COMMUNITIES CAGAYAN, INC., vs.

SPOUSES ARSENIO (Deceased) and ANGELES NANOL AND ANYBODY

CLAIMING RIGHTS UNDER THEM
COMMUNITIES
CAGAYAN,
INC.,
vs.
SPOUSES ARSENIO (Deceased) and ANGELES NANOL AND ANYBODY CLAIMING RIGHTS
UNDER THEM
Facts:
Sometime in 1994, respondent-spouses Arsenio and Angeles Nanol entered into a Contract to
Sell with petitioner Communities Cagayan, Inc., (CCI) whereby the latter agreed to sell to respondentspouses a house and Lots 17 and 19 located at Block 16, Camella Homes Subdivision, Cagayan de Oro
City, for the price of P368,000.00 (P368T). They obtained a loan from Capitol Development Bank
(CDB), using the property as collateral. To facilitate the loan, a simulated sale over the property was
executed by petitioner in favor of respondent-spouses. Accordingly, titles (TCT Nos. 105202 and
105203) were transferred in the names of respondent-spouses and submitted to CDB for loan
processing. The bank collapsed and closed before it could release the loan.
On November 30, 1997, respondent-spouses entered into another Contract to Sell with petitioner
over the same property for the same price. This time, they availed of petitioners in-house
financing thus, undertaking to pay the loan over four years, from 1997 to 2001.
Respondent Arsenio demolished the original house and constructed a three-story house
allegedly valued at P3.5 million, more or less. (Respondent Arsenio died, leaving his wife, herein
respondent Angeles, to pay for the monthly amortizations.)
On September 10, 2003, petitioner sent respondent-spouses a notarized Notice of Delinquency
and Cancellation of Contract to Sell due to the latters failure to pay the monthly amortizations.
Petitioner filed before the Municipal Trial Court in Cities, an action for unlawful detainer against
respondent-spouses.
In her Answer, respondent Angeles averred that the Deed of Absolute Sale is valid.
Issues
1) Whether petitioner is obliged to refund to respondent-spouses all the monthly installments
paid; and
2) Whether petitioner is obliged to reimburse respondent-spouses the value of the new house
minus the cost of the original house.
Ruling
The petition is partly meritorious.
Respondent-spouses are entitled to the cash surrender value of the payments
on the property equivalent to 50% of the total payments made under the Maceda Law.
Respondent-spouses are entitled to reimbursement of the improvements
made on the property.
In view of the special circumstances obtaining in this case, we are constrained to rely on the
presumption of good faith on the part of the respondent-spouses which the petitioner failed to rebut.
Thus, respondent-spouses being presumed builders in good faith, we now rule on the applicability of
Article 448 of the Civil Code. Article 448 on builders in good faith does not apply where there is a
contractual relation between the parties, such as in the instant case. We went over the records of this
case and we note that the parties failed to attach a copy of the Contract to Sell. As such, we are
constrained to apply Article 448 of the Civil Code, which provides viz:
ART. 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable
rent, if the owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in
accord with the principle of accession, i.e., that the accessory follows the principal and not the other
way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive.
The landowner cannot refuse to exercise either option and compel instead the owner of the building to
remove it from the land. The raison detre for this provision has been enunciated thus: 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 impracticability 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
the proper rent. He cannot refuse to exercise either option. 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.
In conformity with the foregoing pronouncement, we hold that petitioner, as landowner, has two
options. It may appropriate the new house by reimbursing respondent Angeles the current market
value thereof minus the cost of the old house. Under this option, respondent Angeles would have "a
right of retention which negates the obligation to pay rent." In the alternative, petitioner may sell the
lots to respondent Angeles at a price equivalent to the current fair value thereof. However, if the value
of the lots is considerably more than the value of the improvement, respondent Angeles cannot be
compelled to purchase the lots. She can only be obliged to pay petitioner reasonable rent.
Jul 17
2014
Heirs of Roman Durano, Sr. vs Spouses Uy, et al.
Gr 136456
October 24, 2000
Facts:
Congressman Ramon Durano, Sr, and son Ramon Durano III and the latters wife Elizabeth Hotchkiss
Durano (herein petitioners) filed a case for damages against respondents for allegedly officiating a
hate campaign against them by lodging complaints for invasion of the respondents properties in
Cahumayhumayan, Danao City. The complaints were filed with the Police Department of Danao and the
Office of the President. The said complaints were investigated by the Department of Justice through
the City Fiscal and the Philippine Constabulary who later on dismissed the complaints for being
baseless. The petitioners added that the respondents spread false rumours and tales which subjected
them to public contempt and ridicule.
The respondents made a counterclaim demanding the return of their properties claiming that in August
1970, they received mimeographed notices signed by Durano Sr. informing them that the land they
occupied is owned by Cebu Portland Cement Company and was purchased by Durano & Co for
immediate turn over. However, before many of them could even receive the notice, employees of
Durano & Co. proceeded to bulldoze the land, destroying plantings and improvements made
therein. On September 15, 1970, Durano & Co. sold the subject land to Durano III. Claiming that during
that time, they were not able to find local relief as Durano Sr.s wife was the Mayor at that time causing
them to send a letter to then President Marcos.
On April 22, 1975, petitioners moved to dismiss their own complaint granted by the RTC without
prejudice to the counterclaim of the respondents. According to the petitioners, the property originally
belonged to Cepoc and was sold to Durano & Co., and later on to Durano III. But Durano III claimed that
he only learned of the bulldozing when complaints were already filed by the respondents. He further
claimed that they dismissed the complaints against the respondents as a form of reconciliation with
them but the latter still pursued their counterclaim. According to him, the properties of the claimants,
except for Sepulveda Uy, daughter of former Mayor of Danao, were occupants of the said property and
Durano & Co. purchased the adjacent property for mining coal.
The RTC ordered in their ruling that the petitioners are to pay damages to the respondent and the
return of the properties of Venancia Repaso, Hermogenes Tito, and Marcelino Gonzales as well as the

