Bachrach v. Seifert [G.R. No. L-2659. October 12, 1950.

]
Facts: The deceased E. M. Bachrach, who left no forced heir
except his widow Mary McDonald Bachrach, in his last will and
testament made various legacies in cash and willed the
remainder of his estate. The estate of E. M. Bachrach, as
owner of 108,000 shares of stock of the Atok-Big Wedge
Mining Co., Inc., received from the latter 54,000 shares
representing 50 per cent stock dividend on the said 108,000
shares. On June 10, 1948, Mary McDonald Bachrach, as
usufructuary or life tenant of the estate, petitioned the lower
court to authorize the Peoples Bank and Trust Company, as
administrator of the estate of E. M. Bachrach, to transfer to
her the said 54,000 shares of stock dividend by indorsing and
delivering to her the corresponding certificate of stock,
claiming that said dividend, although paid out in the form of
stock, is fruit or income and therefore belonged to her as
usufructuary or life tenant. Sophie Siefert and Elisa Elianoff,
legal heirs of the deceased, opposed said petition on the
ground that the stock dividend in question was not income but
formed part of the capital and therefore belonged not to the
usufructuary but to the remainderman. While appellants admit
that a cash dividend is an income, they contend that a stock
dividend is not, but merely represents an addition to the
invested capital.
Issue: Whether or not a dividend is an income and whether it
should go to the usufructuary.
Held: The usufructuary shall be entitled to receive all the
natural, industrial, and civil fruits of the property in usufruct.
The 108,000 shares of stock are part of the property in
usufruct. The 54,000 shares of stock dividend are civil fruits of
the original investment. They represent profits, and the
delivery of the certificate of stock covering said dividend is
equivalent to the payment of said profits. Said shares may be
sold independently of the original shares, just as the offspring
of a domestic animal may be sold independently of its mother.
If the dividend be in fact a profit, although declared in stock, it
should be held to be income. A dividend, whether in the form
of cash or stock, is income and, consequently, should go to
the usufructuary, taking into consideration that a stock
dividend as well as a cash dividend can be declared only out
of profits of the corporation, for if it were declared out of the
capital it would be a serious violation of the law.
Under the Massachusetts rule, a stock dividend is considered
part of the capital and belongs to the remainderman; while
under the Pennsylvania rule, all earnings of a corporation,
when declared as dividends in whatever form, made during
the lifetime of the usufructuary, belong to the latter. The
Pennsylvania rule is more in accord with our statutory laws
than the Massachusetts rule.
Bachrach Motors v. Talisay-Silay Milling [G.R. No. 35223.
September 17, 1931.]
En Banc, Romualdez (J): 7 concurring
Facts: On 22 December 1923, the Talisay-Silay Milling Co., Inc.,
was indebted to the PNB. To secure the payment of its debt, it
succeeded in inducing its planters, among whom was Mariano
Lacson Ledesma, to mortgage their land to the bank. And in
order to compensate those planters for the risk they were
running with their property under that mortgage, the
aforesaid central, by a resolution passed on the same date,
and amended on 23 March 1928, undertook to credit the
owners of the plantation thus mortgaged every year with a
sum equal to 2% of the debt secured according to the yearly
balance, the payment of the bonus being made at once, or in
part from time to time, as soon as the central became free of
its obligations to the bank, and of those contracted by virtue
of the contract of supervision, and had funds which might be
so used, or as soon as it obtained from said bank authority to

make such payment.

