Beruflich Dokumente
Kultur Dokumente
FACTS
Ricardo Galit contracted a loan from Marcelo Soriano, in the total sum of P480,000.00,
evidenced by four promissory notes in the amount of P120,000.00 each. This loan was secured
by a real estate mortgage over a parcel of land covered by Original Certificate of Title No. 569.
After he failed to pay his obligation, Soriano filed a complaint for sum of money against him
with the RTC. The RTC rendered judgment in favor of Soriano.
The judgment became final and executory. Accordingly, the trial court issued a writ of execution
in due course, by virtue of which, the Sheriff levied on the following real properties of the Galit
spouses: 1.)A parcel of land covered by Original Certificate of Title No. T-569; 2.)
STORE/HOUSE CONSTRUCTED on Lot No. 1103; 3.) BODEGA constructed on Lot 1103.
Petitioner was the highest and only bidder. Accordingly, the Sheriff issued a Certificate of Sale of
Execution of Real Property. The period of redemption will expire One (1) year from and after the
registration of the Certificate of Sale with the Register of Deeds. The Certificate of Sheriffs Sale
is issued to the highest and lone bidder, Marcelo Soriano, under guarantees prescribed by law.
Petitioner caused the registration of the Certificate of Sale on Execution of Real Property with
the Registry of Deeds. The said Certificate of Sale registered with the Register of Deeds includes
at the dorsal portion thereof, not found in the Certificate of Sale on file with the Deputy Sheriff
ORIGINAL CERTIFICATE OF TITLE NO. T-40785.
On February 23, 2001, ten months from the time the Certificate of Sale on Execution was
registered with the Registry of Deeds, petitioner moved for the issuance of a writ of possession.
He averred that the one-year period of redemption had elapsed without the respondents having
redeemed the properties sold at public auction; thus, the sale of said properties had already
become final. He also argued that after the lapse of the redemption period, the titles to the
properties should be considered, for all legal intents and purposes, in his name and favor.
On June 4, 2001, the Regional Trial Court of Balanga City, Branch 1 granted the motion for
issuance of writ of possession.
WHEREFORE, you are hereby commanded to place the herein plaintiff Marcelo Soriano in
possession of the property involved in this case situated (sic) more particularly described as:
1. STORE HOUSE constructed on Lot No. 1103 situated at Centro 1, Orani, Bataan covered
by TCT No. 40785;
2. BODEGA constructed on Lot No. 1103 with an area of 42.75 square meters under Tax
Declaration No. 86 situated at Centro 1, Orani, Bataan;
3. Original Certificate of Title No. 40785 with an area of 134 square meters known as Lot
No. 1103 of the Cadastral Survey of Orani
against the mortgagor/former owners Sps. Ricardo and Rosalinda (sic) Galit, her (sic) heirs,
successors, assigns and all persons claiming rights and interests adverse to the petitioner and
make a return of this writ every thirty (30) days from receipt hereof together with all the
proceedings thereon until the same has been fully satisfied.
WITNESS THE HONORABLE BENJAMIN T. VIANZON, Presiding Judge, this 18th day of
July 2001, at Balanga City.
(Sgd) GILBERT S. ARGONZA
OIC
Respondents filed a petition for certiorari with the Court of Appeals, the Court of Appeals
GRANTED. Accordingly, the writ of possession issued by the Regional Trial Court of Balanga
City, Branch 1, on 18 July 2001 is declared NULL and VOID.
In the event that the questioned writ of possession has already been implemented, the Deputy
Sheriff of the Regional Trial Court of Balanga City, Branch 1, and private respondent Marcelo
Soriano are hereby ordered to cause the redelivery of Transfer Certificate of Title No. T-40785 to
the petitioners.
SO ORDERED. [19]
Aggrieved, petitioner now comes to this Court maintaining that
ISSUE
RULING
There is no question that petitioners were remiss in attending with dispatch to the protection of
their interests as regards the subject lots, and for that reason the case in the lower court was
dismissed on a technicality and no definitive pronouncement on the inadequacy of the price paid
for the levied properties was ever made. In this regard, it bears stressing that procedural rules are
not to be belittled or dismissed simply because their non-observance may have resulted in
prejudice to a partys substantive rights as in this case. Like all rules, they are required to be
followed except when only for the most persuasive of reasons they may be relaxed to relieve a
litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying
with the procedure prescribed. [29] (emphasis and italics supplied.)
In short, since rules of procedure are mere tools designed to facilitate the attainment of justice,
their strict and rigid application which would result in technicalities that tend to frustrate rather
than promote substantial justice must always be avoided. [30] Technicality should not be allowed
to stand in the way of equitably and completely resolving the rights and obligations of the
parties. [31]
Eschewing, therefore, the procedural objections raised by petitioner, it behooves us to address
the issue of whether or not the questioned writ of possession is in fact a nullity considering that it
includes real property not expressly mentioned in the Certificate of Sale of Real Property.
Petitioner, in sum, dwells on the general proposition that since the certificate of sale is a public
document, it enjoys the presumption of regularity and all entries therein are presumed to be done
in the performance of regular functions.
The argument is not persuasive.
There are actually two (2) copies of the Certificate of Sale on Execution of Real Properties
issued on February 4, 1999 involved, namely: (a) copy which is on file with the deputy sheriff;
and (b) copy registered with the Registry of Deeds. The object of scrutiny, however, is not the
copy of the Certificate of Sale on Execution of Real Properties issued by the deputy sheriff on
February 4, 1999, [32] but the copy thereof subsequently registered by petitioner with the
Registry of Deeds on April 23, 1999, [33] which included an entry on the dorsal portion of the
first page thereof describing a parcel of land covered by OCT No. T-40785 not found in the
Certificate of Sale of Real Properties on file with the sheriff.