property of Angeles Sepulveda Uy with respect to the are found outside of the Cepoc property. On
appeal, the CA affirmed the decision but modified the judgement ordering the return of all properties
to the respondents.
Issue:
Whether or not the respondents are builders in good faith.
Decision:
The court ruled that the records indicated that the respondents possession has already ripened into
ownership by acquisitive prescription. Acquisitive prescription is acquired by possession in good faith
with just tittle for a period of ten years. One is considered in good faith when he is not aware of any
flaw in his tittle or mode of acquisition of the property and there is just title when the adverse
claimant came into possession of the property through one of the modes of acquiring ownership
provided by law.
In the case at bar, the respondents acquired the properties by purchase or inheritance and ever since
were in actual, continuous, open, and adverse possession. The records showed that they were unaware
of any claims over the properties until the notices given on August 1970.
The petitioners on the other hand cannot claim good faith. The validity of the certificates of title
obtained by them were doubted by the courts as there was a lack of registered title of Cepoc and the
deed of sale between Cepoc and Durano & Co. were not notarised and therefore unregisterable.
Furthermore, a buyer could not have been ignorant that the property they bought were adversely
possessed by the respondents nor did they investigate the property the petitioners cannot be held to
be buyers in good faith, nor builders in good faith.
Under the Article 449 of the New Civil Code, he who builds etc. in bad faith on the land of another,
loses what is built etc. without right of indemnity. Furthermore, Article 450 gives the landowner over
which something was built in bad faith the power to demolish the works to replace the property in their
former condition at the expense of the builder. And Article 451 gives him the right to damages.
***non property issue: piercing the veil of corporate fiction
Test in determining the applicability of the doctrine of piercing the veil of corporate fiction:
1. Control
2. Control myst have been used to commit fraud or a wrong
3. Control and breach of duty must proximately cause the injury or unjust loss complained off.

