositive portion of which reads:
WHEREFORE, premises considered, in Civil Case No.
9148, for Recovery of Property, the court hereby
renders judgment:
a) Declaring plaintiffs as the absolute owners of the
land in question including the portion claimed and
occupied by defendants;
b) Ordering defendants Editha Alviola and her
husband Porfirio Alviola to peacefully vacate and to
surrender the possession of the premises in
question to plaintiffs; Defendants may remove their
store and dryer on the premises without injury and
prejudice to the plaintiffs;
c) Ordering defendants
amounts to the plaintiffs:

to

pay

the

following

1. P150.00 monthly rentals from April 1988 up to

the time the improvements in the questioned
portions are removed;
2. P5,000.00 for attorney's fees;

3. P3,000.00 for litigation expenses and to pay the

costs.
SO ORDERED.

12

Petitioners appealed to the Court of Appeals. On April 8, 1994,

the respondent court rendered its decision, 13affirming the
judgment of the lower court. Petitioners filed a motion for
reconsideration 14 but the same was denied by the respondent
court in an order dated October 6, 1994. 15
Hence, this petition.
Petitioners aver that respondent court erred in declaring private
respondents the owners of the disputed properties. They contend
that ownership of a public land cannot be declared by the courts
but by the Executive Department of the Government, citing the
case of Busante vs. Hon. Court of Appeals, Oct. 20, 1992, 214
SCRA 774; and that the respondent court erred in not considering
that private respondents' predecessor-in-interest, Victoria
Sonjaco Tinagan, during her lifetime, ceded her right to the
disputed properties in favor of petitioners.
Moreover, petitioners maintain that the respondent court erred in
holding that they were in bad faith in possessing the disputed
properties and in ruling that the improvements thereon are
transferable. They claim that the copra dryer and the store are
permanent structures, the walls thereof being made of hollowblocks and the floors made of cement.
Private respondents counter that the question of whether or not
the disputed properties are public land has been resolved by
overwhelming evidence showing ownership and possession by
the Tinagans and their predecessors-in-interest prior to 1949.

They further aver that they merely tolerated petitioners'

possession of the disputed properties for a period which was less
than that required for extraordinary prescription.

Agustin Tinagan, effective 1985. 26 Moreover, the realty taxes on

the two lots have always been paid by the private
respondents. 27 There can be no doubt, therefore, that the two
parcels of land are owned by the private respondents.

The petition must fail.

Petitioners claim that the disputed properties are public lands.
This is a factual issue. The private respondents adduced
overwhelming evidence to prove their ownership and possession
of the two (2) parcels of land on portions of which petitioners
built the copra dryer and a store. Private respondents' tax
declarations and receipts of payment of real estate taxes, as well
as other related documents, prove their ownership of the
disputed properties. As stated previously in the narration of
facts, these two (2) parcels of land were originally owned by
Mauro Tinagan, who sold the same to Victoria S. Tinagan on April
1, 1950, as evidenced by a Deed of Sale, 16wherein the two (2)
lots, Parcels 1 and 2, are described. 17 Anent Parcel 1, tax
declarations indicate that the property has always been declared
in the name of the Tinagans. The first, Tax Declaration No.
3335 18 is in the name of Mauro Tinagan. It was thereafter
cancelled by Tax Declaration No. 19534 effective 1968, 19 still in
the name of Mauro. This declaration was cancelled by Tax
Declaration No. 016740 now in the name of Agustin
Tinagan, 20 effective 1974, followed by Tax Declaration No. 08421 in the name of Jesus Tinagan, effective 1980; 21 and finally
by Tax Declaration No. 08-816 in the name of Jesus Tinagan,
effective 1985. 22
With regard to Parcel 2, private respondents presented Tax
Declaration No. 20973 in the name of Mauro Tinagan, effective
1959, 23 Tax Declaration No. 016757, effective 1974; 24 Tax
Declaration No. 08-405-C in the name of Agustin Tinagan,
effective 1980 25 and Tax Declaration No. 08-794 in the name of

The record further discloses that Victoria S. Tinagan and her son,
Agustin Tinagan, took possession of the said properties in 1950,
introduced improvements thereon, and for more than 40 years,
have been in open, continuous, exclusive and notorious
occupation thereof in the concept of owners.
Petitioners' own evidence recognized the ownership of the land
in
favor
of
Victoria
Tinagan.
In
their
tax
28
declarations, petitioners stated that the house and copra dryer
are located on the land of Victoria S. Tinagan/Agustin Tinagan. By
acknowledging that the disputed portions belong to
Victoria/Agustin Tinagan in their tax declarations, petitioners'
claim as owners thereof must fail.
The assailed decision of the respondent court states that
"Appellants do not dispute that the two parcels of land subject
matter of the present complaint for recovery of possession
belonged to Victoria S. Tinagan, the grandmother of herein
plaintiffs-appellees; that Agustin Tinagan inherited the parcels of
land from his mother Victoria; and that plaintiffs-appellees, in
turn, inherited the same from Agustin." 29
Taking exception to the aforequoted finding, petitioners contend
that while the 2 parcels of land are owned by private
respondents, the portions wherein the copra dryers and store
stand were ceded to them by Victoria S. Tinagan in exchange for
an alleged indebtedness of Agustin Tinagan in the sum of
P7,602.04. 30

This claim of the petitioners was brushed aside by the

respondent court as merely an afterthought, thus
Appellants' claim that they have acquired ownership
over the floor areas of the store and dryer "in
consideration of the account of Agustin Tinagan in
the sum of P7,602.04" is not plausible. It is more of
an "after-thought" defense which was not alleged in
their answer. Although the evidence presented by
them in support of this particular claim was not duly
objected to by counsel for appellees at the proper
time and therefore deemed admissible in evidence,
an examination of the oral and documentary
evidence submitted in support thereof, reveals the
weakness of their claim.
Appellant testified that the areas on which their
store and dryer were located were exchanged for
the amount of P7,602.04 owed to them by Agustin
in 1967 (TSN, Hearing of April 14, 1989, p. 9); that
he did not bother to execute a document reflecting
such agreement "because they were our parents
and we had used the land for quite sometime
already they had also sold their copra to us for a
long time." (id.) Yet, as earlier discussed, the tax
declarations in appellants' answer show that even
after 1967, they expressly declared that the parcels
of land on which their store and dryer were
constructed, belonged to Victoria and Agustin (Exhs.
2-A, 2-B, 2-C, 3-A, 3-B). If appellants really believed
that they were in possession of the said particular
areas in the concept of owners, they could have
easily declared it in said tax declarations. 31

Concededly, petitioners have been on the disputed portions

since 1961. However, their stay thereon was merely by tolerance
on the part of the private respondents and their predecessor-ininterest. The evidence shows that the petitioners were permitted
by Victoria Sanjoco Tinagan to build a copra dryer on the land
when they got married. Subsequently, petitioner Editha Alviola,
claiming to be the illegitimate daughter of Agustin Tinagan, filed
a petition for partition demanding her share in the estate of the
deceased Agustin Tinagan on December 6, 1976. However, the
petition was dismissed since it was brought only after the death
of Agustin Tinagan. This Court dismissed the petition
for certiorari and mandamus filed by petitioner Editha Alviola on
August 9, 1982. It was on March 29, 1988, when private
respondents filed this complaint for recovery of possession
against petitioners. Considering that the petitioners' occupation
of the properties in dispute was merely tolerated by private
respondents, their posture that they have acquired the property
by "occupation" for 20 years does not have any factual or legal
foundation.
As correctly ruled by the respondent court, there was bad faith
on the part of the petitioners when they constructed the copra
dryer and store on the disputed portions since they were fully
aware that the parcels of land belonged to Victoria Tinagan. And,
there was likewise bad faith on the part of the private
respondents, having knowledge of the arrangement between
petitioners and Victoria Tinagan relative to the construction of
the copra dryer and store. Thus, for purposes of indemnity,
Article 448 of the New Civil Code should be applied. 32 However,
the copra dryer and the store, as determined by the trial court
and respondent court, are transferable in nature. Thus, it would
not fall within the coverage of Article 448. As the noted civil law
authority, Senator Arturo Tolentino, aptly explains: "To fall within
the provision of this Article, the construction must be of

permanent character, attached to the soil with an idea of

perpetuity; but if it is of a transitory character or is transferable,
there is no accession, and the builder must remove the
construction. The proper remedy of the landowner is an action to
eject the builder from the land." 33
The private respondents' action for recovery of possession was
the suitable solution to eject petitioners from the premises.
WHEREFORE, this petition should be, as it is hereby, DISMISSED.
The assailed decision is hereby AFFIRMED.
SO ORDERED.

VERONA PADA-KILARIO and RICARDO KILARIO, petitioners,

vs.
COURT OF APPEALS and SILVERIO PADA, respondents.
DE LEON, JR., J.:
The victory1 of petitioner spouses Ricardo and Verona Kilario in
the Municipal Circuit Trial Court2 in an ejectment suit3 filed
against them by private respondent Silverio Pada, was foiled by
its reversal4 by the Regional Trial Court5 on appeal. They elevated
their cause6 to respondent Court of Appeals 7 which, however,
promulgated a Decision8 on May 20, 1998, affirming the Decision
of the Regional Trial Court.
The following facts are undisputed:

One Jacinto Pada had six (6) children, namely, Marciano, Ananias,
Amador, Higino, Valentina and Ruperta. He died intestate. His
estate included a parcel of land of residential and coconut land
located at Poblacion, Matalom, Leyte, denominated as Cadastral
Lot No. 5581 with an area of 1,301.92 square meters. It is the
northern portion of Cadastral Lot No. 5581 which is the subject of
the instant controversy.

On June 14, 1978, Juanita Pada sold to Engr. Ernesto Paderes, the
right of his father, Ananias, as co-owner of Cadastral Lot No.
5881.

During the lifetime of Jacinto Pada, his half-brother, Feliciano

Pada, obtained permission from him to build a house on the
northern portion of Cadastral Lot No. 5581. When Feliciano died,
his son, Pastor, continued living in the house together with his
eight children. Petitioner Verona Pada-Kilario, one of Pastor's
children, has been living in that house since 1960.

Thereafter, private respondent demanded that petitioner

spouses vacate the northern portion of Cadastral Lot No. 5581 so
his family can utilize the said area. They went through a series of
meetings with the barangay officials concerned for the purpose
of amicable settlement, but all earnest efforts toward that end,
failed.

Sometime in May, 1951, the heirs of Jacinto Pada entered into an

extra-judicial partition of his estate. For this purpose, they
executed a private document which they, however, never
registered in the Office of the Registrar of Deeds of Leyte.

On June 26, 1995, private respondent filed in the Municipal

Circuit Trial Court of Matalom, Leyte, a complaint for ejectment
with prayer for damages against petitioner spouses.

At the execution of the extra-judicial partition, Ananias was

himself present while his other brothers were represented by
their children. Their sisters, Valentina and Ruperta, both died
without any issue. Marciano was represented by his daughter,
Maria; Amador was represented by his daughter, Concordia; and
Higina was represented by his son, Silverio who is the private
respondent in this case. It was to both Ananias and Marciano,
represented by his daughter, Maria, that Cadastral Lot No. 5581
was allocated during the said partition. When Ananias died, his
daughter, Juanita, succeeded to his right as co-owner of said
property.

On November 17, 1993, it was the turn of Maria Pada to sell the
co-ownership right of his father, Marciano. Private respondent,
who is the first cousin of Maria, was the buyer.

On July 24, 1995, the heirs of Amador Pada, namely, Esperanza

Pada-Pavo, Concordia Pada-Bartolome, and Angelito Pada,
executed a Deed of Donation 9 transferring to petitioner Verona
Pada-Kilario, their respective shares as co-owners of Cadastral
Lot No. 5581.
On February 12, 1996, petitioner spouses filed their Answer
averring that the northern portion of Cadastral Lot No. 5581 had
already been donated to them by the heirs of Amador Pada. They
contended that the extra-judicial partition of the estate of Jacinto
Pada executed in 1951 was invalid and ineffectual since no
special power of attorney was executed by either Marciano,
Amador or Higino in favor of their respective children who
represented them in the extra-judicial partition. Moreover, it was

effectuated only through a private document that was never

registered in the office of the Registrar of Deeds of Leyte.
The Municipal Circuit Trial Court rendered judgment in favor of
petitioner spouses. It made the following findings:
After a careful study of the evidence submitted by both
parties, the court finds that the evidence adduced by
plaintiff failed to establish his ownership over . . .
Cadastral Lot No. 5581 . . . while defendants has [sic]
successfully proved by preponderance of evidence that
said property is still under a community of ownership
among the heirs of the late Jacinto Pada who died
intestate. If there was some truth that Marciano Pada and
Ananias Pada has [sic] been adjudicated jointly of [sic] the
above-described residential property . . . as their share of
the inheritance on the basis of the alleged extra judicial
settlement, how come that since 1951, the date of
partition, the share of the late Marciano Pada was not
transferred in the name of his heirs, one of them Maria
Pada-Pavo and still remain [sic] in the name of Jacinto
Pada up to the present while the part pertaining to the
share of Ananias Pada was easily transferred in the name
of his heirs . . ..
The alleged extra judicial settlement was made in private
writing and the genuineness and due execution of said
document was assailed as doubtful and it appears that
most of the heirs were not participants and signatories of
said settlement, and there was lack of special power of
attorney to [sic] those who claimed to have represented
their co-heirs in the participation [sic] and signing of the
said extra judicial statement.

Defendants were already occupying the northern portion

of the above-described property long before the sale of
said property on November 17, 1993 was executed
between Maria Pada-Pavo, as vendor and the plaintiff, as
vendee. They are in possession of said portion of the
above-described property since the year 1960 with the
consent of some of the heirs of Jacinto Pada and up to the
[sic] present some of the heirs of Jacinto Pada has [sic]
donated . . . their share of [sic] the above-described
property to them, virtually converting defendants'
standing as co-owners of the land under controversy.
Thus, defendants as co-owners became the undivided
owners of the whole estate . . . . As co-owners of . . .
Cadastral Lot No. 5581 . . . their possession in the northern
portion is being [sic] lawful.10
From the foregoing decision, private respondent appealed to the
Regional Trial Court. On November 6, 1997, it rendered a
judgment of reversal. It held:
. . . [T]he said conveyances executed by Juanita Pada and
Maria Pada Pavo were never questioned or assailed by
their co-heirs for more than 40 years, thereby lending
credence on [sic] the fact that the two vendors were
indeed legal and lawful owners of properties ceded or sold.
. . . At any rate, granting that the co-heirs of Juanita Pada
and Maria Pada Pavo have some interests on the very lot
assigned to Marciano and Ananias, nevertheless, said
interests had long been sadly lost by prescription, if not
laches or estoppel.
It is true that an action for partition does not prescribe, as
a general rule, but this doctrine of imprescriptibility cannot
be invoked when one of the heirs possessed the property

as an owner and for a period sufficient to acquire it by

prescription because from the moment one of the co-heirs
claim [sic] that he is the absolute owner and denies the
rest their share of the community property, the question
then involved is no longer one for partition but of
ownership. . . . Since [sic] 1951 up to 1993 covers a period
of 42 long years. Clearly, whatever right some of the coheirs may have, was long extinguished by laches, estoppel
or prescription.
xxx

xxx

2. To remove their house at their expense unless appellant

exercises the option of acquiring the same, in which case
the pertinent provisions of the New Civil Code has to be
applied;
3. Ordering the defendants-appellees to pay monthly
rental for their occupancy and use of the portion of the
land in question in the sum of P100.00 commencing on
June 26, 1995 when the case was filed and until the
termination of the present case;

xxx

. . . [T]he deed of donation executed by the Heirs of

Amador Pada, a brother of Marciano Pada, took place only
during the inception of the case or after the lapse of more
than 40 years reckoned from the time the extrajudicial
partition was made in 1951. Therefore, said donation is
illegal and invalid [sic] the donors, among others, were
absolutely bereft of any right in donating the very property
in question.11
The dispositive portion of the decision of the Regional Trial Court
reads as follows:
WHEREFORE, a judgment is hereby rendered, reversing
the judgment earlier promulgated by the Municipal Circuit
Trial Court of Matalom, Leyte, [sic] consequently,
defendants-appellees are hereby ordered:
1. To vacate the premises in issue and return peaceful
possession to the appellant, being the lawful possessor in
concept of owner;

4. Ordering the defendants to pay to the appellant the

sum of P5,000.00 as moral damages and the further sum
of P5,000.00 as attorney's fees;
5. Taxing defendants to pay the costs of suit. 12
Petitioners filed in the Court of Appeals a petition for review of
the foregoing decision of the Regional Trial Court.
On May 20, 1998, respondent Court of Appeals rendered
judgment dismissing said petition. It explained:
Well-settled is the rule that in an ejectment suit, the only
issue is possession de facto or physical or material
possession and not de jure. Hence, even if the question of
ownership is raised in the pleadings, the court may pass
upon such issue but only to determine the question of
possession, specially if the former is inseparably linked
with the latter. It cannot dispose with finality the issue of
ownership, such issue being inutile in an ejectment suit
except to throw light on the question of possession . . . .