True, public documents by themselves may be adequate to establish the presumption of their
validity. However, their probative weight must be evaluated not in isolation but in conjunction
with other evidence adduced by the parties in the controversy, much more so in this case where
the contents of a copy thereof subsequently registered for documentation purposes is being
contested. No reason has been offered how and why the questioned entry was subsequently
intercalated in the copy of the certificate of sale subsequently registered with the Registry of
Deeds. Absent any satisfactory explanation as to why said entry was belatedly inserted, the
surreptitiousness of its inclusion coupled with the furtive manner of its intercalation casts serious
doubt on the authenticity of petitioners copy of the Certificate of Sale. Thus, it has been held that
while a public document like a notarized deed of sale is vested with the presumption of
regularity, this is not a guarantee of the validity of its contents. [34]
It must be pointed out in this regard that the issuance of a Certificate of Sale is an end result of
judicial foreclosure where statutory requirements are strictly adhered to; where even the slightest
deviations therefrom will invalidate the proceeding [35] and the sale. [36] Among these
requirements is an explicit enumeration and correct description of what properties are to be sold
stated in the notice. The stringence in the observance of these requirements is such that an
incorrect title number together with a correct technical description of the property to be sold and
vice versa is deemed a substantial and fatal error which results in the invalidation of the sale.
[37]
The certificate of sale is an accurate record of what properties were actually sold to satisfy the
debt. The strictness in the observance of accuracy and correctness in the description of the
properties renders the enumeration in the certificate exclusive. Thus, subsequently including
properties which have not been explicitly mentioned therein for registration purposes under
suspicious circumstances smacks of fraud. The explanation that the land on which the properties
sold is necessarily included and, hence, was belatedly typed on the dorsal portion of the copy of
the certificate subsequently registered is at best a lame excuse unworthy of belief.
The appellate court correctly observed that there was a marked difference in the appearance of
the typewritten words appearing on the first page of the copy of the Certificate of Sale registered
with the Registry of Deeds [38] and those appearing at the dorsal portion thereof. Underscoring
the irregularity of the intercalation is the clearly devious attempt to let such an insertion pass
unnoticed by typing the same at the back of the first page instead of on the second page which
was merely half-filled and could accommodate the entry with room to spare.
The argument that the land on which the buildings levied upon in execution is necessarily
included is, likewise, tenuous. Article 415 of the Civil Code provides:
ART. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil.
xxx xxx xxx
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking them material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or
on lands by the owner of the immovable in such a manner that it reveals the intention to attach
them permanently to the tenements;
(5) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or on a piece of land,
and which tend directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon houses, beehives, fish ponds or breeding places of similar nature,
in case their owner has placed them or preserves them with the intention to have them
permanently attached to the land, and forming a permanent part of it; the animals in these places
are also included;
xxx xxx xxx
(9) Docks and structures which, though floating, are intended by their nature and object to
remain at a fixed place on a river, lake or coast;
xxx xxx x x x.
The foregoing provision of the Civil Code enumerates land and buildings separately. This can
only mean that a building is, by itself, considered immovable. [39] Thus, it has been held that
. . . while it is true that a mortgage of land necessarily includes, in the absence of stipulation of
the improvements thereon, buildings, still a building by itself may be mortgaged apart from the
land on which it has been built. Such mortgage would be still a real estate mortgage for the
building would still be considered immovable property even if dealt with separately and apart
from the land. [40] (emphasis and italics supplied)
In this case, considering that what was sold by virtue of the writ of execution issued by the trial
court was merely the storehouse and bodega constructed on the parcel of land covered by
Transfer Certificate of Title No. T-40785, which by themselves are real properties of respondents
spouses, the same should be regarded as separate and distinct from the conveyance of the lot on
which they stand.
The petition is hereby DENIED.
PANGANIBAN, J.:
The parties in this case are owners of adjoining lots in Parañaque, Metro Manila. It was
discovered in a survey, that a portion of a building of petitioner, which was presumably
constructed by its predecessor-in-interest, encroached on a portion of the lot owned by private
respondent. What are the rights and obligations of the parties? Is petitioner considered a builder
in bad faith because, as held by respondent Court, he is "presumed to know the metes and bounds
of his property as described in his certificate of title"? Does petitioner succeed into the good faith
or bad faith of his predecessor-in-interest which presumably constructed the building?
These are the questions raised in the petition for review of the Decision1 dated August 28, 1992,
in CA-G.R. CV No. 28293 of respondent Court2 where the disposition reads:3
WHEREFORE, premises considered, the Decision of the Regional Trial Court is hereby reversed
and set aside and another one entered —
1. Dismissing the complaint for lack of cause of action;
2. Ordering Tecnogas to pay the sum of P2,000.00 per month as reasonable rental from October
4, 1979 until appellee vacates the land;
3. To remove the structures and surrounding walls on the encroached area;
4. Ordering appellee to pay the value of the land occupied by the two-storey building;
5. Ordering appellee to pay the sum of P20,000.00 for and as attorney's fees;
6. Costs against appellee.
Acting on the motions for reconsideration of both petitioner and private respondent, respondent
Court ordered the deletion of paragraph 4 of
the dispositive portion in an Amended Decision dated February 9, 1993, as follows: 4
WHEREFORE, premises considered, our decision of August 28, 1992 is hereby modified
deleting paragraph 4 of the dispositive portion of our decision which reads:
4. Ordering appellee to pay the value of the land occupied by the two-storey building.
The motion for reconsideration of appellee is hereby DENIED for lack of merit.
The foregoing Amended Decision is also challenged in the instant petition.
The Facts
The facts are not disputed. Respondent Court merely reproduced the factual findings of the trial
court, as follows: 5
That plaintiff (herein petitioner) which is a corporation duly organized and existing under and by
virtue of Philippine laws is the registered owner of a parcel of land situated in Barrio San
Dionisio, Parañaque, Metro Manila known as Lot 4331-A (should be 4531-A) of Lot 4531 of the
Cadastral Survey of Parañaque, Metro Manila, covered by Transfer Certificate of Title No.
409316 of the Registry of Deeds of the Province of Rizal; that said land was purchased by
plaintiff from Pariz Industries, Inc. in 1970, together with all the buildings and improvements
including the wall existing thereon; that the defendant (herein private respondent) is the
registered owner of a parcel of land known as Lot No. 4531-B of Lot 4531 of the Cadastral
Survey of Parañaque, LRC (GLRO) Rec. No. 19645 covered by Transfer Certificate of Title No.