G.R. No. 160453 November 12, 2012REPUBLIC OF THE PHILIPPINES,

Petitioner,vs.
ARCADIO IVAN A. SANTOS III, and ARCADIO C. SANTOS, JR.,
Respondents
.Facts:

Alleging continuous and adverse possession of more than ten years, respondentArcadio IvanA. Santos III (ArcadioIvan) applied on March 7, 1997 for the
registration of Lot 4998-B (the property) in the Regional Trial Court (RTC) inParafiaque City.The property,which had an area of 1,045 square meters, more or less, was
located in BarangaySan Dionisio, Paraaque City,and was bounded in the Northeast byLot 4079 belonging to respondentArcadio C.Santos, Jr.(Arcadio, Jr.), in the Southeast
bythe Paraaque River,in the Southwest byan abandoned road, and inthe Northwest byLot 4998-Aalso owned byArcadio Ivan.
On May21, 1998,Arcadio Ivan amended his application for land registration to includeArcadio, Jr.as his co-applicant because of the lattersco-ownership of the
property.He alleged that the propertyhad been formedthrough accretion and had been in their joint open, notorious, public, continuous and adverse possession for morethan
30 years.
The City of Paraaque (the City) opposed the application for land registration, stating that it needed the property for its
flood control program; that the propertywas within the legal easement of 20 meters from the river bank; and that assuming that the propertywas not covered bythe legal
easement, title to the propertycould not be registered in favor of the applicants for the reason that the propertywas an orchard that had dried up and had not resulted from
accretion .
On May10, 2000 the RTC granted the application for land registration, disposing:WHEREFORE, the Court herebydeclares the applicants,ARCADIO IVAN
A. SANTOS, III andARCADIO C. SANTOS, JR.,both Filipinos and of legal age, as the TRUE andABSOLUTE OWNERS of the land being applied for which is
situatedin the Barangayof San Dionisio, Cityof Paraaque with an area of one thousand fortyfive (1045) square metersmore or less and covered by Subdivision Plan Csd-00000343, being a portion of Lot 4998, Cad. 299, Case 4,Paraaque Cadastre, LRC Rec. No. and orders the registration of Lot 4998-B
With this, the Republic, through the Office of the Solicitor General (OSG), appealed. The CA grossly erred in applying Article 457 of the
Civil Code to respondents benefit.
Article 457 of the Civil Code provides that "(t)o the owners of lands adjoining the banks of rivers belong the accretion which theygradually receive from the
effects of the currents of the waters.
"In ruling for respondents, the RTC pronounced that on the basis of the evidence presented bythe applicants, the Court finds thatArcadio IvanA. Santos III and
Arcadio C. Santos, Jr., are the owners of the land subject of this application which was previously a part of the Paraaque River which became an orchard after it dried up and
further considering that Lot 4 which adjoins the same propertyis owned byapplicant,Arcadio C. Santos, Jr., after itwas obtained byhim through inheritance from his mother,
Concepcion Cruz, nowdeceased.
The CA upheld the RTCs pronouncement, and stated that it could not be denied that "to the owners of the landsadjoining
the banks of rivers belong the accretion which theygraduallyreceive from the effects of the current of thewaters"(Article 457 NewCivil Code) as in this case,Arcadio Ivan
Santos III andArcadio Santos, Jr., are the ownersof the land which was previouslypart of the Paraaque River which became an orchard after it dried up and considering that
Lot 4 which adjoins the same property is owned bythe applicant which was obtained bythe latter from his mother
The Republic submits, however, that the application by both lower courts of Article 457 of the Civil Code waserroneous
in the face of the fact that respondentsevidence did not establish accretion, but instead the drying up of the Paraaque River
.Issue:Whether or not respondents could claim the propertybyvirtue of acquisitive prescription (section 14(1) of PD 1529)
Held:NO. (Bylaw,accretion - the gradual and imperceptible deposit made through the effects of the current of the water-belongs to the owner of the land adjacent to the banks
of rivers where it forms.The drying up of the river is notaccretion. Hence, the dried-up river bed belongs to the State as propertyof public dominion, not to the riparian owner,
unless a lawvests the ownership in some other person.)Respondents as the applicants for land registration carried the burden of proof to establish the merits of their application
bya preponderance of evidence, bywhich is meant such evidence that is of greater weight, or more