<It seems Mariano Lacson Ledesma is indebted from
Bachrach Motor; the circumstance of which is not found in the
case facts.>
Bachrach Motor Co., Inc. filed a complaint against the TalisaySilay Milling Co., Inc., for the delivery of the amount of
P13,850 or promissory notes or other instruments of credit for
that sum payable on 30 June 1930, as bonus in favor of
Mariano Lacson Ledesma. The complaint further prays that
the sugar central be ordered to render an accounting of the
amounts it owes Mariano Lacson Ledesma by way of bonus,
dividends, or otherwise, and to pay Bachrach Motors a sum
sufficient to satisfy the judgment mentioned in the complaint,
and that the sale made by said Mariano Lacson Ledesma be
declared null and void. The PNB filed a third
party claim alleging a preferential right to receive any amount
which Mariano Lacson Ledesma might be entitled from TalisaySilay Milling as bonus. Talisay-Silay answered the complaint
that Mariano Lacson Ledesmas credit (P7,500) belonged to
Cesar Ledesma because he had purchase it. Cesar Ledesma
claimed to be an owner by purchase in good faith. At the trial
all the parties agreed to recognize and respect the sale made
in favor of Cesar Ledesma of the P7,500 part of the credit in
question, for which reason the trial court dismissed the
complaint and cross-complaint against Cesar Ledesma
authorizing the central to deliver to him the sum of P7,500.
And upon conclusion of the hearing, the court held that the
Bachrach Motor Co., Inc., had a preferred right to receive the
amount of P11,076.02 which was Mariano Lacson Ledesmas
bonus, and it ordered the central to deliver said sum to
Bachrach Motors. PNB appealed.
The Supreme Court affirmed the judgment appealed from, as
it found no merit in the appeal;, without express finding as to
costs.
1. Civil Fruits under Article 355 of the Civil Code
Article 355 of the Civil Code considers three things as civil
fruits: First, the rents of buildings; second, the proceeds from
leases of lands; and, third, the income from perpetual or life
annuities, or other similar sources of revenue. According to
the context of the law, the phrase u otras analogas refers
only to rents or income, for the adjectives otras and
analogas agree with the noun rentas, as do also the other
adjectives perpetuas and vitalicias. The civil fruits the
Civil Code understands one of three and only three things, to
wit: the rent of a building, the rent of land, and certain kinds
of income.
2. Bonus not a civil fruit; not an income of the land
The amount of the bonus, according to the resolution of the
central granting it, is not based upon the value, importance or
any other circumstance of the mortgaged property, but upon
the total value of the debt thereby secured, according to the
annual balance, which is something quite distinct from and
independent of the property referred to. As the bonus is not
obtained from the land, it is not civil fruits of that land. It is
neither rent of buildings, proceeds from lease of lands, or
income under Article 355 of the Civil Code.
EQUATORIAL V. MAYFAIR- Sale of Land
While execution of a public instrument of sale is recognized
by law as equivalent to the delivery of the thing sold, such
constructive or symbolic delivery is merely presumptive. It is
nullified by the failure of the vendee to take actual possession

of the land sold.

FACTS: Carmelo & Bauermann, Inc. owned a land, together
with two 2-storey buildings at Claro M. Recto Avenue, Manila,
and covered by TCT No. 18529.
On June 1, 1967, Carmelo entered into a Contract of Lease
with Mayfair Theater Inc. fpr 20 years. The lease covered a
portion of the second floor and mezzanine of a two-storey
building with about 1,610 square meters of floor area, which
respondent used as Maxim Theater.
Two years later, on March 31, 1969, Mayfair entered into a
second Lease with Carmelo for another portion of the latters
property this time, a part of the second floor of the two-storey
building, and two store spaces on the ground floor. In that
space, Mayfair put up another movie house known as Miramar
Theater. The Contract of Lease was likewise for a period of 20
years.
Both leases contained a clause giving Mayfair a right of first
refusal to purchase the subject properties. Sadly, on July 30,
1978 - within the 20-year-lease term -- the subject properties
were sold by Carmelo to Equatorial Realty Development, Inc.
for eleven million smackers, without their first being offered to
Mayfair.
As a result of the sale of the subject properties to Equatorial,
Mayfair filed a Complaint before the Regional Trial Court of
Manila for the recission of the Deed of Absolute Sale between
Carmelo and Equatorial, specific performance, and damages.
RTC decided for Carmelo and Equatorial. Tsk tsk.CA reversed
and ruled for Mayfair. The SC denied a petition questioning
the CA decision. What happened is that the contract did get
rescinded, Equatorial got its money back and asserted that
Mayfair have the right to purchase the lots for 11 million
bucks.
Decision became final and executory, so Mayfair deposited
with the clerk the 11M (less 847grand withholding) payment
for the properties (Carmelo somehow disappeared).
Meanwhile, on Sept 18, 1997, barely five months after Mayfair
submitted its Motion for Execution, Equatorial demanded from
Mayfair backrentals and reasonable compensation for the
Mayfairs continued use of the subject premises after its lease
contracts expired. Remember that Mayfair was still occupying
the premises during all this hullabaloo.
ISSUE: Whether or not Equatorial was the owner of the
subject property and could thus enjoy the fruits and rentals.
HELD:NO. Nor right of ownership was transferred from
Carmelo to Equatorial since there was failure to deliver the
property to the buyer. Compound this with the fact that the
sale was even rescinded.
The court went on to assert that rent is a civil fruit that
belonged to the owner of the property producing it by right of
accession. Hence, the rentals that fell due from the time of
the perfection of the sale to petitioner until its rescission by
final judgment should belong to the owner of the property
during that period.
We remember from SALES that in a contract of sale, one of
the contracting parties obligates himself to transfer ownership
of and to deliver a determinate thing and the other to pay
therefor a price certain in money or its equivalent.
Ownership of the thing sold is a real right, which the buyer
acquires only upon delivery of the thing to him in any of the
ways specified in articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is
transferred from the vendor to the vendee. This right is
transferred, not by contract alone, but by tradition or delivery.
There is delivery if and when the thing sold is placed in the
control and possession of the vendee.