Private respondent Silverio Pada anchors his claim to the

portion of the land possessed by petitioners on the Deed
of Sale executed in his favor by vendor Maria Pada-Pavo, a
daughter of Marciano, son of Jacinto Pada who was the
registered owner of the subject lot. The right of vendee
Maria Pada to sell the property was derived from the extrajudicial partition executed in May 1951 among the heirs of
Jacinto Pada, which was written in a Bisayan dialect signed
by the heirs, wherein the subject land was adjudicated to
Marciano, Maria Pavo's father, and Ananias Pada. Although
the authenticity and genuineness of the extra-judicial
partition is now being questioned by the heirs of Amador
Pada, no action was ever previously filed in court to
question the validity of such partition.1wphi1.nt
Notably, petitioners in their petition admitted among the
antecedent facts that Maria Pavo is one of the co-owners
of the property originally owned by Jacinto Pada . . . and
that the disputed lot was adjudicated to Marciano (father
of Maria Pavo) and Ananias, and upon the death of
Marciano and Ananias, their heirs took possession of said
lot, i.e. Maria Pavo the vendor for Marciano's share and
Juanita for Ananias' share . . . . Moreover, petitioners do
not dispute the findings of the respondent court that
during the cadastral survey of Matalom, Leyte, the share
of Maria Pada Pavo was denominated as Lot No. 5581,
while the share of Juanita Pada was denominated as Lot
No. 6047, and that both Maria Pada Pavo and Juanita were
in possession of their respective hereditary shares.
Further, petitioners in their Answer admitted that they
have been occupying a portion of Lot No. 5581, now in
dispute without paying any rental owing to the liberality of
the plaintiff . . . . Petitioners cannot now impugn the
aforestated extrajudicial partition executed by the heirs in

1951. As owner and possessor of the disputed property,

Maria Pada, and her vendee, private respondent, is
entitled to possession. A voluntary division of the estate of
the deceased by the heirs among themselves is conclusive
and confers upon said heirs exclusive ownership of the
respective portions assigned to them . . ..
The equally belated donation of a portion of the property
in dispute made by the heirs of Amador Pada, namely,
Concordia, Esperanza and Angelito, in favor of petitioner
Verona Pada is a futile attempt to confer upon the latter
the status of co-owner, since the donors had no interest
nor right to transfer. . . . This gesture appears to be a mere
afterthought to help petitioners to prolong their stay in the
premises. Furthermore, the respondent court correctly
pointed out that the equitable principle of laches and
estoppel come into play due to the donors' failure to
assert their claims and alleged ownership for more than
forty (40) years . . . . Accordingly, private respondent was
subrogated to the rights of the vendor over Lot No. 5581
which include [sic] the portion occupied by petitioners.13
Petitioner spouses filed a Motion for Reconsideration of the
foregoing decision.
On June 16, 1998, respondent Court of Appeals issued a
Resolution denying said motion.
Hence this petition raising the following issues:
I.
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING
THAT PETITIONERS, AS CO-OWNERS, CANNOT BE EJECTED

FROM THE PREMISES CONSIDERING THAT THE HEIRS OF

JACINTO PADA DONATED TO THEM THEIR UNDIVIDED
INTEREST IN THE PROPERTY IN DISPUTE.
II.
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING
THAT WHAT MARIA PADA SOLD WAS HER UNDIVIDED
SHARE IN THE PROPERTY IN DISPUTE.
III.
WHETHER OR NOT THE PETITIONERS ARE BUILDERS IN
GOOD FAITH.14
There is no merit to the instant petition.
First. We hold that the extrajudicial partition of the estate of
Jacinto Pada among his heirs made in 1951 is valid, albeit
executed in an unregistered private document. No law requires
partition among heirs to be in writing and be registered in order
to be valid.15 The requirement in Sec. 1, Rule 74 of the Revised
Rules of Court that a partition be put in a public document and
registered, has for its purpose the protection of creditors and the
heirs themselves against tardy claims. 16 The object of
registration is to serve as constructive notice to others. It follows
then that the intrinsic validity of partition not executed with the
prescribed formalities is not undermined when no creditors are
involved.17 Without creditors to take into consideration, it is
competent for the heirs of an estate to enter into an agreement
for distribution thereof in a manner and upon a plan different
from those provided by the rules from which, in the first place,
nothing can be inferred that a writing or other formality is
essential for the partition to be valid. 18 The partition of inherited

property need not be embodied in a public document so as to be

effective as regards the heirs that participated therein. 19 The
requirement of Article 1358 of the Civil Code that acts which
have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property, must
appear in a public instrument, is only for convenience, noncompliance with which does not affect the validity or
enforceability of the acts of the parties as among
themselves.20 And neither does the Statute of Frauds under
Article 1403 of the New Civil Code apply because partition
among heirs is not legally deemed a conveyance of real
property, considering that it involves not a transfer of property
from one to the other but rather, a confirmation or ratification of
title or right of property that an heir is renouncing in favor of
another heir who accepts and receives the inheritance. 21 The
1951 extrajudicial partition of Jacinto Pada's estate being legal
and effective as among his heirs, Juanita and Maria Pada validly
transferred their ownership rights over Cadastral Lot No. 5581 to
Engr. Paderes and private respondent, respectively. 22
Second. The extrajudicial partition which the heirs of Jacinto Pada
executed voluntarily and spontaneously in 1951 has produced a
legal status.23 When they discussed and agreed on the division of
the estate Jacinto Pada, it is presumed that they did so in
furtherance of their mutual interests. As such, their division is
conclusive, unless and until it is shown that there were debts
existing against the estate which had not been paid. 24 No
showing, however, has been made of any unpaid charges against
the estate of Jacinto Pada. Thus, there is no reason why the heirs
should not be bound by their voluntary acts.
The belated act of Concordia, Esperanza and Angelito, who are
the heirs of Amador Pada, of donating the subject property to
petitioners after forty four (44) years of never having disputed

the validity of the 1951 extrajudicial partition that allocated the

subject property to Marciano and Ananias, produced no legal
effect. In the said partition, what was allocated to Amador Pada
was not the subject property which was a parcel of residential
land in Sto. Nino, Matalom, Leyte, but rather, one-half of a parcel
of coconut land in the interior of Sto. Nino St., Sabang, Matalom,
Leyte and one-half of a parcel of rice land in Itum, Sta. Fe,
Matalom, Leyte. The donation made by his heirs to petitioners of
the subject property, thus, is void for they were not the owners
thereof. At any rate it is too late in the day for the heirs of
Amador Pada to repudiate the legal effects of the 1951
extrajudicial partition as prescription and laches have equally set
in.
Third. Petitioners are estopped from impugning the extrajudicial
partition executed by the heirs of Jacinto Pada after explicitly
admitting in their Answer that they had been occupying the
subject property since 1960 without ever paying any rental as
they only relied on the liberality and tolerance of the Pada
family.25 Their admissions are evidence of a high order and bind
them insofar as the character of their possession of the subject
property is concerned.
Considering that petitioners were in possession of the subject
property by sheer tolerance of its owners, they knew that their
occupation of the premises may be terminated any time. Persons
who occupy the land of another at the latter's tolerance or
permission, without any contract between them, is necessarily
bound by an implied promise that they will vacate the same
upon demand, failing in which a summary action for ejectment is
the proper remedy against them. 26 Thus, they cannot be
considered possessors nor builders in good faith. It is well-settled
that both Article 44827 and Article 54628 of the New Civil Code
which allow full reimbursement of useful improvements and

retention of the premises until reimbursement is made, apply

only to a possessor in good faith, i.e., one who builds on land
with the belief that he is the owner thereof. 29 Verily, persons
whose occupation of a realty is by sheer tolerance of its owners
are not possessors in good faith. Neither did the promise of
Concordia, Esperanza and Angelito Pada that they were going to
donate the premises to petitioners convert them into builders in
good faith for at the time the improvements were built on the
premises, such promise was not yet fulfilled, i.e., it was a mere
expectancy of ownership that may or may not be realized. 30 More
importantly, even as that promise was fulfilled, the donation is
void for Concordia, Esperanza and Angelito Pada were not the
owners of Cadastral Lot No. 5581. As such, petitioners cannot be
said to be entitled to the value of the improvements that they
built on the said lot.
WHEREFORE, the petition for review is HEREBY DENIED.
Costs against petitioners.
SO ORDERED.

ARADA LUMUNGO, JUHURI DAWA, ET AL., petitioners,

vs.
ASAAD USMAN, JOSE ANGELES and DOMINGA USMAN, ET
AL., respondents.

Dominador
Sobrevias
Marciano Almario for respondents.

for

petitioners.

CONCEPCION, C.J.:
Review on certiorari of a decision of the Court of Appeals, on
appeal from a decision of the Court of First Instance of Sulu in
Civil Cases Nos. 155 and 156 of said court, both instituted by
plaintiffs herein, Arada Lumungo (deceased), substituted by her
heirs, Juhuri Dawa, Kayajuja, Sadatul, Sarapatul, Jaramatul, Alma,
Kalukasa and Vicente, all surnamed Juhuri to recover the
possession of lot No. 871 of the Siasi Cadastre, in the first case,
and in the second, of lots Nos. 892, 893, 894 and 1121 of the
same cadastre. The defendants in case No. 155 are Asaad
Usman, Akmadul and Hada, whereas those in case No. 156 are
Asaad Usman, Fatima Angeles, Hadjaratul Julkanain, Inkiran and
Sitti Haridja, who were subsequently joined by Dominga Usman
and Jose Angeles, as defendants-intervenors.

him and his predecessors in interest on Lots 892, 893 and 894.
Should plaintiffs fail to do so within ninety (90) days from the
date this decision becomes final, the three lots shall be ordered
sold at public auction, the proceeds of which shall be applied to
the P4,500.00 herein adjudged to Jose Angeles, and the balance
to be delivered to the plaintiffs.
Both parties appealed from this decision to the Court of Appeals,
but, later, the defendants withdrew their appeal, which,
accordingly, was dismissed. Thus the only question left for
determination by the Court of Appeals was plaintiffs' appeal from
the trial court's decision, insofar as it sentenced them to pay
P4,500.00 to intervenor Jose Angeles. After appropriate
proceedings, the Court of Appeals reduced this amount to
P2,500.00 and affirmed the decision of the Court of First Instance
in all other respects, with costs against defendants-intervenors.
The case is now before us upon petition for review
on certiorari filed by the plaintiffs.

After a joint trial of the two (2) cases, the Court of First Instance
of Sulu rendered a decision, the dispositive part of which reads
as follows:

The pertinent facts are set forth in the decision of the trial court,
which were adopted in that of the Court of Appeals, from which
we quote:

WHEREFORE, judgment is hereby rendered declaring plaintiffs to

have a better right to the possession of Lots Nos. 892, 893, 894,
1121 and 871, Siasi and Lapak Cadastral Survey, located at
Lapak, Siasi, Sulu and described in Transfer Certificates of Title
Nos. T-419, T-422, T-420 and T-421 and Original Certificate of
Title No. 8023. The defendants are ordered to vacate said lots in
favor of the plaintiffs if they have not already done so.

It ... appears that, having allegedly collaborated with the enemy

during the Japanese Occupation of Sulu, Datu Idiris Amilhussin
was arrested and detained when the American Liberation Forces
came to Sulu in the year 1945. On March 1, 1946, Datu Idiris was
prosecuted for Treason before the People's Court, docketed as
Criminal Case No. 1334 in said Court. Justice of the Peace Asaad
Usman of Siasi and his wife Dominga Usman, became interested
in Lots Nos. 892, 893, 894, 1121 and 871. Jamasali Usman,
brother of Atty. Asaad Usman, also became interested in Lot No.
1226(?). Datu Idiris was desperately in need of money to pay his
attorney's fees and the premium on his bailbond. He sent his

On the other hand, the plaintiffs are ordered to reimburse to the

defendant-intervenor, JOSE ANGELES, the sum of P4,500.00
representing the value of the 3,000 coconut trees introduced by

wife to Jamasali for money. Jamasali proposed to buy Lot No.

1227(?). Upon the execution of a Pacto de Retro sale (Exhibit
"DDD"), Jamasali gave Datu Idiris partial payments of the
P3,000.00 mentioned in the document. Sometime in the year
1946, Atty. Usman visited Datu Idiris in the Provincial jail and
promised to help him in his case and to secure his bailbond for
his temporary liberty. But Atty. Usman asked Datu Idiris to sell to
his wife, Dominga Miranda Usman, the five lots in question. Datu
Idiris agreed.
Through the help of Atty. Usman, the bailbond of Datu Idiris was
perfected. Consequently, on January 11, 1947, he was released
from the Provincial Jail. True to his word, on March 14, 1947, Datu
Idiris executed an agreement with Dominga Usman (Exhibit
"33"). He also caused Datu Amirul Amilhussin, brother of Datu
Idiris, to sign a similar document, being one of the co-owners of
said lots (Exh. "34"). Upon execution of the agreement, Dominga
Usman paid Datu Idiris P300.00; subsequently, Atty. Usman paid
him P500.00 and P10.00. Thus, Datu Idiris received all in all from
the spouses, P810.00 in consideration of the tenor stated in the
document, Exhibit "33". In the meantime, Atty. Usman took
possession of the five lots in question and cultivated the same.
As the whole amount of P3,000.00 mentioned in the sale
of Pacto de Retro executed by Datu Idiris in favor of Jamasali
Usman was not fully paid, Datu Idiris upon his being released
from confinement, demanded from Jamasali to complete
payment. He also demanded from Atty. Usman the payment of
the balance of the purchase price of the lots described in Exhibit
"33". After Datu Idiris had been repeatedly refusedsaid payments
by both Jamasali and Atty. Usman, he became exasperated. He
wrote two complaints, one to the Secretary of Justice, dated June
15, 1946, and the other, to the President of the Philippines,
dated March 8, 1948, complaining against Justice of the Peace

Asaad Usman and Jamasali Usman. After filing these complaints,

Justice of the Peace Usman immediately caused the revocation
of the bailbond of Datu Idiris before the People's Court. On March
31, 1948, he was rearrested and committed to the Provincial Jail
again. A serious misunderstanding developed between Datu
Idiris on one hand and Atty. Usman and Jamasali Usman on the
other. Several complaints for murder were caused to be filed
before the Court of Justice of the Peace Usman against Datu
Idiris. In the meantime, Atty. Usman wrote letters of demand
upon Datu Idiris asking him to produce the titles to the above
five lots to enable him to have a sufficient deed of sale
conveying the said five lots in favor of his wife. Datu Idiris on the
other hand, had been demanding from Atty. Usman to pay the
balance of the purchase price of the land. Despite those mutual
demands, no one complied therewith. On December 10, 1951,
Datu Idiris proposed, thru Atty. Flor, to call off the deal, stated in
documents, Exhibits "33" and "34", promising to return the
P810.00 which he received from the spouses. Dominga Usman
and Atty. Usman agreed to call of the deal. Datu Idiris however,
never paid the P810.00. Despite this. Dominga Usman and Atty.
Usman never went to Court to file an action to compel Datu Idiris
either to comply with his obligation to execute and deliver a
good and sufficient deed conveying titles to the five lots in
question, or to pay back the P810.00. What Dominga Usman did
when Datu Idiris failed to pay her the P810.00 was to sell lots
892, 893 and 894 to Jose Angeles for P1,000.00. Jose Angeles,
upon taking possession of the land, planted same with coconuts,
which, together with those already planted by Dominga Usman,
numbered about 3,000, most of which are now fruit-bearing.
On Feb. 2, 1962, Datu Idiris filed a civil complaint against Atty.
Asaad Usman for recovery of possession of the five lots in
question which was docketed as Civil Case No. 87 of this Court.
Atty. Usman, instead of informing the Court that he and his wife

had the legal right to possess those lots by virtue of the

agreement had between Datu Idiris and his wife embodied in
Exhibit "33", manifested in open Court on September 26, 1952,
that he was not interested in the posession or ownership of the
land, and that he did not buy the land from Datu Idiris. So, on
said date, this Court dictated an order as follows:
"In Open Court, when this case was called for hearing, the
defendant Attorney Asaad Usman manifested that he does not
claim ownership nor possession to the two parcels of land
described in paragraph 2 of the complaint of the plaintiff.
Thereupon, the plaintiff (moved) the Court to enter judgment, to
which motion the defendant interposed no objection. Such being
the case, the Court has no alternative but to enter judgment as it
is hereby entered in favor of the plaintiff Datu Idiris Amilhussin,
and against the defendant declaring the plaintiff the owner
and possessor of the two parcels of land above mentioned, and
inasmuch as the defendant is not in possession of the land, the
Court finds it unnecessary to enter an order ejecting the said
defendant from the two parcels of land, without prejudice to any
claim of any other third party, without pronouncement as to
costs.
On the other hand, the defendant moved for the dismissal of his
counterclaim. The Court orders the dismissal of the same, also
without pronouncement as to cost."
Upon the promulgation of the above-quoted judgment, Datu
Idiris, who was badly in need of money, went around, offering to
sell the land to another. Spouses Juhuri Dawa and Arada
Lumungo being interested in acquiring those lots, asked Atty.
Dominador Sobrevias to verify if they could buy the same. Atty.
Sobrevias went to the Office of the Register of Deeds and found
no annotation of encumbrances on the Original Certificates of