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.
Canas vs Tuason
In 1904, Maria Concepcion Canas obtained a Torrens title over a large parcel of land (5,122 hectares)
situated near the Marikina (then Mariquina) River. On the opposite side of the river is situated an
equally large parcel of land belonging to the Tuasons (Mariquina Estate).
In 1920, Concepcion sold her land to Payatas Estate Improvement Co. Payatas Estate had the land
surveyed but this time it is showing that the total land area is 22 hectares less than the original plan.
The surveyor explained that this was due to erosions that took place near the river bank and that some
portions of the land were washed away by the river toward the opposite estate.
Payatas Estate is now claiming some portions of the Mariquina estate. Payatas Estate avers that since
the land is covered by a Torrens title, the rule on accretion is not applicable.
Issue: Whether or not Payatas Estate has a right to claim some portions of the Mariquina Estate.

Held: No. Article 366 of the [Old] Civil Code provides: any accretions which the banks of rivers may
gradually receive from the effect of the current belong to the owners of the estates bordering thereon.
This provision applies even to Torrens titled lands.
Accretions of that character are natural incidents to land bordering on running streams and are not
affected by the registration laws. It follows that registration does not protect the riparian owner
(Payatas Estate) against diminution of the area of his land through gradual changes in the course of
the adjoining stream.
Avulsion cannot be raised as well as a ground to lay claim over the 22 hectares land now forming part
of the Mariquina estate. There was no evidence presented to show that the increase was due to
avulsion. The presumption is that the change was gradual and cause by erosion of the Payatas bank of
the river and consequent accretion to the Mariquina estate. It follows that the land in question is now a
part of that estate and no longer pertains to the Payatas estate.

[DESAMPARADO VDA. DE NAZARENO vs. C.A]

Facts:
Sometimes in 1979, PR Salasalan and Rabaya leased the subject lots on which their houses stood from one Antonio
Nazareno, petitioners predecessor-in-interest. In the latter part of 1982, PR allegedly stopped paying rentals. As a result,
petitioners filed a case for ejectment with the MTC of CDO. A decision was rendered against PR, which decision was affirmed by
the RTC of Misamis Oriental, before he died, Antonio Nazareno caused the approval by the Bureau of Lands of the Survey plan
with a view of perfecting his title over the accretion are being claimed by him. Before the approved survey plan could be released
to the applicant, however it was protested by PR before the Bureau of Land.
Upon investigating of the RD of Bureau of Land, it was recommended that Survey Plan in the name of Antonio
Nazareno who denied the motion, Respondent Director of Land then ordered him to vacate the portion adjudicated to private
respondent be placed in possession thereof.
Upon the denial of the late Antonio Nazareno's motion for reconsideration, petitioners Desamparado Vda. de
Nazareno and Leticia Tapia Nazareno, filed a case before the RTC, Branch 22 for annulment of the following: order of
investigation by respondent Gillera, report and recommendation by respondent Labis, decision by respondent Hilario,
order by respondent Ignacio affirming the decision of respondent Hilario and order of execution by respondent Palad.
The RTC dismissed the complaint for failure to exhaust administrative remedies which resulted in the finality of the
administrative decision of the
Bureau of Lands, On Appeal, the CA affirmed the decision of the RTC dismissing the complain.
Issue: W/N the subject land is public land.
Ruling:
Petitioners claim that the subject land is private land being an accretion to his titled property, applying Art. 457
of the Civil Code which provides:

To the owner of lands adjoining the banks of river belong the accretion which they gradually receive from the
effect of the current of the water.
In the case of Meneses v. CA, 2 this Court held that accretion, as a mode of acquiring property under Art. 457 of the Civil
Code, requires the concurrence of these requisites.
a. That the deposition of soil or
sediment be gradual and imperceptible;
b. That it be the result of the action of the waters of the river (or sea).
c. That the land where takes place is adjacent to the bank of river (or the sea cost).
These are called the rules on alluvion which if present in a case, give to the owner of lands adjoining the bank of rivers or
stream any accretion gradually received from the effect of the current of waters.

Furthermore, the Bureau of Lands, classified the subject land as an accretion are which was formed by deposits of
sawdust in Balacanas Creek and the Cagayan river, in accordance with the ocular inspection conducted by the Bureau of
Land