While execution of a public instrument of sale is recognized by

law as equivalent to the delivery of the thing sold, such
constructive or symbolic delivery is merely presumptive. It is
nullified by the failure of the vendee to take actual possession
of the land sold.
For property to be delivered, we need two things. Delivery of
property or title, and transfer of control or custody to the
buyer.
Possession was never acquired by the petitioner. It therefore
had no rights to rent.
G.R. No. L-11269, Felices v. Iriola, 103 Phil. 125
Originally brought to the Court of Appeals, this appeal was
certified to us by that Court on the ground that it does not
raise any genuine issue of fact.

It appears that plaintiff and appellee Silverio Fences was the

grantee of a homestead of over eight hectares located in
barrio Curry, Municipality of Pili, Province of Camarines Sur,
under Homestead Patent No. V-2117 dated January 26, 1949,
and by virtue of which he was issued Original Certificate of
Title No. 104 over said property. The month following the
issuance of his patent, on February 24, 1949, appellee
conveyed in conditional sale to defendant and appellant
Mamerto Iriola a portion of his homestead of more than four
hectares, for the consideration of P1,700. The conveyance
(Exh. 1) expressly stipulates that the sale was subject to the
provisions of Sec. 119 of Act 141, as amended, and to the
prohibitions spread on the vendor's patent; and that after the
lapse of five years or as soon as may be allowed by law, the
vendor or his successors would execute in vendee's favor a
deed of absolute sale over the land in question.

Two years after the sale, on April 19, 1951, appellee tried to
recover the land in question from appellant, but the latter
refused to allow it unless he was paid the amount of P2,000 as
the alleged value of improvements he had introduced on the
property. In view of appellant's persistent refusal, plaintiff
deposited the received price in court and filed this action on
October 4, 1951.

In the court below, appellant, while recognizing appellee's

right to "redeem", insisted that he must first be reimbursed,
the value of his improvements. Whereupon, the court
appointed a commissioner to ascertain the nature and value
of the alleged improvements, and thereafter found that said
improvements were made by defendant either after plaintiff
had informed him of his intention to recover the land, or after
the complaint had been filed; some of the improvements were
even introduced after a commissioner had already been
appointed to appraise their value. Wherefore, the lower court
held defendant in bad faith and not entitled to reimbursement
for his improvements. Defendant was, likewise, ordered to
accept the amount of P1,700 deposited by plaintiff in court, to
execute in favor of the latter the corresponding deed of
reconveyance, and to restore him in possession of the land in
question.

At the outset, it must be made clear that as the sale in

question was executed by the parties within the five-year
prohibitive period under section 118 of the Public Land Law,
the same is absolutely null and void and ineffective from its
inception. Consequently, appellee never lost his title or
ownership over the land in question, and there was no need
either for him to repurchase the same from appellant, or for
the latter to execute a deed of reconveyance in his favor. The
case is actually for mutual restitution, incident to the nullity
ab initio of the conveyance.

