[G.R. No. 156295.

September 23, 2003]

MARCELO R. SORIANO, petitioner, vs. SPOUSES RICARDO and ROSALINA GALIT,
respondents.

FACTS
Ricardo Galit loaned from Marcelo Soriano which was secured by a real estate mortgage over a
parcel of land covered by Original Certificate of Title No. 569. After failing to pay, Soriano filed
a complaint for sum of money against him with the RTC. The RTC rendered judgment in favor
of Soriano. Accordingly, the trial court issued a writ of execution, 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. Upon the expiration of the period of redemption, the
Certificate of Sheriffs Sale is issued to the highest and lone bidder, Marcelo Soriano. The
Certificate of Sale registered by the petitioner 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.
Petitioner moved for the issuance of a writ of possession. The RTC granted the motion for
issuance of writ of possession of the following properties: 1. STORE HOUSE constructed on Lot
No. 1103; 2. BODEGA constructed on Lot No. 1103; 3. Original Certificate of Title No. 40785
known as Lot No. 1103.
Respondents filed a petition for certiorari with the CA saying that the land under OCT No. 40785
is separate and distinct from the Bodega and Store house built on it. The CA granted the petition
and declared NULL and VOID the RTC decision.

ISSUE
Whether or not the storehouse and bodega constructed on the parcel of land covered by Transfer
Certificate of Title No. T-40785 should be regarded as separate and distinct from the lot on which
they stand.

RULING
The argument that the land on which the buildings levied upon in execution is necessarily
included is 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
The foregoing provision of the Civil Code enumerates land and buildings separately. This can
only mean that a building is, by itself, considered immovable. 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.
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, the same should be regarded as separate and distinct
from the conveyance of the lot on which they stand.

G.R. No. L-11139 April 23, 1958

SANTOS EVANGELISTA, petitioner, vs. ALTO SURETY & INSURANCE CO., INC.,
respondent.

FACTS
Santos Evangelista, filed a case for a sum of money. On the same date, he obtained a writ of
attachment, which levied upon a house, built by Rivera on a land situated in Manila and leased to
him, by filing copy of said writ and the corresponding notice of attachment with the Office of the
Register of Deeds of Manila. In due course, judgment was rendered in favor of Evangelista, who
bought the house at public auction held in compliance with the writ of execution issued in said
case. When Evangelista sought to take possession of the house, Rivera refused to surrender it,
upon the ground that he had leased the property from the Alto Surety & Insurance Co., Inc. and
that the latter is now the true owner of said property. It appears that a definite deed of sale of the
same house had been issued to respondent, as the highest bidder at an auction sale held, on a
prior date, in compliance with a writ of execution issued in another Civil case between Alto and
Rivera, in which judgment had been rendered in favor Alto.
The Court of First Instance of Manila rendered judgment for Evangelista, sentencing Rivera and
respondent to deliver the house. On appeal taken by respondent, this decision was reversed by
the CA with the opinion that the house is "ostensibly a personal property."

ISSUE
Whether or not the house is a personal property.

RULING
As explicitly held, "a true building (not merely superimposed on the soil) is immovable or real
property, whether it is erected by the owner of the land or by usufructuary or lessee. It is true that
the parties to a deed of chattel mortgage may agree to consider a house as personal property for
purposes of said contract. However, this view is good only insofar as the contracting parties are
concerned. It is based, partly, upon the principle of estoppel. Neither this principle, nor said view,
is applicable to strangers to said contract. Much less is it in point where there has been no
contract whatsoever, with respect to the status of the house involved, as in the case at bar. We,
therefore, declare that the house of mixed materials levied upon on execution, although subject
of a contract of chattel mortgage between the owner and a third person, is real property
[G.R. No. 129471. April 28, 2000]
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS
and CARLOS CAJES, respondents.