Title of the five lots. Besides, since the Court had already
adjudged in the above-quoted order that Atty. Usman did not
have any claim of possession or ownership over the land, and
that he did not buy the land from Datu Idiris, Atty. Sobrevias
advised his clients that they may buy the lots. Accordingly, a
deed of sale, Exhibits "L" to "L-2", was executed. Upon
presentation of this deed of sale to the Register of Deeds,
Original Certificates of Title Nos. 8986, 8123, 8087 and 8122
were cancelled and in lieu thereof, Transfer Certificates of Title
Nos. T-419, T-420, T-422, and T-421 were issued in the names of
the plaintifs. Plaintiffs took possession of the property, but they
were allegedly driven from the land. About three years ago, the
defendants left Lots Nos. 892, 893, 894 and 1121. Plaintiffs took
possession thereof. The defendants are still in possession of Lot
No. 871.[[1]]
Defendants maintained in the Court of Appeals that the sale
made by Datu Idiris Amilhussin to plaintiffs Arada Lumungo and
Juhuri Dawa, on September 30, 1952, is null and void because
the lots thus sold had previously been conveyed by Datu Idiris
and Datu Amirul Amilhussin to intervenor Dominga Usman, wife
of defendant Asaad Usman, and because the sale to said
plaintiffs was not approved by the provincial governor of Sulu, as
required by the Administrative Code of Mindanao and Sulu. The
Court of Appeals overruled these objections upon the ground
that the sale to Dominga Usman "did not materialize" and was
"called off" by mutual agreement of the vendors and the vendee,
and that said lack of approval by the provincial governor is a
defense available to the contracting parties only, not to the
defendants herein who are not parties to said transaction. Then
the Court of Appeals went on to say:
Upon the other hand, it is to be noted that when intervenor
Dominga Usman who claimed to have purchased the lots in

question from one of the original owners, sold and transferred

her alleged ownership over the same to her co-intervenor Jose
Angeles, the latter made the purchase with the knowledge that
the property subject matter of the sale was already in dispute by
and between herein defendants, one of whom is the husband of
intervener Dominga Usman, on the one hand, and herein
plaintifs on the other. Nevertheless, as well stated by the court
a quo, equity should come in to protect the rights of intervenor
Jose Angeles who introduced some improvements on three of the
lots subject-matter of the litigation, namely, lots Nos. 892, 893
and 894.
The Court found for a fact that around 3,000 coconut trees were
planted on those lots aforementioned, some of them already
fruit-bearing. It appears from the records that not all, but a
portion, of the 3,000 were planted by intervenor Jose Angeles.
The value placed by the lower court of P1.50 per fruit-bearing
coconut tree is reasonable enough, inasmuch as the lower court
was in a better position to make the assessment, it being more
closely in contact with the conditions and circumstances of the
locality. We are not prepared to disturb such finding for lack of
evidence to warrant such an action on our part.
IN VIEW OF THE FOREGOING CONSIDERATIONS, with the only
modification thatthe amount of indemnity should be reduced
from P4,500.00 to P2,500.00, the rest of the judgment appealed
from is hereby affirmed with costs against defendantsintervenors.[[2]]
The only issue posed by plaintiffs' petition for review is whether
or not Jose Angeles is entitled to reimbursement for the coconut
trees planted by him on the property in litigation. In this
connection, it should be noted that said trees are improvements,
not "necessary expenses of preservation," which a builder,

planter or sower in bad faith may recover under Arts. 452 and
546, first paragraph, of the Civil Code.
Upon the other hand, the Court of Appeals found as a fact that
when Dominga Usman sold and transferred her rights in and to
the property in question to Jose Angeles "the latter made the
purchase with the knowledge that the property subject matter of
the sale was already in dispute by and between herein
defendants, one of whom is the husband of intervenor Dominga
Usman, on the one hand, and herein plaintiffs on the other."
Angeles was, therefore, aware of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title to
the property in question, which was an easy matter for him to
ascertain, said property being registered under the Torrens
System.[[3]]
Indeed, Jose Angeles is a nephew of defendant Asaad Usman,
and the controversy between the latter and Datu Idiris was a
matter of public knowledge, for Usman was a justice of the
peace, and Datu Idiris had filed charges against him, as such,
with the Department of Justice and the Office of the President, to
which Usman countered by causing the bail bond of Datu Idiris to
be cancelled and his corresponding reincarceration, as well as
the filing of complaints for murder against him. Besides, on
February 2, 1952, or several months prior to the sale to Angeles
on September 30, 1952, Datu Idiris had filed Civil Case No. 87 of
the Court of First Instance of Sulu against Asaad Usman to
recover the lots in question, and the latter stated in that case, on
September 26, 1952, or four (4) days before the aforementioned
sale, that he was not interested in either the possession or the
ownership of said lots and that he had not bought the same from
the former. It may not be amiss to note, also, that at the time of
the alleged sale in his favor, Jose Angeles was a law student;
that, in fact, on August 9, 1957, he entered his appearance as

counsel for the defendants, in collaboration with Asaad Usman;

and that the consideration for said sale, involving a land of 46
hectares, was only P1,000.
In short, the foregoing facts, and the above-quoted findings of
both the trial court and the Court of Appeals, leave no room for
doubt that Jose Angeles was a purchaser and a builder in bad
faith.[[4]] The provision applicable to this case is, accordingly,
Article 449 of the Civil Code, which provides that, "(h)e who
builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to
indemnity."
Obviously, the alleged equity in favor of Jose Angeles, on which
the lower courts have relied, cannot prevail over the
aforementioned express statutory provision to the contrary,
[[ ]]
5 apart from the fact that he who seeks equity must come with
clean hands.[[6]]

REGALADO, J.:
This petition seeks the review of the decision 1 rendered by
respondent Court of Appeals on September 25, 1975 in CA-G.R.
No. 32479-R, entitled "Rosendo del Rosario, et al., PlaintiffsAppellees, versus Mario Ronquillo, Defendant-Appellant,"
affirming in toto the judgment of the trial court, and its
amendatory resolution 2 dated January 28, 1976 the dispositive
portion of which reads:
IN VIEW OF THE FOREGOING, the decision of this Court
dated September 25, 1975 is hereby amended in the
sense that the first part of the appealed decision is set
aside, except the last portion "declaring the plaintiffs to be
the rightful owners of the dried-up portion of Estero
Calubcub which is abutting plaintiffs' property," which we
affirm, without pronouncement as to costs.
SO ORDERED.

WHEREFORE, the decision of the Court of Appeals should be as it

is hereby modified by eliminating therefrom the contested award
of P2,500.00 in favor of Jose Angeles, and, thus modified, said
decision is hereby affirmed in all other respects, with the costs. It
is so ordered.
MARIO
C.
RONQUILLO, petitioner
vs.
THE COURT OF APPEALS, DIRECTOR OF LANDS,
DEVELOPMENT BANK OF THE PHILIPPINES, ROSENDO DEL
ROSARIO, AMPARO DEL ROSARIO and FLORENCIA DEL
ROSARIO, respondents.*
Angara, Abello, Concepcion, Regala & Cruz for petitioner.

The following facts are culled from the decision of the Court of
Appeals:
It appears that plaintiff Rosendo del Rosario was a
registered owner of a parcel of land known as Lot 34,
Block 9, Sulucan Subdivision, situated at Sampaloc, Manila
and covered by Transfer Certificate of Title No. 34797 of
the Registry of Deeds of Manila (Exhibit "A"). The other
plaintiffs Florencia and Amparo del Rosario were daughters
of said Rosendo del Rosario. Adjoining said lot is a dried-up
portion of the old Estero Calubcub occupied by the
defendant since 1945 which is the subject matter of the
present action.

Plaintiffs claim that long before the year 1930, when T.C.T.
No. 34797 over Lot No. 34 was issued in the name of
Rosendo del Rosario, the latter had been in possession of
said lot including the adjoining dried-up portion of the old
Estero Calubcub having bought the same from Arsenio
Arzaga. Sometime in 1935, said titled lot was occupied by
Isabel Roldan with the tolerance and consent of the
plaintiff on condition that the former will make
improvements on the adjoining dried-up portion of the
Estero Calubcub. In the early part of 1945 defendant
occupied the eastern portion of said titled lot as well as
the dried-up portion of the old Estero Calubcub which
abuts plaintiffs' titled lot. After a relocation survey of the
land in question sometime in 1960, plaintiffs learned that
defendant was occupying a portion of their land and thus
demanded defendant to vacate said land when the latter
refused to pay the reasonable rent for its occupancy.
However, despite said demand defendant refused to
vacate.
Defendant on the other hand claims that sometime before
1945 he was living with his sister who was then residing or
renting plaintiffs' titled lot. In 1945 he built his house on
the disputed dried-up portion of the Estero Calubcub with
a small portion thereof on the titled lot of plaintiffs. Later
in 1961, said house was destroyed by a fire which
prompted him to rebuild the same. However, this time it
was built only on the called up portion of the old Estero
Calubcub without touching any part of plaintiffs titled land.
He further claims that said dried-up portion is a land of
public domain.3
Private respondents Rosendo, Amparo and Florencia, all
surnamed del Rosario (Del Rosarios), lodged a complaint with the

Court of First Instance of Manila praying, among others, that they

be declared the rightful owners of the dried-up portion of Estero
Calubcub. Petitioner Mario Ronquillo (Ronquillo) filed a motion to
dismiss the complaint on the ground that the trial court had no
jurisdiction over the case since the dried-up portion of Estero
Calubcub is public land and, thus, subject to the disposition of
the Director of Lands. The Del Rosarios opposed the motion
arguing that since they are claiming title to the dried-up portion
of Estero Calubcub as riparian owners, the trial court has
jurisdiction. The resolution of the motion to dismiss was deferred
until after trial on the merits.
Before trial, the parties submitted the following stipulation of
facts:
1. That the plaintiffs are the registered owners of Lot 34,
Block 9, Sulucan Subdivision covered by Transfer
Certificate of Title No. 34797;
2. That said property of the plaintiffs abuts and is adjacent
to the dried-up river bed of Estero Calubcub Sampaloc,
Manila;
3. That defendant Mario Ronquillo has no property around
the premises in question and is only claiming the dried-up
portion of the old Estero Calubcub, whereon before
October 23, 1961, the larger portion of his house was
constructed;
4. That before October 23, 1961, a portion of defendant's
house stands (sic) on the above-mentioned lot belonging
to the plaintiffs;

5. That the plaintiffs and defendant have both filed with

the Bureau of Lands miscellaneous sales application for
the purchase of the abandoned river bed known as Estero
Calubcub and their sales applications, dated August 5,
1958 and October 13, 1959, respectively, are still pending
action before the Bureau of Lands;
6. That the parties hereby reserve their right to prove such
facts as are necessary to support their case but not
covered by this stipulation of facts. 4
On December 26, 1962, the trial court rendered judgment the
decretal portion of which provides:
WHEREFORE, judgment is hereby rendered ordering the
defendant to deliver to the plaintiffs the portion of the
land covered by Transfer Certificate of title No. 34797
which is occupied by him and to pay for the use and
occupation of said portion of land at the rate of P 5.00 a
month from the date of the filing of the complaint until
such time as he surrenders the same to the plaintiffs and
declaring plaintiffs to be the owners of the dried-up
portion of estero Calubcub which is abutting plaintiffs'
property.
With costs to the defendant.
SO ORDERED.

On appeal, respondent court, in affirming the aforequoted

decision of the trial court, declared that since Estero Calubcub
had already dried-up way back in 1930 due to the natural
change in the course of the waters, under Article 370 of the old
Civil Code which it considers applicable to the present case, the

abandoned river bed belongs to the Del Rosarios as riparian

owners. Consequently, respondent court opines, the dried-up
river bed is private land and does not form part of the land of the
public domain. It stated further that "(e)ven assuming for the
sake of argument that said estero did not change its course but
merely dried up or disappeared, said dried-up estero would still
belong to the riparian owner," citing its ruling in the case
of Pinzon vs. Rama. 6
Upon motion of Ronquillo, respondent court modified its decision
by setting aside the first portion of the trial court's decision
ordering Ronquillo to surrender to the Del Rosarios that portion
of land covered by Transfer Certificate of Title No. 34797
occupied by the former, based on the former's representation
that he had already vacated the same prior to the
commencement of this case. However, respondent court upheld
its declaration that the Del Rosarios are the rightful owners of
the dried-up river bed. Hence, this petition.
On May 17, 1976, this Court issued a resolution 7 requiring the
Solicitor General to comment on the petition in behalf of the
Director of Lands as an indispensable party in representation of
the Republic of the Philippines, and who, not having been
impleaded, was subsequently considered impleaded as such in
our resolution of September 10, 1976. 8 In his Motion to Admit
Comment, 9 the Solicitor General manifested that pursuant to a
request made by this office with the Bureau of Lands to conduct
an investigation, the Chief of the Legal Division of the Bureau
sent a communication informing him that the records of his office
"do not show that Mario Ronquillo, Rosendo del Rosario, Amparo
del Rosario or Florencia del Rosario has filed any public land
application covering parcels of land situated at Estero Calubcub
Manila as verified by our Records Division.

The position taken by the Director of Lands in his

Comment 10 filed on September 3, 1978, which was reiterated in
the Reply dated May 4, 1989 and again in the Comment dated
August 17, 1989, explicates:
5. We do not see our way clear to subscribe to the ruling
of the Honorable Court of Appeals on this point for Article
370 of the Old Civil Code, insofar as ownership of
abandoned river beds by the owners of riparian lands are
concerned, speaks only of a situation where such river
beds were abandoned because of a natural change in the
course of the waters. Conversely, we submit that if the
abandonment was for some cause other than the natural
change in the course of the waters, Article 370 is not
applicable and the abandoned bed does not lose its
character as a property of public dominion not susceptible
to private ownership in accordance with Article 502 (No. 1)
of the New Civil Code. In the present case, the drying up of
the bed, as contended by the petitioner, is clearly caused
by human activity and undeniably not because of the
natural change of the course of the waters (Emphasis in
the original text).
In his Comment
further adds:

11

dated August 17, 1989, the Director of Lands

8. Petitioner herein and the private respondents, the del

Rosarios, claim to have pending sales application(s) over
the portion of the dried up Estero Calubcub, as stated in
pages 4-5, of the Amended Petition.
9. However, as stated in the Reply dated May 4, 1989 of
the Director of Lands, all sales application(s) have been
rejected by that office because of the objection interposed

by the Manila City Engineer's Office that they need the

dried portion of the estero for drainage purposes.
10. Furthermore, petitioner and private respondents, the
del Rosarios having filed said sales application(s) are now
estopped from claiming title to the Estero Calubcub (by
possession for petitioner and by accretion for respondents
del Rosarios) because for (sic) they have acknowledged
that they do not own the land and that the same is a
public land under the administration of the Bureau of
Lands (Director of Lands vs. Santiago, 160 SCRA 186,
194).
In a letter dated June 29, 1979 12 Florencia del Rosario
manifested to this Court that Rosendo, Amparo and Casiano del
Rosario have all died, and that she is the only one still alive
among the private respondents in this case.
In a resolution dated January 20, 1988, 13 the Court required
petitioner Ronquillo to implead one Benjamin Diaz pursuant to
the former's manifestation 14 that the land adjacent to the dried
up river bed has already been sold to the latter, and the Solicitor
General was also required to inquire into the status of the
investigation being conducted by the Bureau of Lands. In
compliance therewith, the Solicitor General presented a letter
from the Director of Lands to the effect that neither of the parties
involved in the present case has filed any public land
application. 15
On April 3, 1989, petitioner filed an Amended Petition
for Certiorari, 16 this time impleading the Development Bank of
the Philippines (DBP) which subsequently bought the property
adjacent to the dried-up river bed from Benjamin Diaz. In its

resolution dated January 10, 1990, 17 the Court ordered that DBP
be impleaded as a party respondent.
In a Comment 18 filed on May 9, 1990, DBP averred that
"[c]onsidering the fact that the petitioner in this case
claims/asserts no right over the property sold to Diaz/DBP by the
del Rosarios; and considering, on the contrary, that Diaz and DBP
claims/asserts (sic) no right (direct or indirect) over the property
being claimed by Ronquillo (the dried-up portion of Estero
Calubcub), it follows, therefore, that the petitioner Ronquillo has
no cause of action against Diaz or DBP. A fortiori from the
viewpoint of the classical definition of a cause of action, there is
no legal justification to implead DBP as one of the respondents in
this petition." DBP thereafter prayed that it be dropped in the
case as party respondent.
On
September
13,
1990,
respondent
DBP
filed
a
19
Manifestation/Compliance stating that DBP's interest over
Transfer Certificate of Title No. 139215 issued in its name
(formerly Transfer Certificate of Title No. 34797 of the Del
Rosarios and Transfer Certificate of Title No. 135170 of Benjamin
Diaz) has been transferred to Spouses Victoriano and Pacita A.
Tolentino pursuant to a Deed of Sale dated September 11, 1990.
Petitioner Ronquillo avers that respondent Court of Appeals
committed an error of law and gross abuse of discretion, acted
arbitrarily and denied petitioner due process of law (a) when it
declared private respondents Del Rosarios the rightful owners of
the dried-up portion of Estero Calubcub by unduly relying upon
decisional law in the case of Pinzon vs. Rama, ante, which case
was decided entirely on a set of facts different from that
obtaining in this case; and (b) when it ignored the undisputed
facts in the present case and declared the dried-up portion of
Estero Calubcub as a private property.