The question now is: May appellant recover or be reimbursed

the value of his improvements on the land in question, on the
theory that as both he and appellee knew that their sale was
illegal and void, they were both in bad faith and consequently,
Art. 453 of the Civil Code applies in that "the rights of one and
the other shall be the same as though both had acted in good
faith"?

he had in his possession the original certificate of title

covering the property in the name of the deceased Victorino
and Crisanta dela Rosa.

The rule of Art. 453 of the Civil Code invoked by appellant[[1]]

can not be applied to the instant case for the reason that the
lower court found, and appellant admits, that the
improvements in question were made on the premises only
after appellee had tried to recover the land in question from
appellant, and even during the pendency of this action in the
court below. After appellant had refused to restore the land to
the appellee, to the extent that the latter even had to resort
to the present action to recover his property, appellee could
no longer be regarded as having impliedly assented or
conformed to the improvements thereafter made by appellant
on the premises. Upon the other hand, appellant, recognizing
as he does appellee's right to get back his property, continued
to act in bad faith when he made improvements on the land in
question after he had already been asked extra-judicially and
judicially, to surrender and return its possession to appellee;
and as a penalty for such bad faith, he must forfeit his
improvements without any right to reimbursement therefor.
"He who builds, plants or sows in bad faith on the land of
another, loses that is built, planted, or sown without right to
indemnity" (Art. 449, New Civil Code).

ISSUE: Who is the rightful owner of the subject property?

Wherefore, the judgment appealed from is affirmed, with the

sole modification that appellant need not execute a deed of
reconveyance in appellee's favor, the original conveyance
being hereby declared void ab initio. Costs against appellant
Mamerto Iriola. So ordered.

Nuguid vs. Court of Appeals, and Guevarra 171 SCRA

213 March 1989
FACTS: The deceased spouses Victorino and Crisanta dela
Rosa (spouses dela Rosa) were registered owners of a parcel
of land in Orani, Bataan, and covered by OCT No. 3778. On or
about May 4, 1931, Victorino dela Rosa (widowed by then)
sold one-half of the said property to Juliana Salazar for P95.00.
This sale between him and Salazar, though evidenced by a
document, was not registered. Nevertheless, Juliana Salazar
constructed a house on the lot she purchased immediately
after the sale. On March 10, 1964, petitioner spouses
Diosdado Nuguid and Marqiueta Venegas (spouses Nuguid)
caused the registration of a document entitled "Kasulatan ng
Partihan at Bilihan" (Kasulatan) dated June 6, 1961. In this
document, Marciana dela Rosa, together with the heirs of
Victorino and Crisanta dela Rosa, sold to spouses Nuguid the
entire area of the property for the sum of P300.00.
Subsequently, OCT No. 3778 was cancelled by the Register of
Deeds of Bataan, and TCT No. T-12782 was issued in the
spouses Nuguids names.
Private respondents claimed that the presented by spouses
Nuguid was forged. They also allegedly discovered the forged
deed as well as the certificate of title in the name of the
petitioners much later, that is, on February 28, 1978, when
respondents Amorita Guevarra and Teresita Guevarra thought
of having the title of their grandmother Juliana Salazar,
registered. On the other hand, spouse Nuguid assert that in
the latter part of 1960, Nicolas dela Rosa, uncle of respondent
Marciana dela Rosa and grandfather of the other heirssignatories, offered to sell the subject land to them.
Apparently, Nicolas dela Rosa claimed that he had already
purchased the shares of the heirs over the subject property as
evidenced by a private document entitled "Kasunduan"
(Kasunduan) dated August 31, 1955, and as a matter of fact,

The CFI of Bataan dismissed the complaint filed by private

respondents, but the Court of Appeals reversed said decision
and ordered the spouses Nuguid to execute a deed of
reconveyance in favor of herein respondents.