FACTS
The land in dispute, consisting of 19.4 hectares, was originally owned by Ulpiano Mumar, whose
ownership since 1917 was evidenced by Tax Declaration No. 3840. In 1950, Mumar sold the
land to private respondent who was issued Tax Declaration No. R-1475 that same year. The tax
declaration was later superseded by Tax Declaration Nos. R-799 issued in 1961 and D-2247
issued in 1974. Private respondent occupied and cultivated the said land.
In 1969, unknown to private respondent, Jose Alvarez succeeded in obtaining the registration of
a parcel of land with an area of 1,512,468.00 square meters, in his name for which he was issued
OCT No. 546 on June 16, 1969. The parcel of land included the 19.4 hectares occupied by
private respondent. Alvarez never occupied nor introduced improvements on said land.
In 1972, Alvarez sold the land to the spouses Gaudencio and Rosario Beduya to whom TCT No.
10101 was issued. That same year, the spouses Beduya obtained a loan from petitioner DBP, as
security, mortgaged the land covered by TCT No. 10101 to the bank. The spouses Beduya later
failed to pay their loans, as a result of which, the mortgage on the property was foreclosed and
petitioner was the highest bidder. Spouses Beduya failed to redeem the property.
Private respondent had also applied for a loan from petitioner in 1978, offering his 19.4 hectare
property under Tax Declaration No. D-2247 as security for the loan. After releasing the amount
of the loan to private respondent, petitioner found that the land mortgaged by private respondent
was included in the land covered by TCT No. 10101 in the name of the spouses Beduya. Thus,
the loan was immediatel demanded to be paid
It was then discovered that private respondent was occupying a portion of said land. Private
respondent was informed that petitioner had become the owner of the land he was occupying,
and he was asked to vacate the property. As private respondent refused to do so, petitioner filed a
complaint for recovery of possession with damages against him. The RTC rendered a decision
declaring petitioner the lawful owner of the entire land covered by TCT No. 10101. On appeal,
the Court of Appeals reversed the decision.

ISSUE
Whether or not the possession by private respondent and his predecessor-in-interest for more
than 30 years can overcome the decree of registration issued in favor of Jose Alvarez.

RULING
Registration has never been a mode of acquiring ownership over immovable property. The Court
of Land Registration was created for the sole purpose of bringing the land titles of the Philippine
Islands under one comprehensive and harmonious system, the cardinal features of which are
indefeasibility of title and the intervention of the State as a prerequisite to the creation and
transfer of titles and interest, with the resultant increase in the use of land as a business asset by
reason of the greater certainty and security of title. It does not create a title nor vest one. It
simply confirms a title already created and already vested, rendering it forever indefeasible. The
fact that a party was able to secure a title in his favor did not operate to vest ownership upon her
of the property.
In the present case, it was established that private respondent, having been in possession of the
land since 1950, was the owner of the property when it was registered by Jose Alvarez in 1969,
his possession tacked to that of his predecessor-in-interest, Ulpiano Mumar, which dates back to
1917. Clearly, more than 30 years had elapsed before a decree of registration was issued in favor
of Jose Alvarez. This uninterrupted adverse possession of the land for more than 30 years could
only ripen into ownership of the land through acquisitive prescription which is a mode of
acquiring ownership and other real rights over immovable property. Prescription requires public,
peaceful, uninterrupted and adverse possession of the property in the concept of an owner for ten
(10) years, in case the possession is in good faith and with a just title. Such prescription is called
ordinary prescription, as distinguished from extraordinary prescription which requires possession
for 30 years in case possession is without just title or is not in good faith.

[G.R. No. 137705. August 22, 2000]

SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING
AND FINANCE, INC., respondent.

FACTS
PCI Leasing and Finance, Inc. filed with the RTC a complaint for a sum of money, with an
application for a writ of replevin. Respondent judge issued a writ of replevin directing its sheriff
to seize and deliver the machineries and equipment to PCI Leasing. The sheriff proceeded to
petitioners factory, seized one machinery with the word that he would return for the other
machineries.
Petitioners filed a motion for special protective order, praying for a directive for the sheriff to
defer enforcement of the writ of replevin. This motion was opposed by PCI Leasing, on the
ground that the properties still personal and therefore still subject to seizure and a writ of
replevin. In their Reply, petitioners asserted that the properties sought to be seized were
immovable, the parties agreement to the contrary notwithstanding. They argued that to give
effect to the agreement would be prejudicial to innocent third parties.
The sheriff again sought to enforce the writ of seizure and take possession of the remaining
properties. He was able to take two more, but was prevented by the workers from taking the rest.
On the CA, the appellate court held that the subject machines were personal property.

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

RULING
The Court has held that contracting parties may validly stipulate that a real property be
considered as personal. After agreeing to such stipulation, they are consequently estopped from
claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily precluded
from denying the truth of any material fact found therein.
In the present case, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. Clearly then, petitioners are estopped from denying the
characterization of the subject machines as personal property. Under the circumstances, they are
proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines should be deemed personal
property pursuant to the Lease Agreement is good only insofar as the contracting parties are
concerned. Hence, while the parties are bound by the Agreement, third persons acting in good
faith are not affected by its stipulation characterizing the subject machinery as personal. In any
event, there is no showing that any specific third party would be adversely affected.