The main issue posed for resolution in this petition is whether the
dried-up portion of Estero Calubcub being claimed by herein
petitioner was caused by a natural change in the course of the
waters; and, corollary thereto, is the issue of the applicability of
Article 370 of the old Civil Code.
Respondent court, in affirming the findings of the trial court that
there was a natural change in the course of Estero Calubcub
declared that:
The defendant claims that Article 370 of the old Civil Code
is not applicable to the instant case because said Estero
Calubcub did not actually change its course but simply
dried up, hence, the land in dispute is a land of public
domain and subject to the disposition of the Director of
Land(s). The contention of defendant is without merit. As
mentioned earlier, said estero as shown by the relocation
plan (Exhibit "D") did not disappear but merely changed
its course by a more southeasternly (sic) direction. As
such, "the abandoned river bed belongs to the plaintiffsappellees and said land is private and not public in nature.
Hence, further, it is not subject to a Homestead
Application by the appellant." (Fabian vs. Paculan CA-G.R.
Nos. 21062-63-64-R, Jan. 25 1962). Even assuming for the
sake of argument that said estero did not change its
course but merely dried up or disappeared, said dried-up
estero would still belong to the riparian owner as held by
this Court in the case of Pinzon vs. Rama (CA-G.R. No.
8389, Jan. 8, 1943; 2 O.G. 307). 20
Elementary is the rule that the jurisdiction of the Supreme Court
in cases brought to it from the Court of Appeals in a petition
for certiorari under Rule 45 of the Rules of Court is limited to the
review of errors of law, and that said appellate court's finding of

fact is conclusive upon this Court. However, there are certain

exceptions, such as (1) when the conclusion is a finding
grounded entirely on speculation, surmises or conjectures; (2)
when the inference made is manifestly absurd, mistaken or
impossible; (3) when there is grave abuse of discretion in the
appreciation of facts; (4) when the judgment is premised on a
misapprehension of facts; (5) when the findings of fact are
conflicting; and (6) when the Court of Appeals in making its
findings went beyond the issues of the case and the same is
contrary
to
the
admissions
of
both
appellant
and
appellee. 21
A careful perusal of the evidence presented by both parties in
the case at bar will reveal that the change in the course of Estero
Calubcub was caused, not by natural forces, but due to the
dumping of garbage therein by the people of the surrounding
neighborhood. Under the circumstances, a review of the findings
of fact of respondent court thus becomes imperative.
Private respondent Florencia del Rosario, in her testimony, made
a categorical statement which in effect admitted that Estero
Calubcub changed its course because of the garbage dumped
therein, by the inhabitants of the locality, thus:
Q When more or less what (sic) the estero fully dried up?
A By 1960 it is (sic) already dried up except for a little rain
that accumulates on the lot when it rains.
Q How or why did the Estero Calubcub dried (sic) up?
A It has been the dumping place of the whole
neighborhood. There is no street, they dumped all the

garbage there. It is the dumping place of the whole

community, sir. 22
In addition, the relocation plan (Exhibit "D") which also formed
the basis of respondent court's ruling, merely reflects the change
in the course of Estero Calubcub but it is not clear therefrom as
to what actually brought about such change. There is nothing in
the testimony of lone witness Florencia del Rosario nor in said
relocation plan which would indicate that the change in the
course of the estero was due to the ebb and flow of the waters.
On the contrary, the aforequoted testimony of the witness belies
such fact, while the relocation plan is absolutely silent on the
matter. The inescapable conclusion is that the dried-up portion of
Estero Calubcub was occasioned, not by a natural change in the
course of the waters, but through the active intervention of man.
The foregoing facts and circumstances remove the instant case
from the applicability of Article 370 of the old Civil Code which
provides:
Art. 370. The beds of rivers, which are abandoned because
of a natural change in the course of the waters, belong to
the owners of the riparian lands throughout the respective
length of each. If the abandoned bed divided tenements
belonging to different owners the new dividing line shall
be equidistant from one and the other.
The law is clear and unambiguous. It leaves no room for
interpretation.1wphi1 Article 370 applies only if there is a
natural change in the course of the waters. The rules on alluvion
do not apply to man-made or artificial accretions 23 nor to
accretions to lands that adjoin canals or esteros or artificial
drainage systems. 24 Considering our earlier finding that the
dried-up portion of Estero Calubcub was actually caused by the

active intervention of man, it follows that Article 370 does not

apply to the case at bar and, hence, the Del Rosarios cannot be
entitled thereto supposedly as riparian owners.
The dried-up portion of Estero Calubcub should thus be
considered as forming part of the land of the public domain
which cannot be subject to acquisition by private ownership.
That such is the case is made more evident in the letter, dated
April 28, 1989, of the Chief, Legal Division of the Bureau of
Lands 25 as reported in the Reply of respondent Director of Lands
stating that "the alleged application filed by Ronquillo no longer
exists in its records as it must have already been disposed of as
a rejected application for the reason that other applications
"covering Estero Calubcub Sampaloc, Manila for areas other than
that contested in the instant case, were all rejected by our office
because of the objection interposed by the City Engineer's office
that they need the same land for drainage purposes".
Consequently, since the land is to be used for drainage purposes
the same cannot be the subject of a miscellaneous sales
application.
Lastly, the fact that petitioner and herein private respondents
filed their sales applications with the Bureau of Lands covering
the subject dried-up portion of Estero Calubcub cannot but be
deemed as outright admissions by them that the same is public
land. They are now estopped from claiming otherwise.
WHEREFORE, the decision appealed from, the remaining
effective portion of which declares private respondents Del
Rosarios as riparian owners of the dried-up portion of Estero
Calubcub is hereby REVERSED and SET ASIDE.
SO ORDERED.

ANGELICA VIAJAR and CELSO VIAJAR, plaintiffs-appellants,

vs.
COURT OF APPEALS, LEONOR P. LADRIDO, LOURDES
LADRIDO IGNACIO, EUGENIO P. LADRIDO and L P.
LADRIDO, defendants-appellees.
Ramon A. Gonzales for petitioner.
Miraflores Law Offices for respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the
Court of Appeals dated December 29, 1986, in CA-G.R. CV No.
69942 entitled, "ANGELICA VIAJAR, et. al., Plaintifs-Appellants,
versus
LEONOR
LADRIDO,
et.
al.,
DefendantsAppellees," affirming the decision of the Court of First Instance
(now Regional Trial Court) of Iloilo dated December 10, 1981.
The antecedent facts in the instant case are as follows: The
spouses Ricardo Y. Ladrido and Leonor P. Ladrido were the
owners of Lot No. 7511 of the Cadastral Survey of Pototan
situated in barangay Cawayan, Pototan, Iloilo. This lot contained
an area of 154,267 square meters and was registered in the

names of the spouses under Transfer Certificate of Title No. T21940 of the Register of Deeds of Iloilo.

F. Viajar. For this reason, plaintiff Angelica F. Viajar now appears

to be the sole registered owner of this lot.

Spouses Rosendo H. Te and Ana Te were also the registered

owners of a parcel of land described in their title as Lot No. 7340
of the Cadastral Survey of Pototan.

On May 25, 1978, defendant Ladrido died. He was substituted in

the civil action by his wife, Leonor P. Ladrido, and children,
namely: Lourdes Ladrido-Ignacio, Eugenio P. Ladrido and Manuel
P. Ladrido, as parties defendants.

On September 6, 1973, Rosendo H. Te, with the conformity of

Ana Te, sold this lot to Angelica F. Viajar and Celso F. Viajar for
P5,000. A Torrens title was later issued in the names of Angelica
F. Viajar and Celso F. Viajar.
Later, Angelica F. Viajar had Lot No. 7340 relocated and found
out that the property was in the possession of Ricardo Y. Ladrido.
Consequently, she demanded its return but Ladrido refused.
On February 15, 1974, Angelica F. Viajar and Celso F. Viajar
instituted a civil action for recovery of possession and damages
against Ricardo Y. Ladrido. This case was docketed as Civil Case
No. 9660 of the Court of First Instance of Iloilo. Summoned to
plead, defendant Ladrido filed his answer with a counterclaim.
Plaintiffs filed their reply to the answer.
Subsequently, the complaint was amended to implead Rosendo
H. Te as another defendant. Plaintiffs sought the annulment of
the deed of sale and the restitution of the purchase price with
interest in the event the possession of defendant Ladrido is
sustained. Defendant Te filed his answer to the amended
complaint and he counter claimed for damages. Plaintiffs
answered the counterclaim.
During the pendency of the case, plaintiff Celso F. Viajar sold his
rights over Lot No. 7340 to his mother and co-plaintiff, Angelica

The facts admitted by the parties during the pre-trial show that
the piece of real property which used to be Lot No. 7340 of the
Cadastral Survey of Pototan was located in barangay
Guibuanogan Pototan, Iloilo; that it consisted of 20,089 square
meters; that at the time of the cadastral survey in 1926, Lot No.
7511 and Lot No. 7340 were separated by the Suague River; that
the area of 11,819 square meters of what was Lot No. 7340 has
been in the possession of the defendants; that the area of
14,036 square meters, which was formerly the river bed of the
Suague River per cadastral survey of 1926, has also been in the
possession of the defendants; and that the plaintiffs have never
been in actual physical possession of Lot No. 7340.
After trial on the merits, a second amended complaint which
included damages was admitted.
The plaintiffs raised the following issues to be resolved:
1. Whether the change in the course of
the Suague River was sudden as
claimed by the plaintiffs or gradual as
contended by the defendants;
2. Assuming arguendo it was gradual,
whether or not the plaintiffs are still
entitled to Lot "B' appearing in Exhibit

"4" and to one-half () of Lot "A," also

indicated in Exhibit "4;" and

Not satisfied with the decision, the plaintiffs appealed to the

Court of Appeals and assigned the following errors:

3. Damages (pp. 12-13, Rollo).

On December 10, 1981, the trial court rendered its decision, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor
of the defendants and against the plaintiffs:
1. Dismissing the complaint of plaintiffs
Angelica F. Viajar and Celso F. Viajar
with costs against them;
2. Declaring defendants Leonor P.
Ladrido,
Lourdes
Ladrido-Ignacio,
Eugenio P. Ladrido and Manuel P.
Ladrido as owner of the parcel of land
indicated as Lots A and B in the sketch
plan (Exhs. 'C' as well as '4,' '4-B' and
'4-C') situated in barangays Cawayan
and Guibuanogan Pototan, Iloilo, and
containing an area of 25,855 square
meters, more or less; and
3. Pronouncing that as owners of the
land described in the preceding
paragraph, the defendants are entitled
to the possession thereof.
Defendants' claim for moral
attorney's fees are dismissed.

damages

SO ORDERED (p. 36, Rollo).

and

I.
THE LOWER COURT ERRED IN NOT HOLDING THAT
PLAINTIFFS ARE ENTITLED TO LOT B APPEARING IN
EXHIBIT "4" AND TO ONE-HALF () OF LOT A IN THE
SAID EXHIBIT "4."
II
THE LOWER COURT ERRED IN NOT AWARDING
DAMAGES TO PLAINTIFFS (p. 42, Rollo).
As earlier stated, the Court of Appeals affirmed the decision of
the court a quo. Plaintiffs (the petitioners herein) now come to Us
claiming that the Court of Appeals palpably erred in affirming the
decision of the trial court on the ground that the change in the
course of the Suague River was gradual and not sudden.
In the decision appealed from, the Court of Appeals held:
This appeal is not impressed with merit.
Article 457 of the New Civil Code provides that:
Art. 457. To the owners of lands
adjoining the banks of rivers belong
the accretion which they gradually
receive from the effects of the current
of the waters.

The presumption is that the change in the course of

the river was gradual and caused by accretion and
erosion (Martinez Canas vs. Tuason, 5 Phil. 668;
Payatas Estate Improvement Co. vs. Tuason, 53 Phil.
55; C.H. Hodges vs. Garcia, 109 Phil. 133). In the
case at bar, the lower court correctly found that the
evidence introduced by the plaintiff to show that the
change in the course of the Suague River was
sudden or that it occurred through avulsion is not
clear and convincing.

consequent increase in the area of Lot No. 7511 due

to alluvion or accretion was possessed by the
defendants whose tenants plowed and planted the
same with coin and tobacco.

Contrariwise, the lower court found that:

What used to be the old river bed (Lot A) is in level

with Lot No. 7511. So are the two other areas to the
East. (Lots B and C) Lots A, B and C are still being
cultivated.

... the defendants have sufficiently established that

for many years after 1926 a gradual accretion on
the eastern side of Lot No. 7511 took place by
action of the current of the Suague River so that in
1979 an alluvial deposit of 29,912 square meters
(2.9912 hectares), more or less, had been added to
Lot No. 7511. (Exhs. '1' as well as Exhs. 'C' and '4').
Apropos it should be observed that the accretion
consisted of Lot A with an area of 14,036 square
meters; Lot B, 11,819 square meters; and Lot C,
4,057 square meters. (Exhs. '4-B,' '4-C' and '4-D').
Only Lot C is not involved in this litigation. (See Pretrial Order, supra)
The established facts indicate that the eastern
boundary of Lot No. 7511 was the Suague River
based on the cadastral plan. For a period of more
than 40 years (before 1940 to 1980) the Suague
River overflowed its banks yearly and the property
of the defendant gradually received deposits of soil
from the effects of the current of the river. The

The quondam river bed had been filled by accretion

through the years. The land is already plain and
there is no indication on the ground of any
abandoned river bed. The river bed is definitely no
longer discernible now.

Under the law, accretion which the banks or rivers

may gradually receive from the effects of the
current of the waters becomes the property of the
owners of the lands adjoining the banks. (Art. 366,
Old Civil Code; Art. 457, New Civil Code which took
effect on August 30, 1950 [Lara v. Del Rosario, 94
Phil. 778]. Therefore, the accretion to Lot No. 7511
which consists of Lots A and B (see Exhs. 'C' and '4')
belongs to the defendants (pp. 34-35, Record on
Appeal).
We find no cogent reason to disturb the foregoing
finding and conclusion of the lower court.
The second assignment of error is a mere offshoot
of the first assignment of error and does not
warrant further discussion (pp. 4244, Rollo).

The petition is without merit.

The petitioners contend that the first issue raised during the trial
of the case on the merits in the Court of First Instance, that is,
"whether the change in the course of the Suague River was
sudden as claimed by the plaintiffs or gradual as contended by
the defendants," was abandoned and never raised by them in
their appeal to the Court of Appeals. Hence, the Court of
Appeals, in holding that the appeal is without merit, because of
the change of the Suague River was gradual and not sudden,
disposed of the appeal on an issue that was never raised and,
accordingly, its decision is void. In support of its contention,
petitioners cite the following authorities:
It is a well-known principle in procedure that courts
of justice have no jurisdiction or power to decide a
question not in issue (Lim Toco vs. Go Fay, 80 Phil.
166).
A judgment going outside the issues and purporting
to adjudicate something upon which the parties
were not heard, is not merely irregular, but extrajudicial and invalid ( Salvante vs. Cruz, 88 Phil. 236244; Lazo vs. Republic Surety & Insurance Co., Inc.,
31 SCRA 329, 334).
The pivotal issue in the petitioners' appeal was whether the
change in the course of the Suague River was gradual or sudden
because the trial court below resolved the same in its decision
thus subjecting the same to review by respondent appellate
court. By simply abandoning this issue, the petitioners cannot
hope that the affirmance of the decision wherein this issue was
resolved makes the decision of the Court of Appeals void. In
effect, the petitioners are expounding a new procedural theory

that to render a questioned decision void, all that has to be done

is to simply abandon on appeal the pivotal issue as resolved by
the lower court and when its decision is affirmed on appeal,
attack the decision of the appellate court as void on the principle
that a court of justice has no jurisdiction or power to decide the
question not in issue. This is not correct. Even the authorities
cited by the petitioners, more specifically the Salvante and Lazo
cases, supra, do not support their contention. They were heard in
the trial court and they cannot complain that the proceeding
below was irregular and hence, invalid.
The trial court found that the change in the course of the Suague
River was gradual and this finding was affirmed by the
respondent Court of Appeals. We do not find any valid reason to
disturb this finding of fact.
Article 457 of the New Civil Code (reproduced from Article 366 of
the Old), the law applied by the courts a quoprovides:
Art. 457. To the owners of the lands adjoining the
banks of rivers belong the accretion which they
gradually receive from the effects of the current of
the waters.
Petitioners contend that this article must be read together with
Sections 45 an 46 of Act No. 496 which provides:
SEC. 45. 1 The obtaining of a decree of registration
and the entry of a certificate of title shall be
regarded as an agreement running with the land,
and binding upon the applicant and all successors in
title that the land shall be and always remain
registered land, and subject to the provisions of this
Act and all Acts amendatory thereof.