279838, of the Registry of Deeds for the Province of Rizal; that said land which adjoins
plaintiff's land was purchased by defendant from a certain Enrile Antonio also in 1970; that in
1971, defendant purchased another lot also adjoining plaintiffs land from a certain Miguel
Rodriguez and the same was registered in defendant's name under Transfer Certificate of Title
No. 31390, of the Registry of Deeds for the Province of Rizal; that portions of the buildings and
wall bought by plaintiff together with the land from Pariz Industries are occupying a portion of
defendant's adjoining land; that upon learning of the encroachment or occupation by its buildings
and wall of a portion of defendant's land, plaintiff offered to buy from defendant that particular
portion of defendant's land occupied by portions of its buildings and wall with an area of 770
square meters, more or less, but defendant, however, refused the offer. In 1973, the parties
entered into a private agreement before a certain Col. Rosales in Malacañang, wherein plaintiff
agreed to demolish the wall at the back portion of its land thus giving to defendant possession of
a portion of his land previously enclosed by plaintiff's wall; that defendant later filed a complaint
before the office of Municipal Engineer of Parañaque, Metro Manila as well as before the Office
of the Provincial Fiscal of Rizal against plaintiff in connection with the encroachment or
occupation by plaintiff's buildings and walls of a portion of its land but said complaint did not
prosper; that defendant dug or caused to be dug a canal along plaintiff's wall, a portion of which
collapsed in June, 1980, and led to the filing by plaintiff of the supplemental complaint in the
above-entitled case and a separate criminal complaint for malicious mischief against defendant
and his wife which ultimately resulted into the conviction in court of defendant's wife for the
crime of malicious mischief; that while trial of the case was in progress, plaintiff filed in Court a
formal proposal for settlement of the case but said proposal, however, was ignored by defendant.
After trial on the merits, the Regional Trial Court6 of Pasay City, Branch 117, in Civil Case No.
PQ-7631-P, rendered a decision dated December 4, 1989 in favor of petitioner who was the
plaintiff therein. The dispositive portion
reads: 7
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant and
ordering the latter to sell to plaintiff that portion of land owned by him and occupied by portions
of plaintiff's buildings and wall at the price of P2,000.00 per square meter and to pay the former:
1. The sum of P44,000.00 to compensate for the losses in materials and properties incurred by
plaintiff through thievery as a result of the destruction of its wall;
2. The sum of P7,500.00 as and by way of attorney's fees; and
3. The costs of this suit.
Appeal was duly interposed with respondent Court, which as previously stated, reversed and set
aside the decision of the Regional Trial Court and rendered the assailed Decision and Amended
Decision. Hence, this recourse under Rule 45 of the Rules of Court.
The Issues
The petition raises the following issues:8
(A)
Whether or not the respondent Court of Appeals erred in holding the petitioner a builder in bad
faith because it is "presumed to know the metes and bounds of his property."
(B)
Whether or not the respondent Court of Appeals erred when it used the amicable settlement
between the petitioner and the private respondent, where both parties agreed to the demolition of
the rear portion of the fence, as estoppel amounting to recognition by petitioner of respondent's
right over his property including the portions of the land where the other structures and the
building stand, which were not included in the settlement.
(C)
Whether or not the respondent Court of Appeals erred in ordering the removal of the "structures
and surrounding walls on the encroached area" and in withdrawing its earlier ruling in its August
28, 1992 decision for the petitioner "to pay for the value of the land occupied" by the building,
only because the private respondent has "manifested its choice to demolish" it despite the
absence of compulsory sale where the builder fails to pay for the land, and which "choice"
private respondent deliberately deleted from its September 1, 1980 answer to the supplemental
complaint in the Regional Trial Court.
In its Memorandum, petitioner poses the following issues:
A.
The time when to determine the good faith of the builder under Article 448 of the New Civil
Code, is reckoned during the period when it was actually being built; and in a case where no
evidence was presented nor introduced as to the good faith or bad faith of the builder at that time,
as in this case, he must be presumed to be a "builder in good faith," since "bad faith cannot be
presumed."9
B.
In a specific "boundary overlap situation" which involves a builder in good faith, as in this case,
it is now well settled that the lot owner, who builds on the adjacent lot is not charged with
"constructive notice" of the technical metes and bounds contained in their torrens titles to
determine the exact and precise extent of his boundary perimeter. 10
C.
The respondent court's citation of the twin cases of Tuason & Co. v. Lumanlan and Tuason & Co.
v. Macalindong is not the "judicial authority" for a boundary dispute situation between adjacent
torrens titled lot owners, as the facts of the present case do not fall within nor square with the
involved principle of a dissimilar case. 11
D.
Quite contrary to respondent Uy's reasoning, petitioner Tecnogas continues to be a builder in
good faith, even if it subsequently built/repaired the walls/other permanent structures thereon
while the case a quo was pending and even while respondent sent the petitioner many
letters/filed cases thereon. 12
D.(E.)
The amicable settlement between the parties should be interpreted as a contract and enforced
only in accordance with its explicit terms, and not over and beyond that agreed upon; because the
courts do not have the power to create a contract nor expand its scope. 13
E.(F.)
As a general rule, although the landowner has the option to choose between: (1) "buying the
building built in good faith", or (2) "selling the portion of his land on which stands the building"
under Article 448 of the Civil Code; the first option is not absolute, because an exception thereto,
once it would be impractical for the landowner to choose to exercise the first alternative, i.e. buy
that portion of the house standing on his land, for the whole building might be rendered useless.
The workable solution is for him to select the second alternative, namely, to sell to the builder
that part of his land on which was constructed a portion of the house. 14
Private respondent, on the other hand, argues that the petition is "suffering from the following
flaws: 15
1. It did not give the exact citations of cases decided by the Honorable Supreme Court that
allegedly contradicts the ruling of the Hon. Court of Appeals based on the doctrine laid down in
Tuason vs. Lumanlan case citing also Tuason vs. Macalindong case (Supra).