COURT RULING: The Supreme Court reinstated the decision of

the CFI of Bataan. The basis for the Court of Appeals'
conclusion that petitioners were buyers in bad faith is
ambiguous because said court relied on the singular
circumstance that the petitioners are from Orani, Bataan, and
should have personally known that the private respondents
were the persons in actual possession. However, at the time
of the purchase, the spouses Nuguid dealt with Pedro
Guevarra and Pascuala Tolentino, the latter being the actual
occupants. The respondents Guevarras, children of the said
Pedro and Pascuala Guevarra, came into the picture only after
their parents died. As for the respondent heirs of Victorino
dela Rosa, their being in actual possession of any portion of
the property was, likewise, simply presumed or taken for
granted by the Court of Appeals.
The private respondents cannot also honestly claim that they
became aware of the spouses Nuguids title only in 1978,
because ever since the latter bought the property in 1961, the
spouse Nuguid have occupied the same openly, publicly, and
continuously in the concept of owners, even building their
house thereon. For seventeen years they were in peaceful
possession, with the respondents Guevarras occupying less
than one-half of the same property.
GRANDE v. CA
FACTS: The Grandes are owners of a parcel of land in Isabela,
by inheritance from their deceased mother, Patricia Angui,
who likewise, inherited it from her parents. In the early
1930s, the Grandes decided to have their land surveyed for
registration purposes. The land was described to have
Cagayan River as the northeastern boundary, as stated in the
title.
By 1958, a gradual accretion took place due to the action of
the current of the river, and an alluvial deposit of almost
20,000 sq.m. was added to the registered area. The Grandes
filed an action for quieting of title against the Calalungs,
stating that they were in peaceful and continuous possession
of the land created by the alluvial deposit until 1948, when
the Calalungs allegedly trespassed into their property. The
Calalungs, however, stated that they were the rightful owners
since prior to 1933.
The CFI found for the Grandes and ordered the Calalungs to
vacate the premises and pay for damages. Upon appeal to the
CA, however, the decision was reversed.
ISSUE: Whether or not the alluvium deposited land
automatically belongs to the riparian owners?

HELD: Art. 457 dictates that alluvium deposits on land belong

to the owners of the adjacent land. However, this does not
ipso jure become theirs merely believing that said land have
become imprescriptible. The land of the Grandes only
specifies a specific portion, of which the alluvial deposits are
not included, and are thus, subject to acquisition by
prescription. Since the Calalungs proved that they have been
in possession of the land since 1934 via two credible
witnesses, as opposed to the Grandes single witness who
claims that the Calalungs only entered the land in 1948, the
Calalungs have been held to have acquired the land created

by the alluvial deposits by prescription. This is because the

possession took place in 1934, when the law to be followed
was Act 190, and not the New Civil Code, which only took
effect in 1950.

should be land ADJACENT to the rivers Talisay and Bulacan.

The law is clear on this. Accretion of land along the river bank
may be registered. This is not the case of accretion of land on
the property adjacent to Manila Bay.

HEIRS OF NAVARRO V. IAC

Furthermore, Manila Bay is a sea. Accretion on a sea bank is

foreshore land and the applicable law is not Art 457 but Art 4
of the Spanish Law of Waters of 1866. This law, while old,
holds that accretion along sea shore cannot be registered as it
remains public domain unless abandoned by government for
public use and declared as private property capable of
alienation.