SEC. 46. 2 No title to registered land in derogation to

that of the registered owner shall be acquired by
prescription or adverse possession.
As a result, petitioners contend, Article 457 of the New Civil Code
must be construed to limit the accretion mentioned therein as
accretion of unregistered land to the riparian owner, and should
not extend to registered land. Thus, the lot in question having
remained the registered land of the petitioners, then the private
respondents cannot acquire title there in derogation to that of
the petitioners, by accretion, for that will defeat the
indefeasibility of a Torrens Title.
The rule that registration under the Torrens System does not
protect the riparian owner against the diminution of the area of
his registered land through gradual changes in the course of an
adjoining stream is well settled. InPayatas Estate Improvement
Co. vs. Tuason, 53 Phil. 55, We ruled:
The controversy in the present cases seems to be
due to the erroneous conception that Art. 366 of the
Civil Code does not apply to Torrens registered land.
That article provides that "any accretions which the
banks of rivers may gradually receive from the
effects of the current belong to the owners of the
estates bordering thereon." Accretions of that
character are natural incidents to land bordering on
running streams and are not affected by the
registration laws. It follows that registration does
not protect the riparian owner against diminution of
the area of his land through gradual changes in the
course of the adjoining stream.
In C.N. Hodges vs. Garcia, 109 Phil. 133, We also ruled:

It clearly appearing that the land in question has

become part of defendant's estate as a result of
accretion, it follows that said land now belongs to
him. The fact that the accretion to his land used to
pertain to plaintiffs estate, which is covered by a
Torrens Certificate of Title, cannot preclude him
(defendant) from being the owner thereof.
Registration does not protect the riparian owner
against the diminution of the area of his land
through gradual changes in the course of the
adjoining stream. Accretions which the banks of
rivers may gradually receive from the effect of the
current become the property of the owners of the
banks (Art. 366 of the Old Civil Code; Art. 457 of the
New). Such accretions are natural incidents to land
bordering on running streams and the provisions of
the Civil Code in that respect are not affected by the
Registration Act.
We find no valid reason to review and abandon the aforecited
rulings.
As the private respondents are the owners of the premises in
question, no damages are recoverable from them.
ACCORDINGLY, the petition is DISMISSED for lack of merit without
pronouncement as to costs.
SO ORDERED.

The ownership of the landholding eventually moved from one

person to another. On 9 May 1959, respondent Guillermo Manalo
acquired 8.65 hectares thereof from Faustina Taccad, daughter of
Judge Juan Taccad. The land sold was described in the Deed of
Absolute Sale 1 as follows:

SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR

MACUTAY, DOMINGO ROSALES, GREGORIO ARGONZA,
EUSTAQUIO BAUA, FLORENTINO ROSALES, TEODORO
MABBORANG, PATRICIO MABBORANG and FULGENCIO
MORA, petitioners
vs.
GUILLERMO MANALO and COURT OF APPEALS, respondents.
Josefin De Alban Law Office for Petitioners.
FELICIANO, J.:
The late Judge Taccad originally owned a parcel of land situated
in Tumauini, Isabela having an estimated area of twenty (20)
hectares. The western portion of this land bordering on the
Cagayan River has an elevation lower than that of the eastern
portion which borders on the national road. Through the years,
the western portion would periodically go under the waters of the
Cagayan River as those waters swelled with the coming of the
rains. The submerged portion, however, would re-appear during
the dry season from January to August. It would remain under
water for the rest of the year, that is, from September to
December during the rainy season.

. . . a parcel of agricultural land in Balug, Tumauini,

Isabela, containing an area of 8.6500 hectares, more or
less; bounded on the North by Francisco Forto on the East
by National Road; on South by Julian Tumolva and on the
West by Cagayan River; declared for taxation under Tax
Declaration No. 12681 in the name of Faustina Taccad, and
assessed at P 750.00. . . .
Later in 1964, respondent Manalo purchased another 1.80
hectares from Gregorio Taguba who had earlier acquired the
same from Judge Juan Taccad. The second purchase brought the
total acquisition of respondent Manalo to 10.45 hectares. The
second piece of property was more particularly described as
follows:
. . . a piece of agricultural land consisting of tobacco land,
and containing an area of 18,000 square meters, more or
less, bounded on the North by Balug Creek; on the South,
by Faustina Taccad (now Guillermo R. Manalo); on the East,
by a Provincial Road; and on the West, by Cagayan River
assessed at P 440.00, as tax Declaration No. 3152. . . . 2
During the cadastral survey conducted at Balug, Tumauini,
Isabela on 21 October 1969, the two (2) parcels of land
belonging to respondent Manalo were surveyed and consolidated
into one lot, designated as Lot No. 307, Pls-964. Lot 307 which
contains 4.6489 hectares includes: (a) the whole of the 1.80
hectares acquired from Gregorio Taguba; and (b) 2.8489 hectares

out of the 8.65 hectares purchased from Faustina Taccad. As the

survey was conducted on a rainy month, a portion of the land
bought from Faustina Taccad then under water was left
unsurveyed and was not included in Lot 307.
The Sketch Plan 3 submitted during the trial of this case and
which was identified by respondent Manalo shows that the
Cagayan River running from south to north, forks at a certain
point to form two (2) branchesthe western and the eastern
branchesand then unites at the other end, further north, to
form a narrow strip of land. The eastern branch of the river cuts
through the land of respondent Manalo and is inundated with
water only during the rainy season. The bed of the eastern
branch is the submerged or the unsurveyed portion of the land
belonging to respondent Manalo. For about eight (8) months of
the year when the level of water at the point where the Cagayan
River forks is at its ordinary depth, river water does not flow into
the eastern branch. While this condition persists, the eastern bed
is dry and is susceptible to cultivation.
Considering that water flowed through the eastern branch of the
Cagayan River when the cadastral survey was conducted, the
elongated strip of land formed by the western and the eastern
branches of the Cagayan River looked very much like an island.
This strip of land was surveyed on 12 December 1969. 4
It was found to have a total area of 22.7209 hectares and was
designated as Lot 821 and Lot 822. The area of Lot 822 is
10.8122 hectares while Lot 821 has an area of 11.9087 hectares.
Lot 821 is located directly opposite Lot 307 and is separated
from the latter only by the eastern branch of the Cagayan River
during the rainy season and, during the dry season, by the
exposed, dry river bed, being a portion of the land bought from
Faustina Taccad. Respondent Manalo claims that Lot 821 also

belongs to him by way of accretion to the submerged portion of

the property to which it is adjacent.
Petitioners who are in possession of Lot 821, upon the other
hand, insist that they own Lot 821. They occupy the outer edges
of Lot 821 along the river banks, i.e., the fertile portions on which
they plant tobacco and other agricultural products. They also
cultivate the western strip of the unsurveyed portion during
summer. 5 This situation compelled respondent Manalo to file a
case for forcible entry against petitioners on 20 May 1969. The
case was dismissed by the Municipal Court of Tumauini, Isabela
for failure of both parties to appear. On 15 December 1972,
respondent Manalo again filed a case for forcible entry against
petitioners. The latter case was similarly dismissed for lack of
jurisdiction by the Municipal Court of Tumauini, Isabela.
On 24 July 1974, respondent Manalo filed a complaints 6 before
the then Court of First Instance of Isabela, Branch 3 for quieting
of title, possession and damages against petitioners. He alleged
ownership of the two (2) parcels of land he bought separately
from Faustina Taccad and Gregorio Taguba for which reason he
prayed that judgment be entered ordering petitioners to vacate
the western strip of the unsurveyed portion. Respondent Manalo
likewise prayed that judgment be entered declaring him as
owner of Lot 821 on which he had laid his claim during the
survey.
Petitioners filed their answer denying the material allegations of
the complaint. The case was then set for trial for failure of the
parties to reach an amicable agreement or to enter into a
stipulation of facts. 7 On 10 November 1982, the trial court
rendered a decision with the following dispositive portion:

WHEREFORE, in the light of the foregoing premises, the

Court renders judgment against the defendants and in
favor of the plaintiff and orders:
1. That plaintiff, Guillermo Manalo, is declared the lawful
owner of the land in question, Lot No. 821, Pls-964 of
Tumauini Cadastre, and which is more particularly
described in paragraph 2-b of the Complaint;
2. That the defendants are hereby ordered to vacate the
premises of the land in question, Lot No. 821, Pls-964 of
Tumauini Cadastre, and which is more particularly
described in paragraph 2-b of the Complaint;
3. That the defendants are being restrained from entering
the premises of the land in question, Lot No. 821, Pls-964
of Tumauini Cadastre, and which is more particularly
described in paragraph 2-b of the Complaint; and
4. That there is no pronouncement as to attorney's fees
and costs.
SO ORDERED.

Petitioners appealed to the Court of Appeals which, however,

affirmed the decision of the trial court. They filed a motion for
reconsideration, without success.
While petitioners insist that Lot 821 is part of an island
surrounded by the two (2) branches of the Cagayan River, the
Court of Appeals found otherwise. The Court of Appeals
concurred with the finding of the trial court that Lot 821 cannot
be considered separate and distinct from Lot 307 since the
eastern branch of the Cagayan River substantially dries up for

the most part of the year such that when this happens, Lot 821
becomes physically (i.e., by land) connected with the dried up
bed owned by respondent Manalo. Both courts below in effect
rejected the assertion of petitioners that the depression on the
earth's surface which separates Lot 307 and Lot 821 is, during
part of the year, the bed of the eastern branch of the Cagayan
River.
It is a familiar rule that the findings of facts of the trial court are
entitled to great respect, and that they carry even more weight
when affirmed by the Court of Appeals. 9 This is in recognition of
the peculiar advantage on the part of the trial court of being able
to observe first-hand the deportment of the witnesses while
testifying. Jurisprudence is likewise settled that the Court of
Appeals is the final arbiter of questions of fact. 10 But whether a
conclusion drawn from such findings of facts is correct, is a
question of law cognizable by this Court. 11
In the instant case, the conclusion reached by both courts below
apparently collides with their findings that periodically at the
onset of and during the rainy season, river water flows through
the eastern bed of the Cagayan River. The trial court held:
The Court believes that the land in controversy is of the
nature and character of alluvion (Accretion), for it appears
that during the dry season, the body of water separating
the same land in controversy (Lot No. 821, Pls-964) and
the two (2) parcels of land which the plaintiff purchased
from Gregorio Taguba and Justina Taccad Cayaba becomes
a marshy land and is only six (6) inches deep and twelve
(12) meters in width at its widest in the northern tip (Exhs.
"W", "W-l", "W-2", "W-3" and "W-4"), It has been held by
our Supreme Court that "the owner of the riparian land
which receives the gradual deposits of alluvion, does not

have to make an express act of possession. The law does

not require it, and the deposit created by the current of
the water becomes manifest" (Roxas vs. Tuazon, 6 Phil.
408). 12
The Court of Appeals adhered substantially to the conclusion
reached by the trial court, thus:
As found by the trial court, the disputed property is not an
island in the strict sense of the word since the eastern
portion of the said property claimed by appellants to be
part of the Cagayan River dries up during summer.
Admittedly, it is the action of the heavy rains which comes
during rainy season especially from September to
November which increases the water level of the Cagayan
river. As the river becomes swollen due to heavy rains, the
lower portion of the said strip of land located at its
southernmost point would be inundated with water. This is
where the water of the Cagayan river gains its entry.
Consequently, if the water level is high the whole strip of
land would be under water.
In Government of the Philippine Islands vs. Colegio de San Jose,
it was held that
According to the foregoing definition of the words
"ordinary" and "extra-ordinary," the highest depth of the
waters of Laguna de Bay during the dry season is the
ordinary one, and the highest depth they attain during the
extra-ordinary one (sic); inasmuch as the former is the one
which is regular, common, natural, which occurs always or
most of the time during the year, while the latter is
uncommon, transcends the general rule, order and
measure, and goes beyond that which is the ordinary

depth. If according to the definition given by Article 74 of

the Law of Waters quoted above, the natural bed or basin
of the lakes is the ground covered by their waters when at
their highest ordinary depth, the natural bed or basin of
Laguna de Bay is the ground covered by its waters when
at their highest depth during the dry season, that is up to
the northeastern boundary of the two parcels of land in
question.
We find the foregoing ruling to be analogous to the case at bar.
The highest ordinary level of the waters of the Cagayan River is
that attained during the dry season which is confined only on the
west side of Lot [821] and Lot [822]. This is the natural Cagayan
river itself. The small residual of water between Lot [821] and
307 is part of the small stream already in existence when the
whole of the late Judge Juan Taccad's property was still
susceptible to cultivation and uneroded. 13
The Court is unable to agree with the Court of Appeals
that Government of the Philippine Islands vs. Colegio de San
Jose 14 is applicable to the present case. That case involved
Laguna de Bay; since Laguna de Bay is a lake, the Court applied
the legal provisions governing the ownership and use of lakes
and their beds and shores, in order to determine the character
and ownership of the disputed property. Specifically, the Court
applied the definition of the natural bed or basin of lakes found in
Article 74 of the Law of Waters of 3 August 1866. Upon the other
hand, what is involved in the instant case is the eastern bed of
the Cagayan River.
We believe and so hold that Article 70 of the Law of Waters of 3
August 1866 is the law applicable to the case at bar:

Art. 70. The natural bed or channel of a creek or river

is the ground covered by its waters during the highest
floods. (Emphasis supplied)
We note that Article 70 defines the natural bed or channel of a
creek or river as the ground covered by its waters during
the highest floods. The highest floods in the eastern branch of
the Cagayan River occur with the annual coming of the rains as
the river waters in their onward course cover the entire
depressed portion. Though the eastern bed substantially dries up
for the most part of the year (i.e., from January to August), we
cannot ignore the periodical swelling of the waters ( i.e., from
September to December) causing the eastern bed to be covered
with flowing river waters.
The conclusion of this Court that the depressed portion is a river
bed rests upon evidence of record.1wphi1 Firstly, respondent
Manalo admitted in open court that the entire area he bought
from Gregorio Taguba was included in Lot 307. 15 If the 1.80
hectares purchased from Gregorio Taguba was included in Lot
307, then the Cagayan River referred to as the western boundary
in the Deed of Sale transferring the land from Gregorio Taguba to
respondent Manalo as well as the Deed of Sale signed by
Faustina Taccad, must refer to the dried up bed (during the dry
months) or the eastern branch of the river (during the rainy
months). In the Sketch Plan attached to the records of the case,
Lot 307 is separated from the western branch of the Cagayan
River by a large tract of land which includes not only Lot 821 but
also what this Court characterizes as the eastern branch of the
Cagayan River.
Secondly, the pictures identified by respondent Manalo during
his direct examination depict the depressed portion as a river
bed. The pictures, marked as Exhibits "W" to "W-4", were taken

in July 1973 or at a time when the eastern bed becomes

visible. 16 Thus, Exhibit "W-2" which according to respondent
Manalo was taken facing the east and Exhibit "W-3" which was
taken facing the west both show that the visible, dried up portion
has a markedly lower elevation than Lot 307 and Lot 821. It has
dike-like slopes on both sides connecting it to Lot 307 and Lot
821 that are vertical upward and very prominent. This
topographic feature is compatible with the fact that a huge
volume of water passes through the eastern bed regularly during
the rainy season. In addition, petitioner Ponciano Gannaban
testified that one had to go down what he called a "cliff" from the
surveyed portion of the land of respondent Manalo to the
depressed portion. The cliff, as related by petitioner Gannaban,
has a height of eight (8) meters. 17
The records do not show when the Cagayan River began to carve
its eastern channel on the surface of the earth. However, Exhibit
"E" 18 for the prosecution which was the Declaration of Real
Property standing in the name of Faustina Taccad indicates that
the eastern bed already existed even before the sale to
respondent Manalo. The words "old bed" enclosed in parentheses
perhaps written to make legitimate the claim of private
ownership over the submerged portionis an implied admission
of the existence of the river bed. In the Declaration of Real
Property made by respondent Manalo, the depressed portion
assumed the name Rio Muerte de Cagayan. Indeed, the steep
dike-like slopes on either side of the eastern bed could have
been formed only after a prolonged period of time.
Now, then, pursuant to Article 420 of the Civil Code, respondent
Manalo did not acquire private ownership of the bed of the
eastern branch of the river even if it was included in the deeds of
absolute sale executed by Gregorio Taguba and Faustina Taccad
in his favor. These vendors could not have validly sold land that