2. Assuming that the doctrine in the alleged Co Tao vs. Chico case is contradictory to the
doctrine in Tuason vs. Lumanlan and Tuason vs. Macalindong, the two cases being more current,
the same should prevail.
Further, private respondent contends that the following "unmistakably" point to the bad faith of
petitioner: (1) private respondent's purchase of the two lots, "was ahead of the purchase by
petitioner of the building and lot from Pariz Industries"; (2) the declaration of the General
Manager of Tecnogas that the sale between petitioner and Pariz Industries "was not registered"
because of some problems with China Banking Corporation; and (3) the Deed of Sale in favor of
petitioner was registered in its name only in "the month of May 1973." 16
The Court's Ru1ing
The petition should be granted.
Good Faith or Bad Faith
Respondent Court, citing the cases of J.M. Tuason & Co., Inc. vs. Vda. de Lumanlan 17 and J.M.
Tuason & Co., Inc. vs. Macalindong, 18 ruled that petitioner "cannot be considered in good
faith" because as a land owner, it is "presumed to know the metes and bounds of his own
property, specially if the same are reflected in a properly issued certificate of title. One who
erroneously builds on the adjoining lot should be considered a builder in (b)ad (f)aith, there
being presumptive knowledge of the Torrens title, the area, and the extent of the boundaries." 19
We disagree with respondent Court. The two cases it relied upon do not support its main
pronouncement that a registered owner of land has presumptive knowledge of the metes and
bounds of its own land, and is therefore in bad faith if he mistakenly builds on an adjoining land.
Aside from the fact that those cases had factual moorings radically different from those obtaining
here, there is nothing in those cases which would suggest, however remotely, that bad faith is
imputable to a registered owner of land when a part of his building encroaches upon a neighbor's
land, simply because he is supposedly presumed to know the boundaries of his land as described
in his certificate of title. No such doctrinal statement could have been made in those cases
because such issue was not before the Supreme Court. Quite the contrary, we have rejected such
a theory in Co Tao vs. Chico, 20 where we held that unless one is versed in the science of
surveying, "no one can determine the precise extent or location of his property by merely
examining his paper title."
There is no question that when petitioner purchased the land from Pariz Industries, the buildings
and other structures were already in existence. The record is not clear as to who actually built
those structures, but it may well be assumed that petitioner's predecessor-in-interest, Pariz
Industries, did so. Article 527 of the Civil Code presumes good faith, and since no proof exists to
show that the encroachment over a narrow, needle-shaped portion of private respondent's land
was done in bad faith by the builder of the encroaching structures, the latter should be presumed
to have built them in good faith. 21 It is presumed that possession continues to be enjoyed in the
same character in which it was acquired, until the contrary is proved. 22 Good faith consists in
the belief of the builder that the land he is building on is his, and his ignorance of any defect or
flaw in his title. 23 Hence, such good faith, by law, passed on to Pariz's successor, petitioner in
this case. Further, "(w)here one derives title to property from another, the act, declaration, or
omission of the latter, while holding the title, in relation to the property, is evidence against the
former." 24 And possession acquired in good faith does not lose this character except in case and
from the moment facts exist which show that the possessor is not unaware that he possesses the
thing improperly or wrongfully. 25 The good faith ceases from the moment defects in the title are
made known to the possessor, by extraneous evidence or by suit for recovery of the property by
the true owner. 26
Recall that the encroachment in the present case was caused by a very slight deviation of the
erected wall (as fence) which was supposed to run in a straight line from point 9 to point 1 of
petitioner's lot. It was an error which, in the context of the attendant facts, was consistent with
good faith. Consequently, the builder, if sued by the aggrieved landowner for recovery of
possession, could have invoked the provisions of Art. 448 of the Civil Code, which reads:
The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of the building or
trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof.
The obvious benefit to the builder under this article is that, instead of being outrightly ejected
from the land, he can compel the landowner to make a choice between the two options: (1) to
appropriate the building by paying the indemnity required by law, or (2) sell the land to the
builder. The landowner cannot refuse to exercise either option and compel instead the owner of
the building to remove it from the land. 27
The question, however, is whether the same benefit can be invoked by petitioner who, as earlier
stated, is not the builder of the offending structures but possesses them as buyer.
We answer such question in the affirmative.
In the first place, there is no sufficient showing that petitioner was aware of the encroachment at
the time it acquired the property from Pariz Industries. We agree with the trial court that various
factors in evidence adequately show petitioner's lack of awareness thereof. In any case, contrary
proof has not overthrown the presumption of good faith under Article 527 of the Civil Code, as
already stated, taken together with the disputable presumptions of the law on evidence. These
presumptions state, under Section 3 (a) of Rule 131 of the Rules of Court, that the person is
innocent of a crime or wrong; and under Section 3 (ff) of Rule 131, that the law has been obeyed.
In fact, private respondent Eduardo Uy himself was unaware of such intrusion into his property
until after 1971 when he hired a surveyor, following his purchase of another adjoining lot, to
survey all his newly acquired lots. Upon being apprised of the encroachment, petitioner
immediately offered to buy the area occupied by its building — a species of conduct consistent
with good faith.
In the second place, upon delivery of the property by Pariz Industries, as seller, to the petitioner,
as buyer, the latter acquired ownership of the property. Consequently and as earlier discussed,
petitioner is deemed to have stepped into the shoes of the seller in regard to all rights of
ownership over the immovable sold, including the right to compel the private respondent to
exercise either of the two options provided under Article 448 of the Civil Code.
Estoppel
Respondent Court ruled that the amicable settlement entered into between petitioner and private
respondent estops the former from questioning the private respondent's "right" over the disputed
property. It held that by undertaking to demolish the fence under said settlement, petitioner
recognized private respondent's right over the property, and "cannot later on compel" private
respondent "to sell to it the land since" private respondent "is under no obligation to sell." 28
We do not agree. Petitioner cannot be held in estoppel for entering into the amicable settlement,
the pertinent portions of which read: 29
That the parties hereto have agreed that the rear portion of the fence that separates the property
of the complainant and respondent shall be demolished up to the back of the building housing the
machineries which demolision (sic) shall be undertaken by the complainant at anytime.