G.R. No. 116100 February 9, 1996

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA
CRISTINA SANTOS, petitioners, vs. COURT OF APPEALS, HEIRS OF PACIFICO C.
MABASA and REGIONAL TRIAL COURT OF PASIG, METRO MANILA, BRANCH
181, respondents.

FACTS
The plaintiff owns a parcel of land with a two-door apartment erected thereon. Said property may
be described to be surrounded by other immovables pertaining to defendants herein. As an access
to the public street, there are two possible passageways. Both involves passing through the
immovables of the petitioners.
When said property was purchased by Mabasa, there were tenants occupying the premises.
However, one of said tenants vacated the apartment and when plaintiff Mabasa went to see the
premises, he saw that there had been built an adobe fence in the first passageway making it
narrower in width. Defendant Morato constructed her adobe fence and even extended said fence
in such a way that the entire passageway was enclosed. And it was then that the remaining
tenants of said apartment vacated the area. Defendant Santos testified that she constructed said
fence because there were incidents caused by the tenants.
The trial court ordered the Custodios and Santoses to give plaintiff permanent access ingress and
egress, to the public street and the plaintiff to pay defendants Custodios and Santoses the sum of
P8,000 as indemnity for the permanent use of the passageway.
The CA AFFIRMED the decison WITH MODIFICATION insofar as the grant of damages to
plaintiffs-appellants.

ISSUE
Whether or not the grant of right of way and damages is proper.
RULING
Petitioners did not appeal from the decision of the court a quo granting private respondents the
right of way, hence they are presumed to be satisfied with the adjudication therein. With the
finality of the judgment of the trial court as to petitioners, the issue of propriety of the grant of
right of way has already been laid to rest.
However, with respect to damages, it has no substantial legal basis. The law recognizes in the
owner the right to enjoy and dispose of a thing, without other limitations than those established
by law. It is within the right of petitioners, as owners, to enclose and fence their property. Article
430 of the Civil Code provides that "(e)very owner may enclose or fence his land or tenements
by means of walls, ditches, live or dead hedges, or by any other means without detriment to
servitudes constituted thereon."
At the time of the construction of the fence, the lot was not subject to any servitudes. There was
no easement of way existing in favor of private respondents, either by law or by contract. The
fact that private respondents had no existing right over the said passageway is confirmed by the
very decision of the trial court granting a compulsory right of way in their favor after payment of
just compensation. Hence, prior to said decision, petitioners had an absolute right over their
property and their act of fencing and enclosing the same was an act which they may lawfully
perform in the employment and exercise of said right.

[G.R. No. 127549. January 28, 1998]

SPOUSES CESAR and RAQUEL STA. MARIA and FLORCERFIDA STA. MARIA,
petitioners, vs. COURT OF APPEALS, and SPOUSES ARSENIO and ROSLYNN
FAJARDO, respondents.

FACTS
Spouses Fajardo are the registered owners of a piece of land. Spouses Fajardo filed a complaint
against spouses Sta. Maria for the establishment of an easement of right of way alleging that
their lot is surrounded by properties belonging to other persons, including those of the
defendants; that since plaintiffs have no adequate outlet to the provincial road, an easement of a
right of way passing through either of the alternative defendants properties which are directly
abutting the provincial road would be plaintiffs only convenient, direct and shortest access to and
from the provincial road.
The lower court rendered the assailed decision granting plaintiffs prayer for an easement of right
of way on defendants properties. On appeal, the CA affirmed the trial courts decision.

ISSUE
Whether or not a compulsory right of way can be granted to private respondents.