constituted property of public dominion. Article 420 of the Civil

Code states:
The following things are property of public dominion:
(1) Those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by
the State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for
public use, and are intended for some public service or for
the development of the national wealth. (Emphasis
supplied)
Although Article 420 speaks only of rivers and banks, "rivers" is a
composite term which includes: (1) the running waters, (2) the
bed, and (3) the banks. 19 Manresa, in commenting upon Article
339 of the Spanish Civil Code of 1889 from which Article 420 of
the Philippine Civil Code was taken, stressed the public
ownership of river beds:
La naturaleza especial de los rios, en punto a su disfrute
general, hace que sea necesario considerar en su relacion
de dominio algo mas que sus aguas corrientes. En
efecto en todo rio es preciso distinguir 1. esta agua
corriente; 2. el alveo o cauce, y 3. las riberas. Ahora bien:
son estas dos ultimas cosas siempre de dominio publico,
como las aguas?
Realmente no puede imaginarse un rio sin alveo y sin
ribera; de suerte que al decir el Codigo civil que los rios
son de dominio publico, parece que debe ir implicito el
dominio publico de aquellos tres elementos que integran

el rio. Por otra parte, en cuanto a los alveos o cauces

tenemos la declaracion del art. 407, num 1, donde
dice: son de dominion publico . . . los rios y sus cauces
naturales; declaracion que concuerda con lo que dispone
el art. 34 de la ley de [Aguas], segun el cual, son de
dominion publico: 1. los alveos o cauces de los
arroyos que no se hallen comprendidos en el art. 33, y
2. los alveos o cauces naturales de los riosen la extension
que cubran sus aguas en las mayores crecidas
ordinarias. 20 (Emphasis supplied)
The claim of ownership of respondent Manalo over the
submerged portion is bereft of basis even if it were alleged and
proved that the Cagayan River first began to encroach on his
property after the purchase from Gregorio Taguba and Faustina
Taccad. Article 462 of the Civil Code would then apply divesting,
by operation of law, respondent Manalo of private ownership
over the new river bed. The intrusion of the eastern branch of
the Cagayan River into his landholding obviously prejudiced
respondent Manalo but this is a common occurrence since
estates bordering on rivers are exposed to floods and other evils
produced by the destructive force of the waters. That loss is
compensated by, inter alia, the right of accretion acknowledged
by Article 457 of the Civil Code. 21 It so happened that instead of
increasing the size of Lot 307, the eastern branch of the Cagayan
River had carved a channel on it.
We turn next to the issue of accretion. After examining the
records of the case, the Court considers that there was no
evidence to prove that Lot 821 is an increment to Lot 307 and
the bed of the eastern branch of the river. Accretion as a mode of
acquiring property under Article 457 of the Civil Code requires
the concurrence of three (3) requisites: (a) that the deposition of
soil or sediment be gradual and imperceptible; (b) that it be the

result of the action of the waters of the river (or sea); and (c)
that the land where accretion takes place is adjacent to the
banks of rivers (or the sea coast). 22 The Court notes that the
parcels of land bought by respondent Manalo border on the
eastern branch of the Cagayan River. Any accretion formed by
this eastern branch which respondent Manalo may claim must be
deposited on or attached to Lot 307. As it is, the claimed
accretion (Lot 821) lies on the bank of the river not adjacent to
Lot 307 but directly opposite Lot 307 across the river.
Assuming (arguendo only) that the Cagayan River referred to in
the Deeds of Sale transferring ownership of the land to
respondent Manalo is the western branch, the decision of the
Court of Appeals and of the trial court are bare of factual findings
to the effect that the land purchased by respondent Manalo
received alluvium from the action of the aver in a slow and
gradual manner. On the contrary, the decision of the lower court
made mention of several floods that caused the land to reappear
making it susceptible to cultivation. A sudden and forceful action
like that of flooding is hardly the alluvial process contemplated
under Article 457 of the Civil Code. It is the slow and hardly
perceptible accumulation of soil deposits that the law grants to
the riparian owner.
Besides, it is important to note that Lot 821 has an area of 11.91
hectares. Lot 821 is the northern portion of the strip of land
having a total area of 22.72 hectares. We find it difficult to
suppose that such a sizable area as Lot 821 resulted from slow
accretion to another lot of almost equal size. The total
landholding purchased by respondent Manalo is 10.45 hectares
(8.65 hectares from Faustina Taccad and 1.80 hectares from
Gregorio Taguba in 1959 and 1964, respectively), in fact even
smaller than Lot 821 which he claims by way of accretion. The
cadastral survey showing that Lot 821 has an area of 11.91

hectares was conducted in 1969. If respondent Manalo's

contention were accepted, it would mean that in a span of only
ten (10) years, he had more than doubled his landholding by
what the Court of Appeals and the trial court considered as
accretion. As already noted, there are steep vertical dike-like
slopes separating the depressed portion or river bed and Lot 821
and Lot 307. This topography of the land, among other things,
precludes a reasonable conclusion that Lot 821 is an increment
to the depressed portion by reason of the slow and constant
action of the waters of either the western or the eastern
branches of the Cagayan River.
We turn finally to the issue of ownership of Lot 821. Respondent
Manalo's claim over Lot 821 rests on accretion coupled with
alleged prior possession. He alleged that the parcels of land he
bought separately from Gregorio Taguba and Faustina Taccad
were formerly owned by Judge Juan Taccad who was in
possession thereof through his (Judge Taccad's) tenants. When
ownership was transferred to him, respondent Manalo took over
the cultivation of the property and had it declared for taxation
purposes in his name. When petitioners forcibly entered into his
property, he twice instituted the appropriate action before the
Municipal Trial Court of Tumauini, Isabela. Against respondent
Manalo's allegation of prior possession, petitioners presented tax
declarations standing in their respective names. They claimed
lawful, peaceful and adverse possession of Lot 821 since 1955.
If respondent Manalo had proved prior possession, it was limited
physically to Lot 307 and the depressed portion or the eastern
river bed. The testimony of Dominga Malana who was a tenant
for Justina Taccad did not indicate that she was also cultivating
Lot 821. In fact, the complaints for forcible entry lodged before
the Municipal Trial Court of Tumauini, Isabela pertained only to
Lot 307 and the depressed portion or river bed and not to Lot

821. In the same manner, the tax declarations presented by

petitioners conflict with those of respondent Manalo. Under
Article 477 of the Civil Code, the plaintiff in an action for quieting
of title must at least have equitable title to or interest in the real
property which is the subject matter of the action. The evidence
of record on this point is less than satisfactory and the Court
feels compelled to refrain from determining the ownership and
possession of Lot 821, adjudging neither petitioners nor
respondent Manalo as owner(s) thereof.
WHEREFORE, the Decision and Resolution of the Court of Appeals
in CA-GR CV No. 04892 are hereby SET ASIDE. Respondent
Manalo is hereby declared the owner of Lot 307. The regularly
submerged portion or the eastern bed of the Cagayan River is
hereby DECLARED to be property of public dominion. The
ownership of Lot 821 shall be determined in an appropriate
action that may be instituted by the interested parties inter se.
No pronouncement as to costs.
SO ORDERED.

ROSENDO
BALUCANAG, Petitioner,
ALBERTO
J.
FRANCISCO
STOHNER, Respondents.

vs. HON.
JUDGE
and
RICHARD

ESCOLIN, J.:
This petition for review of the decision of the Court of First
Instance of Manila in Civil Case No. 67503 calls for a
determination of the respective rights of the lessor and the
lessee over the improvements introduced by the latter in the
leased premises.chanroblesvirtualawlibrarychanrobles virtual law
library
Cecilia dela Cruz Charvet was the owner of a 177.50 square
meter lot located in Zamora Street, Pandacan, Manila, covered
by Transfer Certificate of Title No. 25664. On August 31, 1952,
Mrs. Charvet leased said lot to respondent Richard Stohner for a
period of five [5] years at the monthly rental of 2140.00, payable
in advance within the first ten [10] days of each month. The
lease contract 1 provided, among others, that:
IV. The lessee may erect such buildings upon and make such
improvements to the leased land as he shag see fit. All such
buildings and improvements shall remain the property of the
lessee and he may remove them at any nine, it being agreed,
however, that should he not remove the said buildings and
improvements within a period of two months after the expiration
of this Agreement, the Lessor may remove the said buildings and
improvements or cause them to be removed at the expense of
the Lessee.

During the existence of the lease, Stohner made fillings on the

land and constructed a house thereon, said improvements being
allegedly
valued
at
P35,000.00.chanroblesvirtualawlibrarychanrobles
virtual
law
library
On March 8, 1966, Mrs. Charvet sold the said lot to petitioner
Rosendo Balucanag. 2chanrobles virtual law library
For Stohner's failure to pay the rents, Balucanag, thru counsel,
wrote Stohner a letter demanding that he vacate the
premises. 3 In reply thereto, Stohner, also thru counsel, claimed
that he was a builder in good faith of the residential house
erected in the land. He offered the following proposals for a
possible compromise, to wit:
[a] Mr. Stohner will purchase the said lot from your client with the
interest of 12% per annum on the value, orchanrobles virtual law
library
[b] Your client Mr. Rosendo Balucanag will reimburse our client in
the total amount of P35,000.00 for the improvements and
construction he has made on the lot in question.
As no agreement was reached, Balucanag instituted in the City
Court of Manila an ejectment suit against Stohner and, after due
trial, the court rendered a decision, the decretal portion of which
reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is
hereby rendered, ordering the defendant to pay the plaintiff the
sum of P360.00 as back rentals from December, 1965 to August
1966 at the rate of P40.00 a month and to vacate the premises.
The defendant is further ordered to pay the sum of P100.00 as

Attomey's fees which is considered reasonable within the

premises.
On appeal, the Court of First Instance of Manila, Branch IX,
presided by respondent Judge Alberto J. Francisco, after
conducting a trial de novo, rendered a decision, setting aside the
judgment of the city court and dismissing the petitioner's
complaint. Respondent judge held that Stohner was a builder in
good faith because he had constructed the residential house with
the consent of the original lessor, Mrs. Charvet, and also because
the latter, after the expiration of the lease contract on August
31, 1957, had neither sought Stohner's ejectment from the
premises, nor the removal of his house therefrom. Invoking
Articles 448 and 546 of the Civil Code. 4 respondent judge
concluded that Stohner, being a builder in good faith, cannot be
ejected until he is reimbursed of the value of the
improvements.chanroblesvirtualawlibrarychanrobles virtual law
library
Frustrated in his effort to have the decision reconsidered,
Balucanag
filed
the
instant
petition
for
review.chanroblesvirtualawlibrarychanrobles virtual law library
We find the petition impressed with merit. Paragraph IV of the
lease contract entered into by Stohner with Mrs. Charvet
specifically provides that "... such buildings and improvements
shan remain the property of the lessee and he may remove them
at any time, it being agreed, however, that should he not remove
the said buildings and improvements within a period of two
months after the expiration of this Agreement, the Lessor may
remove the said buildings and improvements or cause them to
be removed at the expense of the Lessee." Respondent Stohner
does not assail the validity of this stipulation, Neither has he

advanced any reason why he should not be bound

it.chanroblesvirtualawlibrarychanrobles virtual law library

by

But even in the absence of said stipulation, respondent Stohner

cannot be considered a builder in good faith. Article 448 of the
Civil Code, relied upon by respondent judge, applies only to a
case where one builds on land in the belief that he is the owner
thereof and it does not apply where one's only interest in the
land is that of a lessee under a rental contract. In the case at
bar, there is no dispute that the relation between Balucanag and
Stohner is that of lessor and lessee, the former being the
successor in interest of the original owner of the lot. As we ruled
in Lopez, Inc. vs. Phil. and Eastern Trading Co., Inc., 5 "... the
principle of possessor in good faith refers only to a party who
occupies or possess property in the belief that he is the owner
thereof and said good faith ends only when he discovers a flaw in
his title so as to reasonably advise or inform him that after all he
may not be the legal owner of said property. It cannot apply to a
lessee because as such lessee he knows that he is not the owner
of he leased premises. Neither can he deny the ownership or title
of his lessor. ... A lessee who introduces improvements in the
leased premises, does so at his own risk in the sense that he
cannot recover their value from the lessor, much less retain the
premises until such reimbursement. ..."chanrobles virtual law
library
The law applicable to the case at bar is Article 1678 of the Civil
Code, which We quote:
Art. 1678. If the lessee makes, in good faith, useful
improvements which are suitable to the use for which the lease
is intended, without altering the form or substance of the
property leased, the lessor upon the termination of the lease
shall pay the lessee one-half of the value of the improvements at

the time. Should the lessor refuse to reimburse said amount, the
lessee may remove the improvements, even though the principal
thing may suffer damage thereby. He shall not, however, cause
any more impairment upon the property leased than is
necessary. ...
This article gives the lessor the option to appropriate the useful
improvements by paying one-half of their value, 6 And the lessee
cannot compel the lessor to appropriate the improvements and
make reimbursement, for the lessee's right under the law is to
remove the improvements even if the leased premises may
suffer damage thereby. But he shall not cause any more damage
upon
the
property
than
is
necessary.chanroblesvirtualawlibrarychanrobles
virtual
law
library
One last point. It appears that while the lease contract entered
into by Stohner and Mrs. Charvet had expired on August 31,
1957, he nevertheless continued in possession of the premises
with the acquiescence of Mrs. Charvet and later, of Balucanag.
An implied new lease or tacita reconduccion was thus created
between the parties, the period of which is established by Article
1687 of the Civil Code thus:
Art. 1687. If the period for the lease has not been fixed, it is
understood to be from year to year, if the rent agreed upon is
annual; from month to month, if it is monthly: from week to
week, if the rent is weekly: and from day to day, if the rent is to
be paid daily. ...
Under the above article, the duration of the new lease must be
deemed from month to month, the agreed rental in the instant
case being payable on a monthly basis. The lessor may thus
terminate the lease after each month with due notice upon the

lessee. After such notice, the lessee's right to continue in

possession ceases and his possession becomes one of detainer.
Furthermore, Stohner's failure to pay the stipulated rentals
entities
petitioner
to
recover
possession
of
the
premises.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, the decision in Civil Case No. 67503 is hereby set
aside, with costs against respondent Stohner. The latter is
ordered to vacate the premises in question and to pay Rogelio
Balucanag the rentals due from March 1969 up to the time he
surrenders the premises, at the rate of P40.00 a
month.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.
THE
MUNICIPALITY
OF
OAS,Plaintif-Appellee,
vs. BARTOLOME ROA,Defendant-Appellant.
Del-Pan,
Ortigas
and
Enrique Llopiz for appellee.

Fisher,

for

appellant.