Accretion along an area adjacent to the sea is public domain,

even if the accretion results from rivers emptying into the sea.
It cannot be registered.
FACTS: Sinforoso Pascual sits in the midst of a land
registration case. The story begins on 1946 upon his desire to
register land on the northern section of his existing property.
His current registered property is bounded on the east by
Talisay River, on the West by Bulacan River and on the North
by the Manila bay. Both rivers flow towards the Manila Bay.
Because of constantly flowing water, extra land of about
17hectares (thats about the size of Disney Park!) formed in
the northern most section of the property. It is this property he
sought to register.
The RTC denied the registration claiming this to be foreshore
land and part of public domain (remember, accretion
formedby the sea is public dominion). His Motion for
Reconsideration likewise burned. In 1960, he attempted
registry again, claiming that the Talisay and Bulacan rivers
deposited more silt resulting on accretion. He claimed this
land as riprarian owner. The Director of Lands, Director of
Forestry and the Fiscal opposed.
Then a new party surfaced. Mr Emiliano Navarro jumped into
the fray opposing the same application, stating the he leased
part of the property sought to be registered. He sought to
protect his fishpond that rested on the same property.
Sinforoso was not amused and filed ejectment against Mr.
Navarro, claiming that Navarro used stealth force and strategy
to occupy a portion of his land. Pascual lost the case against
Navarro so he appealed. During the appeal, his original land
registration case was consolidated and tried jointly. (alas
Pascual died) The heirs of Pascual took over the case.
On 1975, the court decided that the property was foreshore
land and therefore part of public domain. The RTC dismissed
the complaint of Pascual for ejectment against Navarro and
also denied his land registration request. Pascuals heirs
appealed and the RTC was reversed by the IAC. The Apellate
court granted petition for registration! The reason? The
accretion was caused by the two rivers, not manila bay. Hence
it wasnt foreshore land. (BUT the confusion lies in the fact
that the accretion formed adjacent to Manila Bay which is
sea!) Aggrieved, the Director of Forestry moved for
reconsideration (Government insists it is foreshore and hence,
public domain). The Apellate court denied all motions of the
Director and the Government.
The matter went to the SC.
ISSUE: Whether or not the accretion taking place on property
adjacent to the sea can be registered under the Torrens
system.
HELD: It cannot be registered. This is land of Public domain.
Pascual claimed ownership under Article 457 of the Civil Code
saying that the disputed 14-hectare land is an accretion
caused by the joint action of the Talisay and Bulacan Rivers
Art 457: Accretion as a mode of acquiring property and
requires the concurrence of the following requisites: (1) that
the accumulation of soil or sediment be gradual and
imperceptible; (2) that it be the result of the action of the
waters of the river; and (3) that the land where the accretion
takes place is adjacent to the bank of the river.
Unfortunately, Pasucal and Heirs claim of ownership based on
Art 457 is misplaced. If theres any land to be claimed, it

Article 4 of the Spanish Law of Waters of August 3, 1866

provides as follows:
Lands added to the shores by accretions and alluvial deposits
caused by the action of the sea, form part of the public
domain. When they are no longer washed by the waters of the
sea and are not necessary for purposes of public utility, or for
the establishment of special industries, or for the coast-guard
service, the Government shall declare them to be the property
of the owners of the estates adjacent thereto and as
increment thereof.
The IAC decision granting registration was reversed and set
aside. Registration cannot be allowed.
BAES V. COURT OF APPEALS
The rules on alluvion do not apply to man-made or artificial
accretions nor to accretions to lands that adjoin canals or
esteros or artificial drainage systems. If the riparian owner is
entitled to compensation for the damage to or loss of his
property due to natural causes, there is all the more reason to
compensate him when the change in the course of the river is
effected through artificial means.
FACTS:
In 1962, the Government dug up a canal on a private estate in
order to streamline the Tripa de Gallina creek (in other words,
there was a mand-made change of river course). Said private
estate was acquired by petitioner Baes, and was subdivided in
to three lots. It was lot 2958-C which was totally occupied by
the canal so the Government in exchange granted him a lot
near but not contiguous to C. The old river bed was filled up
by soil from Lot C. Petitioner now claims ownership over the
old river bed on the basis of Article 461 which says that
abandoned river beds belong to the riparian owners whose
land is occupied by the new course of water.
ISSUE: Whether or not Article 461 applies
RULING: YES! If the riparian owner is entitled to
compensation for the damage to or loss of his property due to
natural causes, there is all the more reason to compensate
him when the change in the course of the river is effected
through artificial means. The loss to the petitioners of the land
covered by the canal was the result of a deliberate act on the
part of the government when it sought to improve the flow of
the Tripa de Gallina creek. It was therefore obligated to
compensate the Baeses for their loss.
We find, however, that the petitioners have already been so
compensated. Felix Baes was given Lot 3271-A in exchange
for the affected Lot 2958-B through the Deed of Exchange of
Real Property dated June 20, 1970. This was a fair exchange
because the two lots were of the same area and value and the
agreement was freely entered into by the parties.
BINALAY VS. MANALO
A sudden and forceful action like that of flooding is not the
alluvial process contemplated in Art. 457. The accumulation