RULING
The findings of fact of both courts satisfied the following requirements for an estate to be entitled
to a compulsory servitude of right of way under the Civil Code, to wit: 1. the dominant estate is
surrounded by other immovables and has no adequate outlet to a public highway; 2. there is
payment of proper indemnity; 3. the isolation is not due to the acts of the proprietor of the
dominant estate; and 4. the right of way claimed is at the point least prejudicial to the servient
estate; and insofar as consistent with this rule, where the distance from the dominant estate to a
public highway may be the shortest.
Anent the first requisite, there is no dispute that the plaintiffs-appellees property is surrounded by
other immovables owned by different individuals. Plaintiffs-appellees property is likewise
without adequate outlet to a public highway. The existing passage way for people at the back of
plaintiffs-appellees property leading to the provincial road cannot be considered an adequate
outlet for purposes of establishing an easement. Article 651 of the Code provides that (t)he width
of the easement of right of way shall be that which is sufficient for the needs of the dominant
estate, and may accordingly be changed from time to time.
The second is likewise present in this case. Plaintiff-appellee spouse Roslynn Fajardo testified on
direct examination that they are willing to pay the corresponding damages provided for by law if
granted the right of way.
The third requisite is that the isolation of plaintiffs-appellees property should not have been due
to their own acts. In the case under consideration, the isolation of their lot is not due to plaintiffs
acts. The property they purchased was already surrounded by other immovables leaving them no
adequate ingress or egress to a public highway.
On the fourth requisite, among the three possible servient estates, it is clear that defendants-
appellants property would afford the shortest distance from plaintiffs-appellees property to the
provincial road. Moreover, it is the least prejudicial since as found by the lower court, (i)t
appears that there would be no significant structures to be injured in the defendants property and
the right-of-way to be constructed thereon would be the shortest of all the alternative routes
pointed to by the defendants.

[G.R. No. 144291. April 20, 2001]

EVADEL REALTY and DEVELOPMENT CORPORATION, petitioners, vs. SPOUSES
ANTERO AND VIRGINIA SORIANO, respondents.

FACTS
Spouses Soriano, as sellers, entered into a Contract to Sell with Evadel Realty and Development
Corporation, as buyer, over a parcel of land denominated as Lot 5536-C of the Subdivision Plan
of Lot 5536 covered by Transfer Certificate of Title No. 125062 which was part of a huge tract of
land known as the Imus Estate.
Respondent spouses successively sent demand letters to petitioner to claim certain portion of
land with a total area of 2,450 square meters from petitioner which portion was allegedly in
excess of the total area of the property actually sold. Petitioner admitted receiving the demand
letters but refused to vacate the said area. Thus, on May 23, 1997, a complaint for accion
reinvindicatoria was filed by respondent spouses against petitioner with the RTC. The RTC
rendered judgment in favor of respondent spouses. On appeal, the CA affirmed the order.
ISSUE
Whether or not the action for reinvindicatoria is proper and the petitoner is a builder in good
faith.

RULING
The case at bar is one for accion reinvindicatoria which is an action to recover ownership over
real property. In a reinvindicatory action, the basic issue for resolution is that of ownership.
Based on the evidence, there is no genuine issue of fact as to ownership of the subject property
because the admissions made by petitioner are tantamount to an admission that respondent
spouses owned the property in question.
Petitioner, however, maintains that the issue of whether or not it was a builder in good faith
should not have been peremptorily disposed of by the trial court. Petitioner decries the fact that it
was not given an opportunity to submit evidence to establish good faith as regards the
improvements it introduced on respondent spouses property. Petitioners contention is untenable.
As correctly pointed out by the trial court and the CA, petitioner already admitted in its Amended
Answer that the lot in dispute is covered by TCT No. T-769166 of respondent spouses. With this
admission, petitioner can no longer claim that it was a builder in good faith. 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. In this case, since petitioner, by its own admission, had knowledge of respondent
spouses title over the subject lot, it was clearly in bad faith when it introduced improvements
thereon.

G.R. No. 108894 February 10, 1997

TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, petitioner, vs.
COURT OF APPEALS (FORMER SPECIAL SEVENTEENTH DIVISION) and
EDUARDO UY, respondents.

FACTS
The petitioner is the registered owner of a parcel of land known as Lot 4331-A (should be 4531-
A) of Lot 4531; 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
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.
The RTC rendered a decision in favor of petitioner who was the plaintiff therein. On appeal, the
CA reversed and set aside the decision of the RTC

ISSUE
Whether or not the petitioner is a builder in bad faith because it is presumed to know the metes
and bounds of his property.

RULING
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. It is presumed that possession continues to be enjoyed in the
same character in which it was acquired, until the contrary is proved. 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. 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." 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. 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.
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.
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.
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.

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.