WILLARD, J.:
The plaintiff brought this action for the recovery of a tract of land
in the pueblo of Oas, claiming that it was a part of the public
square of said town. The defendant in his answer alleged that he
was the owner of the property. Judgment was rendered in favor
of the plaintiff and the defendant has brought the case here by
bill of exceptions.chanroblesvirtualawlibrary chanrobles virtual
law library
As we look at the case, the only question involved is one of fact.
Was the property in question a part of the public square of the
town of Oas? The testimony upon this point in favor of the

plaintiff consisted of statements made by witnesses to the effect

that this land had always been a part of the public square, and of
certain resolutions adopted by the principalia of the pueblo
reciting the same fact, the most important of these being the
minutes of the meeting of the 27th of February, 1892. In that
document it is expressly stated that this land was bought in 1832
by the then parish priest for the benefit of the pueblo. It recites
various proceedings taken thereafter in connection with this
ownership, including among them an order of the corregidor of
Nueva Caceres prohibiting the erection of houses upon the land
by reason of the fact above recited - namely, that the land
belonged to the pueblo. This resolution terminated with an order
to the occupant of the building then standing upon the property
that he should not repair it. The defendant signed this
resolution.chanroblesvirtualawlibrary chanrobles
virtual
law
library
It further appears that the same building was almost entirely
destroyed by a baguio on the 13th and 14th of May, 1893, and
that the authorities of the puebo ordered the complete
demolition thereof. The resolution of the 31st of May, 1893,
declared that the then owner of the building, Jose Castillo, had
no right to reconstruct it because it was situated upon land
which did not belong to him. This resolution was also signed by
the defendant.chanroblesvirtualawlibrary chanrobles virtual law
library
The evidence on the part of the defendant tends to show that in
1876 Juana Ricarte and Juana Riquiza sold the land in question to
Juan Roco, and that on the 17th day of December, 1894, Jose
Castillo sold it to the defendant. No deed of conveyance from
Juan Roco to Jose Castillo was presented in evidence, but Castillo,
testifying as a witness, said that he had bought the property by
verbal contract from Roco, his father-in-law. The defendant, after

his purchase in 1894, procured a possessory of information

which was allowed by an order of the justice of the peace of Oas
on the 19th day of January, 1895, and recorded in the Registry of
Property
on
the
28th
of
March
of
the
same
year.chanroblesvirtualawlibrary chanrobles virtual law library
In this state of the evidence, we can not say that the proof is
plainly and manifestly against the decision of the court below.
Unless it is so, the finding of fact made by that court can not be
reversed. (De la Rama vs. De la Rama, 201 U. S.,
303.) chanrobles virtual law library
The two statements signed by Roa, one in 1892 and the other in
1893, are competent evidence against him. They are admissions
by him to the effect that at that time the pueblo was the owner
of the property in question. They are, of course, not conclusive
against him. He was entitled to, and did present evidence to
overcome the effect of these admissions. The evidence does not
make out a case of estoppel against him. (sec. 333, par. 1, Code
of Civil Procedure.) chanrobles virtual law library
The admissibility of these statements made by Roa do not rest
upon section 278 of the Code of Civil Procedure, which relates to
declarations or admissions made by persons not a party to the
suit, but it rests upon the principle that when the defendant in a
suit has himself made an admission of any fact pertinent to issue
involved,
it
can
be
received
against
him.chanroblesvirtualawlibrary chanrobles virtual law library
This action was commenced on the 17th of December, 1902.
There is no evidence of any adverse occupation of this land for
thirty years, consequently the extraordinary period of
prescription does not apply. The defendant can not rely upon the
ordinary period of prescription of ten years because he was not a

holder in good faith. He knew at that time of his purchase in

1894, and had so stated in writing, that the pueblo was the
owner of the property. So that, even if the statute of limitations
ran against a municipality in reference to a public square, it
could
not
avail
the
defendant
in
this
case.chanroblesvirtualawlibrary chanrobles virtual law library
It appears that Roa has constructed upon the property, and that
there now stands thereon, a substantial building. As early as
1852 this land had been used by the municipality constructed
thereon buildings for the storage of property of the State,
quarters for the cuadrilleros, and others of a like character. It
therefore had ceased to be property used by the public and had
become a part of the bienes patrimoniales of the pueblo. (Civil
Code, arts. 341, 344.) To the case are applicable those provisions
of the Civil Code which relate to the construction by one person
of a building upon land belonging to another. Article 364 of the
Civil Code is as follows:
Where there has been bad faith, not only on the part of the
person who built, sowed, or planted on another's land, but also
on the part of the owner of the latter, the rights of both shall be
the
same
as
if
they
had
acted
in
good
faith.chanroblesvirtualawlibrary chanrobles virtual law library
Bad faith on the part of the owner is understood whenever the
act has been executed in his presence with his knowledge and
tolerance and without objection.
The defendant constructed the building in bad faith for, as we
have said, he had knowledge of the fact that his grantor was not
the owner thereof. There was a bad faith also on the part of the
plaintiff in accordance with the express provisions of article 364
since it allowed Roa to construct the building without any

opposition on its part and to so occupy it for eight years. The

rights of the parties must, therefore, be determined as if they
both had acted in good faith. Their rights in such cases are
governed by article 361 of the Civil Code, which is as follows:
The owner of the land on which the building, sowing, or planting
is done in good faith shall have a right to appropriate as his own
the work, sowing, or planting after the indemnity mentioned in
articles 453 and 454, or, to oblige the person who has built or
planted, to pay him the value of the land and to force the person
who sowed to pay the proper rent.
The judgment of the court below is so modified as to declare that
the plaintiff is the owner of the land and that it has the option of
buying the building thereon, which is the property of the
defendant, or of selling to him the land on which it stands. The
plaintiff
is
entitled
to
recover
the
costs
of
both
instances.chanroblesvirtualawlibrary chanrobles
virtual
law
library
After the expiration of twenty days let judgment be entered in
accordance herewith and at the proper time thereafter let the
record be remanded to the court below for proper action. So
ordered.chanroblesvirtual

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM

(MWSS), Petitioner, v.COURT OF APPEALS, HON. PERCIVAL
LOPEZ,
AYALA
CORPORATION
and
AYALA
LAND,
INC., Respondents.
G.R. No. 128520. October 7, 1998
METROPOLITAN
WATERWORKS
AND
SEWERAGE
SYSTEM, Petitioner, v. HON. PERCIVAL MANDAP LOPEZ,
CAPITOL HILLS GOLF AND COUNTRY CLUB INC.,
SILHOUETTE TRADING CORPORATION, and PABLO ROMAN
JR., Respondents.

DECISION
MARTINEZ, J.:
These are consolidated petitions for review emanating from Civil
Case No. Q-93-15266 of the Regional Trial Court of Quezon City,
Branch 78, entitled "Metropolitan Waterworks and Sewerage
System (hereafter MWSS) vs. Capitol Hills Golf & Country Club
Inc. (hereafter, CHGCCI), STC (hereafter, SILHOUETTE), Ayala
Corporation, Ayala Land, Inc.(hereafter AYALA) Pablo Roman, Jr.,

Josefino Cenizal, Jose A. Roxas, Jesus Hipolito, Alfredo Juinio,

National Treasurer of the Philippines and the Register of Deeds
of Quezon City."
From the voluminous pleadings and other documents submitted
by the parties and their divergent styles in the presentation of
the facts, the basic antecedents attendant herein are as follows:
Sometime in 1965, petitioner MWSS (then known as NAWASA)
leased around one hundred twenty eight (128) hectares of its
land (hereafter, subject property) to respondent CHGCCI
(formerly the International Sports Development Corporation) for
twenty five (25) years and renewable for another fifteen (15)
years or until the year 2005, with the stipulation allowing the
latter to exercise a right of first refusal should the subject
property be made open for sale. The terms and conditions of
respondent CHGCCI's purchase thereof shall nonetheless be
subject to presidential approval.
Pursuant to Letter of Instruction (LOI) No. 440 issued on July 29,
1976 by then President Ferdinand E. Marcos directing petitioner
MWSS to negotiate the cancellation of the MWSS-CHGCCI lease
agreement for the disposition of the subject property, Oscar
Ilustre, then General Manager of petitioner MWSS, sometime in
November of 1980 informed respondent CHGCCI, through its
president herein respondent Pablo Roman, Jr., of its preferential
right to buy the subject property which was up for sale.
Valuadation thereof was to be made by an appraisal company of
petitioner MWSS'choice, the Asian Appraisal Co., Inc. which, on
January 30, 1981, pegged a fair market value of P40.00 per
square meter or a total of P53,800,000.00 for the subject
property.

Upon being informed that petitioner MWSS and respondent

CHGCCI had already agreed in principle on the purchase of the
subject property, President Marcos expressed his approval of the
sale as shown in his marginal note on the letter sent by
respondents Jose Roxas and Pablo Roman, Jr. dated December
20, 1982.
The Board of Trustees of petitioner MWSS thereafter passed
Resolution 36-83, approving the sale of the subject property in
favor of respondent SILHOUETTE, as assignee of respondent
CHGCCI, at the appraised value given by Asian Appraisal Co., Inc.
Said Board Resolution reads:
"NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved,
that in accordance with Section 3, Par. (g) of the MWSS Charter
and subject to the approval of the President of the Philippines,
the sale of a parcel of land located in Balara, Quezon City,
covered by TCT No. 36069 of the Registry of Deeds of Quezon
City, containing an area of ONE HUNDRED TWENTY SEVEN
(127.313) hectares more or less, which is the remaining portion
of the area under lease after segregating a BUFFER ZONE
already surveyed along the undeveloped area near the
treatment plant and the developed portion of the CHGCCI golf
course, to SILHOUETTE TRADING CORPORATION as Assignee of
Capitol Hills Golf & Country Club, Inc., at FORTY (P40.00) PESOS
per square meter, be and is hereby approved.
"BE IT RESOLVED FURTHER, that the General Manager be
authorized, as he is hereby authorized to sign for and in behalf of
the MWSS the contract papers and other pertinent documents
relative thereto."
The MWSS-SILHOUETTE sales agreement eventually pushed
through. Per the Agreement dated May 11, 1983 covering said

purchase,
the
total
price
for
the
subject
property
isP50,925,200, P25 Million of which was to be paid upon
President Marcos' approval of the contract and the balance to be
paid within one (1) year from the transfer of the title to
respondent SILHOUETTE as vendee with interest at 12% per
annum. The balance was also secured by an irrevocable letter of
credit. A Supplemental Agreement was forged between
petitioner MWSS and respondent SILHOUETTE on August 11,
1983 to accurately identify the subject property.
Subsequently, respondent SILHOUETTE, under a deed of sale
dated July 26, 1984, sold to respondent AYALA about sixty-seven
(67) hectares of the subject property at P110.00 per square
meter. Of the total price of around P74 Million, P25 Million was to
be paid by respondent AYALA directly to petitioner MWSS for
respondent SILHOUETTE's account andP2 Million directly to
respondent SILHOUETTE. P11,600,000 was to be paid upon the
issuance of title in favor of respondent AYALA, and the remaining
balance to be payable within one (1) year with 12% per annum
interest.
Respondent AYALA developed the land it purchased into a prime
residential area now known as the Ayala Heights Subdivision.
Almost a decade later, petitioner MWSS on March 26, 1993 filed
an action against all herein named respondents before the
Regional Trial Court of Quezon City seeking for the declaration of
nullity of the MWSS-SILHOUETTE sales agreement and all
subsequent conveyances involving the subject property, and for
the recovery thereof with damages.
Respondent AYALA filed its answer pleading the affirmative
defenses
of
(1)
prescription,
(2)
laches,
(3)
waiver/estoppel/ratification, (4) no cause of action, (5) non-

joinder of indispensable parties, and (6) non-jurisdiction of the

court for non-specification of amount of damages sought.
On June 10, 1993; the trial court issued an Order dismissing the
complaint of petitioner MWSS on grounds of prescription, laches,
estoppel and non-joinder of indispensable parties.
Petitioner MWSS's motion for reconsideration of such Order was
denied, forcing it to seek relief from the respondent Court where
its appeal was docketed as CA-G.R. CV No. 50654. It assigned as
errors the following:
"I. The court a quo committed manifest serious error and
gravely abused its discretion when it ruled that
plaintiff's cause of action is for annulment of contract
which has already prescribed in the face of the clear
and unequivocal recitation of six causes of action in the
complaint, none of which is for annulment.
II. The lower court erred and exceeded its jurisdiction when,
contrary to the rules of court and jurisprudence, it
treated and considered the affirmative defenses of
Ayalas - defenses not categorized by the rules as
grounds for a motion to dismiss - as grounds of a
motion to dismiss which justify the dismissal of the
complaint.
III. The lower court abused its discretion and exceeded its
jurisdiction when it favorably acted on Ayala's motion
for preliminary hearing of affirmative defenses (motion
to dismiss) by dismissing the complaint without
conducting a hearing or otherwise requiring the Ayalas
to present evidence on the factual moorings of their
motion.

IV. The lower court acted without jurisdiction and committed

manifest error when it resolved factual issues and
made findings and conclusions of facts all in favor of
the Ayalas in the absence of any evidence presented
by the parties.
V. The court a quo erred when, contrary to the rules and
jurisprudence, it prematurely ruled that laches and
estoppel bar the complaint as against Ayalas or that
otherwise the alleged failure to implead indispensable
parties dictates the dismissal of the complaint."
In the meantime, respondents CHGCCI and Roman filed their own
motions to hear their affirmative defenses which were identical
to those adduced by respondent AYALA. For its part, respondent
SILHOUETTE filed a similarly grounded motion to dismiss.
Ruling upon these motions, the trial court issued an order dated
December 13, 1993 denying all of them. The motions for
reconsideration of the respondents concerned met a similar fate
in the May 9, 1994 Order of the trial court. They thus filed special
civil actions for certiorari before the respondent Court which
were docketed as CA-G.R. SP Nos. 34605, 34718 and 35065 and
thereafter consolidated with CA-G.R. CV No. 50694 for
disposition.

2.) AFFIRMING the order of the lower court dismissing the

complaint against the appellees Ayalas.
"SO ORDERED."
Petitioner MWSS appealed to this Court that portion of the
respondent Court's decision affirming the trial court's dismissal
of its complaint against respondent AYALA, docketed as G.R. No.
126000. The portion dismissing the petition for certiorari (CA-GR
Nos. 34605, 347718 and 35065) of respondents Roman, CHGCCI
and SILHOUETTE, however, became final and executory for their
failure to appeal therefrom. Nonetheless, these respondents
were able to thereafter file before the trial court another motion
to dismiss grounded, again, on prescription which the trial court
in an Order of October 1996 granted.
This prompted petitioner MWSS to file another petition for review
of said trial court Order before this Court and docketed as G.R.
No. 128520. On motion of petitioner MWSS, this Court in a
Resolution dated December 3, 1997 directed the consolidation of
G.R. Nos. 126000 and 128520.
The errors assigned by petitioner MWSS in CA-GR No. 126000
are:
I

Respondent court, on August 19, 1996, rendered the assailed

decision, the dispositive portion of which reads:
"WHEREFORE, judgment is rendered:
1.) DENYING the petitions for writ of certiorari for lack of
merit; and

In holding, per the questioned Decision dated 19 August

1996, that plaintiffs cause of action is for annulment of
contract which has already prescribed in the face of the clear
and unequivocal recitation of six causes of action in the
complaint, none of which is for annulment and in effect
affirming the dismissal by the respondent judge of the
complaint against respondent Ayalas. This conclusion of

respondent CH is, with due respect, manifestly mistaken and

legally absurd.

The lower court erred in not implementing correctly the

decision of the Court of Appeal. After all, respondents' own
petitions for certiorari questioning the earlier denial of their
motion for preliminary hearing of affirmative defense /
motion to dismiss were dismissed by the Court of Appeal, in
the process of affirming the validity and legality of such
denial by the court a quo. The dismissal of the respondents'
petitions are embodied in the dispositive portion of the said
decision of the Court of Appeals dated 19 August 1996. The
lower court cannot choose to disregard such decretal aspect
of the decision and instead implement an obiter dictum.

II
In failing to consider that the complaint recited six
alternative causes of action, such that the insufficiency of
one cause - assuming there is such insufficiency - does not
render insufficient the other causes and the complaint itself.
The contrary ruling in this regard by respondent CA is
founded entirely on speculation and conjecture and is
constitutive of grave abuse of discretion.
III.
In G.R. No. 128520, petitioner MWSS avers that:

That part of the decision of the decision of the Court of

Appeals resolving the issue of prescription attendant to the
appeal of plaintiff against the Ayalas, has been appealed by
plaintiff to the Supreme Court by way of a petition for review
oncertiorari. Not yet being final and executory, the lower
court erred in making capital out of the same to dismiss the
case against the other defendants, who are the respondents
herein.

I
The court of origin erred in belatedly granting respondent's
motions to dismiss which are but a rehash, a disqualification,
of their earlier motion for preliminary hearing of affirmative
defense / motion to dismiss. These previous motions were
denied by the lower court, which denial the respondents
raised to the Court of Appeals by way of perfection
for certiorari, which petitions in turn were dismissed for lack
of merit by the latter court. The correctness and validity of
the lower court's previous orders denying movant's motion
for preliminary hearing of affirmative defense/motion to
dismiss has accordingly been settled already with finality
and cannot be disturbed or challenged anew at this instance
of defendant's new but similarly anchored motions to
dismiss, without committing procedural heresy causative of
miscarriage of justice.

IV.
The lower court erred in holding, per the questioned orders,
that plaintiff's cause of action is for annulment of contract
which has already prescribed in the face of the clear and
unequivocal recitation of six causes of action in the
complaint, none of which is for annulment. This conclusion of
public respondent is manifestly mistaken and legally absurd.
V.

II

The court a quo erred in failing to consider the complaint

recites six alternative causes of action, such that the
insufficiency of one cause - assuming there is such
insufficiency - does not render insufficient the other cause
and the complaint itself. The contrary ruling in this regard by
public respondent is founded entirely on speculation and
conjecture and is constitutive of grave abuse of discretion.

titles TCT Nos. 213872 and 307655, having been duly issued in
its name. However, as a result of fraudulent and illegal acts of
herein defendants, as described in the paragraphs hereinafter
following, the original of said title/s were cancelled and in lieu
thereof new titles were issued to corporate defendant/s covering
subject 127.9271 hectares. xxx."
Paragraph 34 alleges:

In disposing of the instant petition, this Court shall dwell on the

more crucial upon which the trial court and respondent based
their respective rulings unfavorable to petitioner MWSS; i.e.,
prescription, laches, estoppel/ratification and non-joinder of
indispensable parties.
RE: Prescription
Petitioner MWSS claims as erroneous both the lower courts'
uniform finding that the action has prescribed, arguing that its
complaint is one to declare the MWSS-SILHOUETTE sale, and all
subsequent conveyances of the subject property, void which is
imprescriptible.