That the fence which serve(s) as a wall housing the electroplating machineries shall not be
demolished in the mean time which portion shall be subject to negotiation by herein parties.
From the foregoing, it is clear that petitioner agreed only to the demolition of a portion of the
wall separating the adjoining properties of the parties — i.e. "up to the back of the building
housing the machineries." But that portion of the fence which served as the wall housing the
electroplating machineries was not to be demolished. Rather, it was to "be subject to negotiation
by herein parties." The settlement may have recognized the ownership of private respondent but
such admission cannot be equated with bad faith. Petitioner was only trying to avoid a litigation,
one reason for entering into an amicable settlement.
As was ruled in Osmeña vs. Commission on Audit, 30
A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical
agreement by the Civil Code and is therein dealt with in some detail. "A compromise," declares
Article 2208 of said Code, "is a contract whereby the parties, by making reciprocal concessions,
avoid a litigation or put an end to one already commenced."
xxx xxx xxx
The Civil Code not only defines and authorizes compromises, it in fact encourages them in civil
actions. Art. 2029 states that "The Court shall endeavor to persuade the litigants in a civil case to
agree upon some fair compromise." . . .
In the context of the established facts, we hold that petitioner did not lose its rights under Article
448 of the Civil Code on the basis merely of the fact that some years after acquiring the property
in good faith, it learned about — and aptly recognized — the right of private respondent to a
portion of the land occupied by its building. The supervening awareness of the encroachment by
petitioner does not militate against its right to claim the status of a builder in good faith. In fact, a
judicious reading of said Article 448 will readily show that the landowner's exercise of his option
can only take place after the builder shall have come to know of the intrusion — in short, when
both parties shall have become aware of it. Only then will the occasion for exercising the option
arise, for it is only then that both parties will have been aware that a problem exists in regard to
their property rights.
Options of Private Respondent
What then is the applicable provision in this case which private respondent may invoke as his
remedy: Article 448 or Article 450 31 of the Civil Code?
In view of the good faith of both petitioner and private respondent, their rights and obligations
are to be governed by Art. 448. The essential fairness of this codal provision has been pointed out
by Mme. Justice Ameurfina Melencio-Herrera, citing Manresa and applicable precedents, in the
case of Depra vs. Dumlao, 32 to wit:
Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the
owners, and it becomes necessary to protect the owner of the improvements without causing
injustice to the owner of the land. In view of the impracticality of creating a state of forced co-
ownership, the law has provided a just solution by giving the owner of the land the option to
acquire the improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower to pay the proper rent. It is the owner of the land who is
authorized to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing. (3 Manresa 213; Bernardo vs.
Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.R. No. 49167, April 30, 1949; Article
applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off.
Gaz. 2050).
The private respondent's insistence on the removal of the encroaching structures as the proper
remedy, which respondent Court sustained in its assailed Decisions, is thus legally flawed. This
is not one of the remedies bestowed upon him by law. It would be available only if and when he
chooses to compel the petitioner to buy the land at a reasonable price but the latter fails to pay
such price. 33 This has not taken place. Hence, his options are limited to: (1) appropriating the
encroaching portion of petitioner's building after payment of proper indemnity, or (2) obliging
the latter to buy the lot occupied by the structure. He cannot exercise a remedy of his own liking.
Neither is petitioner's prayer that private respondent be ordered to sell the land 34 the proper
remedy. While that was dubbed as the "more workable solution" in Grana and Torralba vs. The
Court of Appeals, et al., 35 it was not the relief granted in that case as the landowners were
directed to exercise "within 30 days from this decision their option to either buy the portion of
the petitioners' house on their land or sell to said petitioners the portion of their land on which it
stands." 36 Moreover, in Grana and Torralba, the area involved was only 87 square meters while
this case involves 520 square meters 37. In line with the case of Depra vs. Dumlao, 38 this case
will have to be remanded to the trial court for further proceedings to fully implement the
mandate of Art. 448. It is a rule of procedure for the Supreme Court to strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the seeds of future
litigation. 39
Petitioner, however, must also pay the rent for the property occupied by its building as prescribed
by respondent Court from October 4, 1979, but only up to the date private respondent serves
notice of its option upon petitioner and the trial court; that is, if such option is for private
respondent to appropriate the encroaching structure. In such event, petitioner would have a right
of retention which negates the obligation to pay rent. 40 The rent should however continue if the
option chosen is compulsory sale, but only up to the actual transfer of ownership.
The award of attorney's fees by respondent Court against petitioner is unwarranted since the
action appears to have been filed in good faith. Besides, there should be no penalty on the right
to litigate. 41
WHEREFORE, premises considered, the petition is hereby GRANTED and the assailed
Decision and the Amended Decision are REVERSED and SET ASIDE. In accordance with the
case of Depra vs. Dumlao, 42 this case is REMANDED to the Regional Trial Court of Pasay
City, Branch 117, for further proceedings consistent with Articles 448 and 546 43 of the Civil
Code, as follows:
The trial court shall determine:
a) the present fair price of private respondent's 520 square-meter area of land;
b) the increase in value ("plus value") which the said area of 520 square meters may have
acquired by reason of the existence of the portion of the building on the area;
c) the fair market value of the encroaching portion of the building; and
d) whether the value of said area of land is considerably more than the fair market value of the
portion of the building thereon.