of the soil deposits must be slow and hardly imperceptible in

order for the riparian owner to acquire ownership thereof.
Also, the land where the accretion takes place is adjacent to
the banks of the rivers (or the sea coast).
FACTS: Manalo acquired 2 lots which were originally owned
by Judge Taccad from 2 different people (the latters daughter
and from an earlier purchaser). These lots were later
consolidated into Lot 307, a total of 10.45 hectares. The lot
was beside the Cagayan River, which, due to flooding, would
place a portion of the land underwater during the rainy season
(September to December). On sunny days, however, the land
would be dried up for the entire dry season (January to
August). When a survey of the land was conducted on a rainy
month, a portion of the land that Manalo bought was then
underwater and was thus left unsurveyed and excluded from
Lot 307.
The big picture is this: Cagayan River running from south to
north, forks at a certain point to form two braches (western
and eastern) and then unites at the other end, further north,
to form a narrower strip of land. The eastern branch of the
river cuts through Lot 307, and is flooded during the rainy
season. The unsurveyed portion, on the other hand, is the bed
of the eastern branch. Note that the fork exists only during
the rainy season while the island/elongated strip of land
formed in the middle of the forks becomes dry and perfect for
cultivation when the Cagayan river is at its ordinary depth.
The strip of land in the middle of the fork totaled 22.7
hectares and was labeled Lot 821-822. Lot 821 is directly
opposite Lot 307 and is separated by the eastern branch of
the rivers fork.
Manalo claims that Lot 821 belongs to him by way of accretion
to the submerged portion of the land to which it is adjacent.
Petitioners (Binalay, et al) who possess the Lot 821, on the
other hand, insist that they own it. They occupy the other
edges of the lot along the river bank (i.e. the fertile portions
on which they plant tobacco and other agricultural products)
and also cultivate the western strip during the summer.
Manalo filed 2 cases for forcible entry which were both
dismissed. Later on, he filed a complaint for quieting of title,
possession, and damages against petitioner. The trial court
and the CA ruled in favor of Manalo, saying that Lot 821 and
Lot 307 cannot be considered separate and distinct from each
other. They reasoned that when the land dries up for the most
part of the year, the two are connected. [Note: The CA applied
the ruling in Govt of the Phil Islands vs. Colegio de San Jose,
which was actually inappropriate because the subject matter
in this case was a lake so that the definition of a bed was
different.]
ISSUE: Whether or not Manalo owns Lot 821 by way of
accretion
RULING: No. The disputed property is not an accretion. It is
the action of the heavy rains that cause the highest ordinary
level of waters of the Cagayan River during the rainy season.
The depressed portion is a river bed and is thus considered
property of public domain.
The SC observed the following:
a) The pictures identified by Manalo during his direct
examination depict the depressed portion as a river bed. The
dried up portion had dike-like slopes (around 8m) on both
sides connecting it to Lot 307 and Lot 821 that are vertical
and very prominent.
b) The eastern bed already existed even before Manalo
bought the land. It was called Rio Muerte de Cagayan.
c) Manalo could not have acquire ownership of the land
because article 420 of the civil code states that rivers are
property of public dominion. The word river includes the