FACTS
Antonio M. Soriano filed Civil Case No. 5788 against Atal Moslem and Amado Moslem to
recover possession of four (4) hectares of land plus damages. In their answer, the defendants
specifically denied the material averments of the complaint and contended that they entered and
peacefully possessed for more than twenty (20) years the area which was known as public land.
The defendants filed a counterclaim for P2,000.00 moral damages, P2,000.00 exemplary
damages, and P1,000.00 attomey's fees.
The records show that the following transpired during the pre-trial hearings:
xxx xxx xxx
During the pre-trial that followed, Atty. Pangilan who represents the defendants, and Atty.
Fernando Contreras, who represents the plaintiff, agreed to have Surveyor Jose Vidua appointed
Commissioner for the purpose of relocating the boundaries of the land, subject matter of this
complaint, the expenses to be borne by them share and share alike. They also agreed that before
relocation, they will deposit with the Deputy Clerk of Court their share of the costs of the survey,
The defendants, through Atty. Pangilan also agreed that should the defendants be found within
the land, subject matter of this complaint, they will leave.
WHEREFORE, surveyor Jose Vidua is hereby appointed Commissioner for the purpose of
aforesaid.
Before entering into the performance of his duties, he shall take an oath that he win faithfully
perform his duties.
xxx xxx xxx
After the commissioner submitted his report, it was found that the defendants were within the
land titled in the name of Soriano. It appears that Atal Moslem and Amado Moslem interposed
no objection to the report. The court, therefore, rendered a decision ordering the petitioners to
vacate the disputed land and pay the costs.
When the judgment was being executed, the petitioners refused to vacate the land. Soriano filed
a motion to declare them in contempt of court.
The petitioners, assisted by a new counsel filed an opposition to the motion. Resolving the
motion after taking into account the opposition, the respondent court issued an order, the
dispositive portion of which reads:
WHEREFORE, the defendants are hereby found guilty of contempt and ordered arrested and
imprisoned until they obey the order aforementioned.
A motion for reconsideration of the order was denied.
The petitioners are now raising two issues for resolution, namely —
l. Whether petitioners can be declared in contempt of court in a case for delivery of possession of
real property.
2. Whether petitioners can be declared in contempt of court pending payments of the
improvements in the land under Articles 448 and 546 of the New Civil Code.
The arguments of the parties on whether or not the contempt order is valid revolve around the
question as to what section of Rule 39 of the Rules of Court applies in this case.
The petitioners contend that Section 8(d) of Rule 39 is appropriate because the judgment requires
delivery of real property. According to them, the refusal to vacate the disputed land is not
contempt of court because the judgment is not a special judgment enforceable under Section 9 of
Rule 39. The respondents, however, argue that the order of the court is not to deliver possession
of land but to vacate it and to pay costs. They would apply Section 9, Rule 39. The respondents'
arguments are sophistic
A writ of execution under Section 8(d) requires the sheriff or other proper officer to whom it is
directed:
xxx xxx xxx
(d) If it be for the delivery of the possession of real or personal property, to deliver the
possession of the same, describing it, to the party entitled thereto, and to satisfy any costs,
damages, rents, or profits covered by the judgment out of the personal property of the person
against whom it was rendered, and if sufficient personal property cannot be found, then out of
the real property.
On the other hand, Section 9 which the lower court ruled as applicable, provides:
Writ of execution of special judgment. —When a judgment requires the performance of any
other act than the payment of money, or the sale or delivery of real or personal property, a
certified copy of the judgment shall be attached to the writ of execution and shall be served by
the officer upon the party against whom the same is rendered, or upon any other person required
thereby, or by law, to obey the same, and such party or person may be punished for contempt if
he disobeys such judgment.
It is plain from the records that the judgment being enforced is an ordinary one. It is not a special
judgment. The case filed by Antonio M. Soriano is an ordinary civil action for the recovery of
possession of a parcel of land and damages. The judgment directing the petitioners to vacate the
land is nothing but a judgment to deliver possession of real property. A special judgment under
Section 9, Rule 39 is one which "requires the performance of any other act than the payment of
money, or the sale or delivery of real or personal property. "
How is an ordinary judgment enforced? Section 13 of Rule 39 provides:
How execution for the delivery or restitution of property enforced — The officer must enforce an
execution for the delivery or restitution of property by ousting therefrom the person against
whom the judgment is rendered and placing the judgment creditorr in possession of such
property, and by levying as hereinafter provided upon so much of the property of the judgment
debtor as will satisfy the amount of the judgment and costs included in the writ of execution.
We applied the above rule in Rom vs. Cobadora (128 SCRA 758) and declared that the mere
refusal or unwillingness on the part of the defeated party to relinquish the property would not