2. After said amounts shall have been determined by competent evidence, the regional trial court
shall render judgment as follows:
a) The private respondent shall be granted a period of fifteen (15) days within which to exercise
his option under the law (Article 448, Civil Code), whether to appropriate the portion of the
building as his own by paying to petitioner its fair market value, or to oblige petitioner to pay the
price of said area. The amounts to be respectively paid by petitioner and private respondent, in
accordance with the option thus exercised by written notice of the other party and to the court,
shall be paid by the obligor within fifteen (15) days from such notice of the option by tendering
the amount to the trial court in favor of the party entitled to receive it;
b) If private respondent exercises the option to oblige petitioner to pay the price of the land but
the latter rejects such purchase because, as found by the trial court, the value of the land is
considerably more than that of the portion of the building, petitioner shall give written notice of
such rejection to private respondent and to the trial court within fifteen (15) days from notice of
private respondent's option to sell the land. In that event, the parties shall be given a period of
fifteen (15) days from such notice of rejection within which to agree upon the terms of the lease,
and give the trial court formal written notice of the agreement and its provisos. If no agreement is
reached by the parties, the trial court, within fifteen (15) days from and after the termination of
the said period fixed for negotiation, shall then fix the terms of the lease provided that the
monthly rental to be fixed by the Court shall not be less than two thousand pesos (P2,000.00) per
month, payable within the first five (5) days of each calendar month. The period for the forced
lease shall not be more than two (2) years, counted from the finality of the judgment, considering
the long period of time since 1970 that petitioner has occupied the subject area. The rental thus
fixed shall be increased by ten percent (10%) for the second year of the forced lease. Petitioner
shall not make any further constructions or improvements on the building. Upon expiration of
the two-year period, or upon default by petitioner in the payment of rentals for two (2)
consecutive months, private respondent shall be entitled to terminate the forced lease, to recover
his land, and to have the portion of the building removed by petitioner or at latter's expense. The
rentals herein provided shall be tendered by petitioner to the trial court for payment to private
respondent, and such tender shall constitute evidence of whether or not compliance was made
within the period fixed by the said court.
c) In any event, petitioner shall pay private respondent an amount computed at two thousand
pesos (P2,000.00) per month as reasonable compensation for the occupancy of private
respondent's land for the period counted from October 4, 1979, up to the date private respondent
serves notice of its option to appropriate the encroaching structures, otherwise up to the actual
transfer of ownership to petitioner or, in case a forced lease has to be imposed, up to the
commencement date of the forced lease referred to in the preceding paragraph;
d) The periods to be fixed by the trial court in its decision shall be non-extendible, and upon
failure of the party obliged to tender to the trial court the amount due to the obligee, the party
entitled to such payment shall be entitled to an order of execution for the enforcement of
payment of the amount due and for compliance with such other acts as may be required by the
prestation due the obligee.
No costs.
SO ORDERED.
G.R. No. L-36837 August 17, 1983
ATAL MOSLEM and AMADO MOSLEM, petitioners,
vs.
ANTONIO M. SORIANO, and the HONORABLE COURT OF FIRST INSTANCE OF TAGUM
DAVAO DEL NORTE, Branch VIII, SALA I, respondents.
NOCON, J.:
This appeal by certiorari seeks the reversal of the decision of respondent court in C.A.-G.R. No.
14435 promulgated on August 29, 1988, dismissing petitioners' original action for certiorari
which sought the nullification of the order of the Secretary of Agriculture and Foods dated
August 26, 1986 holding in abeyance the execution of judgment and implementation of the order
of the Director of the Bureau of Fisheries and Aquatic Resources dated October 11, 1973.
The fact adduced by the respondent court show that on October 11, 1973, Irene Vda. de Ramirez,
now substituted by her heirs, herein petitioners, was granted a lease over a fishing area under Fp.
A. No. 31471 covering 9.5040 hectares, situated at Masinloc, Zambales by the Acting Director,
Bureau of Fisheries. The pertinent portion of said order 1 is quoted, thus:
WHEREFORE, premises considered, FLA. No. 540 of Vicente Tecson should be as hereby it is
declared TERMINATED, it being issued on December 8, 1953 and had already expired on
December 31, 1964; that Valentina Vda. de Montero, be ordered to vacate the portion of the area
she is occupying and should remove whatever existing improvements she has introduced therein,
inasmuch as her occupation of a public land is without proper authority of the authorities
concerned; Fp. A. No. 31471 of Mrs. Irene VDA. de Ramirez, should be as hereby it is, GIVEN
DUE COURSE, to cover the whole area of 9.5040 hectares formerly under Ord. Fp. Permit No.
F-564-C (Cancelled) of the late Catalino Ramirez.
On February 29, 1974 private respondent Valentina vda. de Montero filed a protest against the
application of Irene vda. de Ramirez, alleging that the failure of the latter to disclose to the
authorities concerned the transfer to said Valentina of a 4-hectare portion of the area under the
permit, constituted fraud, and that the director's order of October 11, 1973 would unjustly enrich
the said Irene vda. de Ramirez. The said protest of the private respondent was dismissed by the
Director of Fisheries on August 12, 1975 and was again dismissed by the Minister of Natural
Resources on November 21, 1978 upon appeal. It met the same fate on August 11, 1981 when
the same protest was appealed to the Office of the President. On September 27, 1984, private
respondent then filed a complaint before the Court of First Instance of Zambales to annul the
aforesaid decision of the Office of the President. This was, however dismissed on September 27,
1984, and upon appeal therefrom, the Court of Appeals dismissed the appeal in its resolution of
August 12, 1985.
When the dismissal resolution of the Court of Appeals became final and executory, herein
petitioners, on July 21, 1986, filed with the Bureau of Fisheries and Aquatic Resources (BFAR) a
motion for the execution of its order of October 11, 1973. The OIC, BFAR issued a
memorandum order dated August 5, 1986 to the Regional Director, MAF, San Fernando,
Pampanga, for the immediate implementation of the said October 11, 1973 order. In compliance
therewith, the provincial Fisheries Officer, served notices to private respondents, et al. and
Candido delos Santos, et al. directing them to vacate the fishpond area they are occupying.
Instead of complying with the order, private respondent on August 13, 1986, filed with the
respondent Secretary (then Minister of Agriculture and Foods, MAF for short) an opposition to
the motion for execution and acting on the said opposition, the respondent Secretary issued an
order dated August 26, 1986, holding in abeyance action on the motion for execution "[i]n order
that this office may act on the OPPOSITION TO THE MOTION FOR EXECUTION OF
JUDGMENT . . ." 2
On October 2, 1986, petitioners filed a motion for reconsideration of the August 26, 1986 order.