running waters, the bed, and the banks. [The seller never
actually owned that part of the land since it was public
property]
d) The submerged area (22.72 ha) is twice the area of the
land he actually bought. It is difficult to suppose that such a
sizable area could have been brought about by accretion.
More importantly, the requisites of accretion in article 457
were not satisfied. These are: 1) that the deposition of the soil
or sediment be gradual and imperceptible; 2) that it be the
result of the action of the waters of the river (or sea); and 3)
the land where the accretion takes place is adjacent to the
banks of the rivers (or the sea coast). The accretion shouldve
been attached to Lot 307 for Manalo to acquire its ownership.
BUT, the claimed accretion lies on the bank of the river; not
adjacent to Lot 307 but directly opposite it across the river.
Aside from that, the dike-like slopes which were very steep
may only be formed by a sudden and forceful action like
flooding. The steep slopes could not have been formed by the
river in a slow and gradual manner.
SIARI VALLEY ESTATE INC. V. FILEMON LUCASAN
If the commingling of 2 things is made in bad faith, the one
responsible for it will lose his share.
FACTS: Siari Valley Inc. brought action to recover 200 heads
of cattle that were driven from its lands to that of Lucasans.
Lucasan however argued that although there was commixtion
of cattle, Siari already retrieved its animals. The CFI of
Zamboanga decided in favor of Siari thus the case at bar.
ISSUE: Whether or not Lucasan was in bad faith thus should
lose his share in the commixtion
HELD: YES Although there was no actual evidence that all
823 missing animals were taken by Lucasan or his men, on 2
occasions however, his men drove away 30 heads of cattle. It
is not erroneous to believe that the others must have also
been driven away applying by analogy the principle that one
who stole a part of the stolen money must have taken also the
larger sum lost by the offended party.
Art. 382 (now Art. 473) of the CC states that if the
commingling of 2 things is made in bad faith, the one
responsible for it will lose his share thus since Lucasan is in
bad faith, he should lose his share in the commixtion.
> The SC ordered Lucasan to deliver the 321 heads that had
been entrusted to his care to Siari; pay damages for the 400
heads he sold since 1946; ordered to allow Siari to round up
all the buffaloes that may be found on its cattle ranch
Montelibano, et.al. vs. Bacolod Murcia Milling Co. Inc.
[G.R. No. L-15092 May 18, 1962]
Facts: Plaintiffs-appellants, Alfredo Montelibano, Alejandro
Montelibano, and the Limited co-partnership Gonzaga and
Company, had been and are sugar planters adhered to the
defendant-appellee's sugar central mill under identical milling
contracts.
The contracts were stipulated to be in force for 30 years and
that the resulting product should be divided in the ratio of
45% for the mill and 55% for the planters. It was later
proposed to execute amended milling contracts, increasing
the planters' share to 60% of the manufactured sugar and
resulting molasses, besides other concessions, but extending
the operation of the milling contract from the original 30 years
to 45 years.
The Board of Directors of the appellee Bacolod-Murcia Milling
Co., Inc., adopted a resolution granting further concessions to
the planters over and above those contained in the printed
Amended Milling Contract. Appellants signed and executed

the printed Amended Milling Contract but a copy of the

resolution was not attached to the printed contract.
In 1953, the appellants initiated the present action,
contending that three Negros sugar centrals had already
granted increased participation to their planters, and that
under paragraph 9 of the abovementioned resolution, the
appellee had become obligated to grant similar concessions to
the plaintiffs (appellants herein).
However, the appellee Bacolod-Murcia Milling Co., inc.,
resisted the claim, and defended by urging that the
stipulations contained in the resolution were made without
consideration; that the resolution in question was, therefore,
null and void ab initio, being in effect a donation that was
ultra vires and beyond the powers of the corporate directors
to adopt.
After trial, the court below rendered judgment upholding the
stand of the defendant Milling company, and dismissed the
complaint. Thereupon, plaintiffs duly appealed to this Court.
Issue: Whether or not the resolution is valid and binding
between the corporation and planters.
Held: The Supreme Court held in the affirmative. There can
be no doubt that the directors of the appellee company had
authority to modify the proposed terms of the Amended
Milling Contract for the purpose of making its terms more
acceptable to the other contracting parties. The rule is that

It is a question, therefore, in each case of the logical relation

of the act to the corporate purpose expressed in the charter. If
that act is one which is lawful in itself, and not otherwise
prohibited, is done for the purpose of serving corporate ends,
and is reasonably tributary to the promotion of those ends, in
a substantial, and not in a remote and fanciful sense, it may
fairly be considered within charter powers. The test to be
applied is whether the act in question is in direct and
immediate furtherance of the corporation's business, fairly
incident to the express powers and reasonably necessary to
their exercise. If so, the corporation has the power to do it;
otherwise, not.
As the resolution in question was passed in good faith by the
board of directors, it is valid and binding, and whether or not it
will cause losses or decrease the profits of the central, the
court has no authority to review them.
It is a well-known rule of law that questions of policy or of
management are left solely to the honest decision of officers
and directors of a corporation, and the court is without
authority to substitute its judgment of the board of directors;
the board is the business manager of the corporation, and so
long as it acts in good faith its orders are not reviewable by
the courts. Hence, the appellee Bacolod-Murcia Milling
Company is, under the terms of its Resolution, duty bound to
grant similar increases to plaintiffs-appellants herein.