"34. Sometime thereafter, clearly influenced by the premature if

not questionable approval by Mr. Marcos of a non-existent
agreement, and despite full knowledge that both the assessed
and market value of subject property were much much higher,
the MWSS Board of Trusties illegally passed an undated
resolution ( 'Resolution No. 36-83' ), approving the 'sale' of the
property to CHGCCI at P40/sq.m. and illegally authorizing
General Manager Ilustre to sign the covering contract.
This 'resolution' was signed by Messrs. Jesus Hipolito as
Chairman; Oscar Ilustre, as Vice Chairman; Aflredo Junio, as
Member; and Silvestre Payoyo, as Member; xxx"

We disagree.

Paragraph 53 states:

The very allegations in petitioner MWSS' complaint show that the

subject property was sold through contracts which, at most, can
be considered only as voidable, and not void. Paragraph 12 of
the complaint reads in part:

" 53. Defendants Pablo Roman, Jr., Josefino Cenizal, and Jose
Roxas as well as defendant corporations (CHGCCI, STC and
Ayala) who acted through the former and their other principal
officers, knowingly inducedand caused then President Marcos
and the former officers of plaintiff MWSS to enter into the
aforesaid undated 'Agreement' which are manifestly and grossly
disadvantageous to the government and which gave the same
defendants unwarranted benefits, i.e., the ownership and
dominion of the afore-described property of plaintiff."

"12. xxx.
The plaintiff has been in continuous, peaceful and public
possession and ownership of the afore-described properties, the
title (TCT No. [36069] 199170) thereto, including its derivative

Paragraph 54 avers:
"54. Defendants Jesus Hipolito and Alfredo Junio, then public
officers, together with the other public officers who are now
deceased (Ferdinand Marcos, Oscar liustre, and Sivestre Payoyo)
knowingly allowed themselves to be persuaded, induced and
influenced to approve and/or enter into the aforementioned
'Agreements' which are grossly and manifestly disadvantageous
to the MWSS/government and which bestowed upon the other
defendants the unwarranted benefit/ownership of subject
property."
The three elements of a contract - consent, the object, and the
cause of obligation11 are all present. It cannot be otherwise
argued that the contract had for its object the sale of the
property and the cause or consideration thereof was the price to
be paid (on the part of respondents CHGCCI/SILHOUETTE) and
the land to be sold (on the part of petitioner MWSS). Likewise,
petitioner MWSS' consent to the May 11, 1983 and August 11,
1983 Agreements is patent on the face of these documents and
on its own resolution No. 36-83.
As noted by both lower courts, petitioner MWSS admits that it
consented to the sale of the property, with the qualification that
such consent was allegedly unduly influenced by the President
Marcos. Taking such allegation to be hypothetically true, such
would have resulted in only voidable contracts because all three
elements of a contract, still obtained nonetheless. The alleged
vitiation of MWSS' consent did not make the sale null and
void ab initio. Thus, "a contract where consent is given through
mistake, violence, intimidation, undue influence or fraud,
is voidable."2 Contracts "where consent is vitiated by mistake,
violence, intimidation, undue influence or fraud" are voidable or
annullable.3These are not void as -

"Concepts of Voidable Contracts. - Voidable or anullable

contracts are existent, valid, and binding, although they can be
annulled because of want of capacity or vitiated consent of the
one of the parties, but before annulment, they are effective and
obligatory between parties. Hence, it is valid until it is set aside
and its validity may be assailed only in an action for that
purpose. They can be confirmed or ratified." 4
As the contracts were voidable at the most, the four year
prescriptive period under Art. 1391 of the New Civil Code will
apply. This article provides that the prescriptive period shall
begin in the cases of intimidation, violence or undue influence,
from the time the defect of the consent ceases", and "in case of
mistake or fraud, from the time of the discovery of the same
time".
Hypothetically admitting that President Marcos unduly influenced
the sale, the prescriptive period to annul the same would have
begun on February 26, 1986 which this Court takes judicial notice
of as the date President Marcos was deposed. Prescription would
have set in by February 26, 1990 or more than three years
before petitioner MWSS' complaint was filed.
However, if petitioner MWSS' consent was vitiated by fraud, then
the prescriptive period commenced upon discovery. Discovery
commenced from the date of the execution of the sale
documents as petitioner was party thereto. At the least,
discovery is deemed to have taken place on the date of
registration of the deeds with the register of Deeds as
registration is constructive notice to the world. 5 Given these two
principles on discovery, the prescriptive period commenced in
1983 as petitioner MWSS actually knew of the sale, or, in 1984
when the agreements were registered and titles thereafter were
issued to respondent SILHOUETTE. At the latest, the action would

have prescribed by 1988, or about five years before the

complaint was instituted. Thus, in Aznar vs. Bernard6, this
Court held that:

the prayer that determines the relief to which the plaintiff is

entitled"7. Respondent court is thus correct in holding that:
"xxx xxx xxx

"Lastly, even assuming that the petitioners had indeed failed to

raise the affirmative defense of prescription in a motion to
dismiss or in an appropriate pleading (answer, or amended or
supplemental answer) and an amendment would no longer be
feasible, still prescription, if apparent on the face of the
complaint, may be favorably considered. In the case at bar, the
private respondents admit in their complaint that the contract or
real estate mortgage which they alleged to be fraudulent and
which had been foreclosed, giving rise to this controversy with
the petitioners, was executed on July 17, 1978, or more than
eight long years before the commencement of the suit in the
court a quo, on September 15, 1986. And an action declare a
contract null and void on the ground of fraud must be instituted
within four years. Extinctive prescription is thus apparent on the
face of the complaint itself as resolved by the Court."
Petitioner MWSS further contends that prescription does not
apply as its complaint prayed not for the nullification of voidable
contracts but for the declaration of nullity of void ab
initio contracts which are imprescriptible. This is incorrect, as the
prayers in a complaint are not determinative of what legal
principles will operate based on the factual allegations of the
complaint. And these factual allegations, assuming their truth,
show that MWSS consented to the sale, only that such consent
was purportedly vitiated by undue influence or fraud. Therefore,
the rules on prescription will operate. Even if petitioner MWSS
asked for the declaration of nullity of these contracts, the
prayers will not be controlling as only the factual allegations in
the complaint determine relief. "(I)t is the material allegations of
fact in the complaint, not the legal conclusion made therein or

The totality then of those allegations in the complaint makes up

a case of a voidable contract of sale - not a void one. The
determinative allegations are those that point out that the
consent of MWSS in the Agreement of Sale was vitiated either by
fraud or undue for the declaration of nullity of the said contract
because the Complaint says no. Basic is the rule however that it
is the body and not the caption nor the prayer of the Complaint
that determines the nature of the action. True, the caption and
prayer of the Complaint state that the action is for a judicial
declaration of nullity of a contract, but alas, as already pointed
out, its body unmistakably alleges only a voidable contract. One
cannot change the real nature of an action adopting a different
nomenclature any more than one can change gin into whisky by
just replacing the label on the bottle with that of the latter's and
calling it whisky. No matter what, the liquid inside remains gin.
xxx xxx xxx."
Petitioner MWSS also theorizes that the May 11, 1983 MWSSSILHOUETTE Agreement and the August 11, 1983 Supplemental
Agreement were void ab initio because the "initial agreement"
from which these agreements emanated was executed "without
the knowledge, much less the approval" of petitioner MWSS
through its Board of Trustees. The "initial agreement" referred to
in petitioner MWSS' argument is the December 20, 1982 letter of
respondents Roxas and Roman, Jr. to President Marcos where the
authors mentioned that they had reached an agreement with
petitioner's then general manager, Mr. Oscar Ilustre. Petitioner
MWSS maintains that Mr. Ilustre was not authorized to enter into

such "initial agreement", contrary to Art. 1874 of the New Civil

Code which provides that "when a sale of a parcel of land or any
interest therein is through an agent, the authority of the latter
shall be in writing otherwise the sale shall be void." It then
concludes that since its Res. No. 36-83 and the May 11, 1983 and
August 11, 1983 Agreements are "fruits" of the "initial
agreement" (for which Mr. Ilustre was allegedly not authorized in
writing), all of these would have been also void under Art. 1422
of NCC, which provides that a contract which is the direct result
of a pronounced illegal contract, is also void and inexistent."
The argument does not impress. The "initial agreement"
reflected in the December 20, 1982 letter of respondent Roman
to Pres. Marcos, is not a sale under Art. 1874. Since the nature of
the "initial agreement" is crucial, we quote 8 the letter in full:
"We respectfully approach Your Excellency in all humility and in
the spirit of the Yuletide Season. We have explained to Your
Excellency when you allowed us the honor to see you, that the
negotiations with MWSS which the late Pablo R. Roman initiated
way back in 1975, with your kind approval, will finally be
concluded.
We have agreed in principle with Mr. Oscar llustre on the terms of
the sale as evidenced by the following:
1 . Our written agreement to hire Asian Appraisal
Company to appraise the entire leased area which
would then be the basis for the negotiations of the
purchase price of the property; and
2. Our exchange of communications wherein MWSS
made a counter-offer and our acceptance of the
counter-offer.

However, we were informed by Mr. Ilustre that only written

instruction from Your Excellency will allow us to finally sign the
Agreement.
In sum, our Agreement is for the purchase price of FIFTY-SEVEN
MILLION
TWO-HUNDRED-FORTY
THOUSAND
PESOS
(P 57,240,000) for the entire leased area of 135 hectares;
TWENTY-SEVEN MILLION PESOS (P27,000,000) payable upon
approval of the contract by Your Excellency and the balance of
THIRTY MILLION TWO HUNDRED FORTY THOUSAND PESOS
(P 30,240,000) after one (1) year inclusive of a 12% interest.
We believe that this arrangement is fair and equitable to both
parties considering that the value of the land was appraised by a
reputable company and independent appraisal company jointly
commissioned by both parties and considering further that
Capitol Hills has still a 23-year lien on the property by virtue of
its existing lease contract with MWSS.
We humbly seek your instruction, Your Excellency and please
accept our families' sincere wish for a Merry Christmas and a
Happy New Year to you and the First Family."
The foregoing does not document a sale, but at most, only the
conditions proposed by respondent Roman to enter into one. By
the terms thereof, it refers only to an "agreement in principle".
Reflecting a future consummation, the letter mentions
"negotiations with MWSS (which) with your (Marcos') kind
approval, will finally be concluded". It must likewise be noted
that presidential approval had yet to be obtained. Thus, the
"initial agreement" was not a sale as it did not in any way
transfer ownership over the property. The proposed terms had
yet to be approval by the President and the agreement in
principle still had to be formalized in a deed of sale. Written

authority as is required under Art. 1834 of the New Civil Code,

was not needed at the point of the "initial agreement".
Verily, the principle on prescription of actions is designed to
cover situations such as the case at bar, where there have been
a series of transfers to innocent purchasers for value. To set
aside these transactions only to accommodate a party who has
slept on his rights is anathema to good order. 9

(1) conduct on the part of the defendant, or one under whom

he claims, giving rise to the situation that led to
the complaint and for which the complaint seeks a
remedy;
(2) delay in asserting the complainant's rights, having had
knowledge or notice of the defendant's conduct
and having been afforded an opportunity to
institute a suit;

RE: Laches

Even assuming, for argument's sake, that the allegations in the

complaint establish the absolute nullity of the assailed contracts
an hence imprescriptible, the complaint can still be dismissed on
the ground of laches which is different from prescription. This
Court, as early as 1966, has distinguished these two concepts in
this wise:
"x x x (T)he defense of laches applies independently of
prescription. Laches is different from the statute of limitations.
Prescription is concerned with the fact of delay, whereas laches
is concerned with the effect of delay. Prescription is a matter of
time; laches is principally a question of inequity of permitting a
claim to be enforced, this inequity being founded on some
change in the condition of the property or the relation of the
parties. Prescription is statutory; laches is not. Laches applies in
inequity, whereas prescription applies at law. Prescription is
based on fixed-time; laches is not."10
Thus, the prevailing doctrine is that the right to have a contract
declared void ab initiomay be barred by laches although not
barred by prescription.11
It has, for all its elements are present, viz:

(3) lack of knowledge or notice on the part of the defendant

that the complainant would assert the right on
which he bases his suit; and
(4) injury or prejudice to the defendant in the event relief is
accorded to the complainant, or the suit is not held
barred.12
There is no question on the presence of the first element. The
main thrust of petitioner MWSS's complaint is to bring to the fore
what it claims as fraudulent and/or illegal acts of the
respondents in the acquisition of the subject property.
The second element of delay is evident from the fact that
petitions tarried for almost ten (10) years from the conclusion of
the sale sometime in 1983 before formally laying claim to the
subject property in 1993.
The third element is present as can be deduced from the
allegations in the complaint that petitioner MWSS (a) demanded
for downpayment for no less than three times; (b) accepted
downpayment for P25 Million; and (c) accepted a letter of credit
for the balance. The pertinent paragraphs in the complaint thus
read:

"38. In a letter dated September 19, 1983, for failure of CHGCCI

to pay on time, Mr. Ilustre demanded payment of the
downpayment of P25 Million which was due as of 18 April 1983.
A copy of this letter is hereto attached as Annex 'X';
"39. Again, in a letter dated February 7, 1984, then MWSS Acting
General Manager Aber Canlas demanded payment from CHGCCI
of the purchase price long overdue. A copy of this letter is hereto
attached as Annex 'Y';
"40. Likewise, in a letter dated March 14, 1984, Mr. Canlas again
demanded from CHGCCI payment of the price. A copy of this
demand letter is hereto attached as Annex 'Z';

enter into the "initial agreement" of December 20, 1982 and

therefore, the sale of the subject property is invalid.
Petitioner MWSS misses the point. The perceived infirmity in the
"initial agreement" can be cured by ratification. So settled is the
precept that ratification can be made by the corporate board
either expressly or impliedly. Implied ratification may take
various forms - like silence or acquiescence; by acts showing
approval or adoption of the contract; or by acceptance and
retention of benefits flowing therefrom. 13 Both modes of
ratification have been made in this case.

Under these facts supplied by petitioner MWSS itself,

respondents have every good reason to believe that petitioner
was honoring the validity of the conveyances of the subject
property, and that the sudden institution of the complaint in
1993 alleging the nullity of such conveyances was surely an
unexpected turn of events for respondents. Hence, petitioner
MWSS cannot escape the effect of laches.

There was express ratification made by the Board of petitioner

MWSS when it passed Resolution No. 36-83 approving the sale of
the subject property to respondent SILHOUETTE and authorizing
Mr. Ilustre, as General Manager, "to sign for and in behalf of the
MWSS the contract papers and other pertinent documents
relative
thereto."
Implied
ratification
by
"silence
or
acquiescence" is revealed from the acts of petitioner MWSS in (a)
sending three (3) demand letters for the payment of the
purchase price, (b) accepting P25 Million as downpayment, and
(c) accepting a letter of credit for the balance, as hereinbefore
mentioned. It may well be pointed out also that nowhere in
petitioner MWSS' complaint is it alleged that it returned the
amounts, or any part thereof, covering the purchase price to any
of the respondents-vendees at any point in time. This is only
indicative of petitioner MWSS' acceptance and retention of
benefits flowing from the sales transactions which is another
form of implied ratification.

RE: Ratification

RE: Non-joinder of indispensable parties

Pertinent to this issue is the claim of petitioner MWSS that Mr.

Ilustre was never given the authority by its Board of Trustees to

There is no denying that petitioner MWSS' action against herein

respondents for the recovery of the subject property now

"41. Thereafter, in a letter dated July 27, 1984, another entity,

defendant Ayala Corporation, through SVP Renato de la Fuente,
paid with a check the long overdue downpayment
of P25,000,000.00 of STC/CHGCCI. Likewise a domestic stand-by
letter of credit for the balance was issued in favor of MWSS;
Copies of the said letter, check and letter of credit are hereto
attached as Annexes 'AA', 'BB', and 'CC', respectively."

converted into a prime residential subdivision would ultimately

affect the proprietary rights of the many lot owners to whom the
land has already been parceled out. They should have been
included in the suit as parties-defendants, for. "it is well
established that owners of property over which reconveyance is
asserted are indispensable parties without whom no relief is
available and without whom the court can render no valid
judgment."14 Being indispensable parties, the absence of these
lot-owners in the suit renders all subsequent actions of the trial
court null and void for want of authority to act, not only as to the
absent parties but even as to those present. 15 Thus, when
indispensable parties are not before the court, the action should
be dismissed.16

WHEREFORE, in view of the foregoing, the consolidated

petitions are hereby DENIED.
SO ORDERED