Instead of acting on the motion, the respondent Secretary ordered that an investigation and ocular
inspection of the area in dispute be conducted as it stated, to wit:
The order dated October 11, 1973 of the Director of Fisheries, subject of implementation, refers
to the adjudication of past facts, namely:
1. That the area in question consists of two (2) lots, separated by a creek; Lot 1 (northern portion)
consisting of 5.9412 hectares, and Lot 2 (southern portion) consisting of 3.6528 hectares.
(Relocation Plan, records page 51)
2. That Valentina Montero was ordered to vacate the portion of the area she was occupying and
to remove the residential house in the north eastern portion of Lot 1. (Order dated October 11,
1973 and Report dated September 20, 1973 of Moises L. Matriano)
3. That Valentina Montero has no fishpond improvements in 1973, since the improvements
existing on the area per report of Moises L. Matriano, were those introduced in 1947.
4. That the two (2) deeds of sale dated March 10, 1966 and April 19, 1966 executed by spouses
Catalino Ramirez and Irene Bermudez Ramirez in favor of Valentina Montero were null and void
for not having been approved by authorities concerned, pursuant to Fisheries Administrative
Order No. 60-2 dated February 15, 1968. (Resolution, Aug. 11, 1981, Office of the President).
5. That Fp. A. No. 31471 of Irene Vda. de Ramirez was given due course covering an area of
9.5040 hectares, formerly under OFP No. F-564-C (Cancelled) of the late Catalino Ramirez.
During the pendency of the case for a period of twelve (12) years from October 11, 1973 to
October 25, 1985, there were supervening the events, happenings of which necessarily affect the
implementation of the order dated October 11, 1973:
1. That Irene Vda. de Ramirez and children, Jose B. Ramirez, Diosdado Ramirez, Bienvenido
Ramirez, Josefina R. Cines, Erlinda R. Almandres, executed a Deed of Quitclaim (Records, p.
720-721) on February 18 1982 in favor of Col. Florentino Cuaresma (Ret.) over a portion of the
area in despute, bounded on the North by Juan Arbizo, on the East by a Provincial Road, on the
South by Irene Vda. de Ramirez (visible by dike), and on the West by the China Sea, containing
an area of 3.0 hectares.
2. That on March 17, 1982, Florentino Cuaresma filed with BFAR his Fp. A. No. 38736 covering
3.0 hectares.
3. That Irene Vda. de Ramirez died on February 22, 1983 as evidenced by a certificate issued by
the Office of the Local Civil Registrar, Masinloc, Zambales.
4. That on August 15, 1984, the Heirs of Catalino Ramirez filed an application covering an area
of 6.5940 hectares, stating that the area applied for is the same area covered by OFP No. F-564-C
and FP. A. No. 31471 of the late Catalino Ramirez and Irene Vda de Ramirez.
5. That there are extensive improvements on the area subsequently introduced by Jose T. Reyes
and Montero, worth about P200,000.00, as alleged in the protest dated August 25, 1986 of Jose
T. Reyes.; 3
Petitioner's motion for reconsideration was denied by the respondent Secretary in his order dated
December 17, 1986.
In sustaining the view of the respondent Secretary, the Court of Appeals stressed that the said
Secretary has not refused to implement the October 11, 1973 order, "rather, he had merely held in
abeyance implementation of the said order and directed that an investigation be conducted in
view of 'supervening events, the happening of which necessarily affect the implementation of the
order dated October 11, 1973.' " 4
The Court of Appeals opined that in as much as the subjects area is still part of the public domain
— petitioners' claim was still in the application stage and no fishpond lease agreement having
been as yet issued by the BFAR — an investigation was necessary in order to determine "(1) the
effect of the death of Irene Vda. de Ramirez on her Fp. A. No. 31471; (2) the effect of the Deed
of Quitclaim dated February 18, 1982 executed by Irene Vda. de Ramirez and children in favor
of Florentino Cuaresma over a portion of 3.0 hectares of area in dispute; and (3) the claim of
Jose T. Reyes and Montero on the subsequent introduction of improvements on the area in
dispute which are not considered in the Order sought to be implemented. 5 The appellate court
further agreed with the respondent Secretary that holding in abeyance the implementation of the
October 11, 1973 order would prevent complication that may arise had said order been
immediately executed without determining the effects and ramifications of the aforesaid
supervening events.
The only issue raised by the petitioners is whether a judgment that had long become final and
executory can still be reconsidered and set aside.
It is the oft-repeated rule that once a judgment has become final, the issues therein should be laid
to rest. 6 It is likewise equally settled that once a judgment becomes final, the prevailing party is
entitled as a matter of right, to a writ of execution and the issuance thereof is the court's
ministerial duty. In fact it has been fittingly said that "an execution is the fruit and end of the suit
and is aptly called the life of the law." 7
The rule nevertheless admits of exceptions. Specifically, when facts and events transpired after a
judgment had become final and executory, which on equitable grounds render its execution
impossible or unjust. In which case a stay or preclusion of execution may properly be sought. 8
A suspension or refusal of execution of judgment or order on equitable grounds can only be
justified upon facts and events transpiring after the judgment or order had become executory,
materially affecting the judgment obligation.
Conversely, any attempt to frustrate enforcement of an executory judgment on the basis of facts
or event happening prior to the finality of judgment cannot be sanctioned or allowed.
Justice Narvasa, now Chief Justice, could not have put it more aptly when he said:
. . . Facts or events bearing on the substance of the obligation subject of the action should
ordinarily be alleged during the issue-formulation stage or otherwise by proper amendment, and
proved at the trial; if discovered after the case has been submitted but before decision is
rendered, proved after obtaining a reopening of the case; and if discovered a reopening of the
case; and if discovered after judgment has been rendered but before it become final,
substantiated at a new trial which the court in its discretion may grant on the ground of newly
discovered evidence pursuant to Rule 37, Rules of Court. Once the judgment becomes executory,
the only remedy left to attempt a material alteration thereof is that provided in Rule 38 of the
Rules of Court (governing petitions for relief from judgment), or an action to set aside the
judgment on account of extrinsic, collateral fraud. There is no other permissible mode of
preventing or delaying execution
on equitable grounds predicated on facts occurring before finality of judgment. 9
All the alleged supervening events transpired prior to 1986 when the judgment of the Court of
Appeals became final and executory. Relying on the cited jurisprudence, said supervening events
should have been raised before the judgment became final and executory, otherwise, their only
remedy is to ask for relief from judgment or to have the judgment set aside based on extrinsic
and collateral fraud. The latter was not pursued by private respondent obviously because she
clearly has no basis to have the judgment set aside.