constitute contempt. The proper procedure must be followed in the execution of the judgment.
Chinese Commercial Company v. Martinez, et al (6 SCRA 848) is clear that:
... Under Section 8(d) of Rule 39, if the judgment be for the delivery of the possession of real
property, the writ of execution must require the sheriff or other officer to whom it must be to
deliver the possession of the property, describing it, to the party entitled thereto. This means his
means that the sheyiff must dispossess or eject the losing party from the premises and deliver the
possession thereof to the winning party. If subsequent to such dispossession or ejectment the
losing party enters or attempts to enter into or upon the real property, for the purpose of
executing acts of ownership or possession or in any manner disturbs the possession of the person
adjudged to be entitled thereto, then and only then may be loser be charged with and punished
for contempt under paragraph (h) of Section 3, Rule 64. "
A similar ruling was rendered in Fuentes, et al vs. Leviste, et al (117 SCRA 958), where this
Court held —
Under Sec. 13, Rule 39 of the Rules of Court, it is not enough for the sheriff, in the enforcement
of a judgment for delivery or restitution of property, to merely direct the defeated party to effect
such delivery or restitution. The refusal of the defeated party to surrender the property to the
winning party upon the order of the sheriff does not constitute contempt. The sheriff himself
must oust the defeated party from the property and effect the delivery or restitution by placing
the winning party in possession of the property (U.S. vs. Ramayat 22 PhiL 183) ...
Under the second issue in this petition, the petitioners allege that they have entered, occupied,
and were in peaceful possession of the land in question which according to them was public land,
for more than twenty (20) years, and that their legal possession is evidenced by Tax Declaration
No. 3068 issued by the Office of the Provincial Assessor on October 1 1, 1960. Having
introduced considerable improvements on the land in question before anybody laid claim to it,
the petitioners state that they are builders and planters in good faith and are thus entitled to the
retention of the improvements pending payment under Articles 448 and 546 of the Civil Code.
With this right of retention, the petitioners contend that their refusal to vacate the premises
cannot be punished as contempt.
The lower court did not find this explanation satisfactory. The respondents have not discussed the
builder in good faith argument but have limited themselves to insisting that the refusal to vacate
and to pay costs is contemptuous defiance of the court orders.
The records of this case are rather sketchy. The petitioners did not submit any evidence to prove
their assertions of being builders and planters in good faith. The matter was not mentioned in
their answer. Only after they were required to show cause why they should not be hold in
contempt did their new counsel explain that the petitioners had been in possession of the land
since before World War II, that under the Civil Code they are entitled to reimbursement of all
their improvements and that pending payment of said improvements, they cannot be held in
contempt of court. Without explaining the basis of its ruling on this point, the lower court found
it unsatisfactory.
Under ordinary circumstances, the petitioners' contentions on the second issue they raised would
not receive serious consideration. During pre-trial, their first counsel agreed that a court
commissioner would survey the land and if they are found within the property of the private
respondent, they would leave.
There are special reasons, however, why the builder in good faith issue should not be ignored or
considered closed in spite of the finality of the decision in the recovery of possession case.
In the first place, the petitioners have the presumption of good faith under Article 527 of the
Civil Code in their favor. In the drafting of the answer and during pre-trial the petitioners do not
seem to have had the benefit of counsel in the real meaning of its availability. The petitioners'
first counsel limited the issues to ascertaining whether or not the two defendants were inside the
titled property of the paintiff. Atal and Amado are members of a cultural minority group. They
appear not even to have any surname. Their family name "Moslem" appears to be more of a
descriptive applation than a surname. There is nothing in the records before us to show whether
or not Atal and Amado were mere squatters who entered land already titled in someone else's
name. It is not also shown whether the two were already working and cultivating land which they
thought was public land when the same was titled by a person more knowledgeable in
acquisition of real estate. The builder in good faith argument is, therefore, a valid one insofar as
this contempt case is concerned. The petitioners are not precluded from pursuing further legal
steps to be reimbursed for their improvements if their claim is supported by satisfactory proof.
WHEREFORE, the orders of the respondent court finding the petitioners guilty of contempt and
ordering their arrest and detention are hereby REVERSED and SET ASIDE. The temporary
restraining order earlier issued is made PERMANENT. Costs against the private respondent.
SO ORDERED.

G.R. No. 85469 March 18, 1992

JOSE RAMIREZ, FE RAMIREZ, JOSEFINA RAMIREZ, ERLINDA RAMIREZ and
DIOSDADO RAMIREZ, petitioners, vs. THE COURT OF APPEALS, THE MINISTER
(NOW SECRETARY) OF AGRICULTURE AND FOODS, and VALENTINA VDA. DE
MONTERO, respondents.

FACTS
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.