The fact is that the questioned order dated August 26, 198610 of the Secretary of Agriculture and
Foods was premised on the protest filed on August 13, 1986 by Jose T. Reyes (not by Valentina
Vda. de Montero herself) against the issuance of the notice to vacate to private respondents and
Candido delos Santos, alleging: 11
1. That the original case involving the fishpond . . . was between Catalino Ramirez and on
Vicente Tecson . . .
2. The investigation failed to disclose that Valentina Montero had previously bought the Ramirez
fishpond on April 19, 1966 . . . Mrs. Montero filed her own application for fishpond permit on
June 10, 1968 . . .
3. Of the land bought by Mrs. Montero from the Ramirezes, a two-hectare portion thereof was
sold to me sometime in December 1973.
4. That the Ramirezes have never been on the fishponds in question since their execution of the
deed of sale of 1966, as shown by the extensive improvements introduced thereon worth about
P200,000.00 more or less by Mrs. Montero and myself.
5. Mrs. Irene Ramirez filed her application for the same fishponds on June 25, 1973, at a time
when she had nothing more to apply
. . . and the prior application of Mrs. Montero had been rejected on the flimsy ground that the
transfer was not with the previous approval of the Commissioner.
6. That to give currency to this . . . would sanction undue enrichment of the Ramirezes at the
expense of Mrs. Montero and myself, because then the former would just pre-empt the vast
improvements we have so far introduced on the fishponds in question . . .
Items 1, 2, 4 and 5 have long been resolved since the Order dated August 12, 1975, 12 of the then
Director of BFAR was handed down. Said Order reads:
The allegations of protestant Montero that her entry over the area was based on the "Deed of
Sale" executed by the late Catalino Ramirez, for which she filed a proposed application on
August 1, 1968 covering the area, was however denied by Protestee Irene Vda. de Ramirez,
during the ex-parte investigation. It appears that the only documentary evidences submitted by
counsel for protestant during the investigation were the following, namely: the alleged Deed of
Sale; a tax declaration and the receipts of payments to the municipality.
xxx xxx xxx
The alleged "Deed of Sale" cannot be the basis of the protestant to occupy the area for it is not
duly approved pursuant to existing rules and regulations governing the lease of fishponds; hence
the same is without force and effect, as far as this office is concerned. Neither the tax declaration
or the receipt of payments to the municipality, constitute a valid ground for the occupation of the
area in controversy, for the law is explicit, that no person shall occupy public land for fishpond
purposes unless a permit or lease agreement is duly issued in his favor.
This was affirmed in the decision 13 of the then Minister of Natural Resources, the dispositive
portion of which states:
All told, appellant's entry into and occupation of the area is without legal basis. And the fact that
she described the area for taxation purposes and paid the taxes thereon does not warrant said
entry and occupation because the area is a forest land, the occupancy of which, without permit or
authority, is prohibited under section 2 of the Fisheries Administrative Order (FAO) No. 60 dated
June 29, 1960, the pertinent portion of which reads as follows:
Use of Forest Lands — No person shall occupy or use any portion of the public forest land,
including tidal, mangrove and other swamps . . . for fishpond purposes, without first securing
thereof a permit or lease in accordance with the provisions of the Order.
This was again upheld by the Office of the President. It is quite evident from the records that as
far as Valentina Vda. de Montero is concerned, she has no right over the fishpond in dispute and
her entry/occupation therein was found to be unlawful. 14 Her status has long been determined
and it is about time that We write finis to her claim.
Neither can Jose Reyes claim any right over a portion of the said area. Records show that he is a
mere assignee of respondent Montero and not, as alleged by the Solicitor General, a new party
who has introduced improvements, and who would be summarily ousted without the opportunity
to be heard. 15 A purchaser of property cannot close his eyes and claim that he acted in good
faith under the belief that there was no defect in the vendor's title. 16 A person buying can
acquire no more than what she seller can legally transfer, because the latter can only sell what he
owns or is authorized to sell. Reyes was very much aware of the defect in Mrs. Montero's title as
he admitted that the prior application of Mrs. Montero for fishpond permit had been rejected as
early as 1968. Considering such, he cannot claim to be a builder in good faith.
The general rule is that a builder in bad faith loses what the built without right to indemnity.17
Moreover, Fisheries Administrative Order No. 60-2 dated 15 February 1968 specifically
provides:
That any transfer or sublease without the previous approval of Commissioner or by the Secretary,
as the case may be, shall be considered null and void and deemed sufficient cause for the
cancellation of the permit or lease, and the forfeiture of the improvement, and bond in
connection therewith, in favor of the Government. 18
As to the death of Irene Vda. de Ramirez, this is not such a supervening event as to warrant re-
investigation of her application. She can simply be substituted by her heirs.
It appears then that the only legitimate supervening event which need to be determined is the
effect of the quitclaim executed by Irene Vda. de Ramirez and her heirs in favor of Col.
Florentino Cuaresma. Should it be found that the same is in order, the application of Irene Vda.
de Ramirez, now substituted by her heirs, under Fp. A. No. 31471 covering 6.5940 (area which
was not conveyed to Cuaresma) should finally be given due course.
WHEREFORE, the judgment of the Court of Appeals is set aside. Another judgment is hereby
rendered: (1) ordering Valentina Vda. de Montero and/or her assigns to vacate the fishpond area
they are occupying; (2) to remand this case to BFAR only for the purpose of determining the
effect of the quitclaim executed by Irene Vda. de Ramirez and her heirs in favor of Col.
Florentino Cuaresma (Ret.): and (3) to allow the heirs of Irene Vda. de Ramirez to substitute her
in her lease application.
SO ORDERED.