HEIRS OF MARIO MALABANAN vs.

REPUBLIC OF THE PHILIPPINES

GR No. 179987 April 29, 2009
FACTS:
On 20 February 1998, Mario Malabanan filed an application for land registration before the RTC of Cavite-Tagaytay,
covering a parcel of land situated in Silang Cavite, consisting of 71,324 square meters. Malabanan claimed that he had
purchased the property from Eduardo Velazco, and that he and his predecessors-in-interest had been in open, notorious, and
continuous adverse and peaceful possession of the land for more than thirty (30) years. Velazco testified that the property
was originally belonged to a twenty-two hectare property owned by his great-grandfather, Lino Velazco. Lino had four sons
Benedicto, Gregorio, Eduardo and Estebanthe fourth being Aristedess grandfather. Upon Linos death, his four sons
inherited the property and divided it among themselves. But by 1966, Estebans wife, Magdalena, had become the
administrator of all the properties inherited by the Velazco sons from their father, Lino. After the death of Esteban and
Magdalena, their son Virgilio succeeded them in administering the properties, including Lot 9864-A, which originally
belonged to his uncle, Eduardo Velazco. It was this property that was sold by Eduardo Velazco to Malabanan.

Among the evidence presented by Malabanan during trial was a Certification dated 11 June 2001, issued by the Community
Environment & Natural Resources Office, Department of Environment and Natural Resources (CENRO-DENR), which
stated that the subject property was verified to be within the Alienable or Disposable land per Land Classification Map No.
3013 established under Project No. 20-A and approved as such under FAO 4-1656 on March 15, 1982. On 3 December
2002, the RTC approved the application for registration.

The Republic interposed an appeal to the Court of Appeals, arguing that Malabanan had failed to prove that the property
belonged to the alienable and disposable land of the public domain, and that the RTC had erred in finding that he had been in
possession of the property in the manner and for the length of time required by law for confirmation of imperfect title. On 23
February 2007, the Court of Appeals reversed the RTC ruling and dismissed the appliocation of Malabanan.

ISSUES:
1. In order that an alienable and disposable land of the public domain may be registered under Section 14(1) of Presidential
Decree No. 1529, otherwise known as the Property Registration Decree, should the land be classified as alienable and
disposable as of June 12, 1945 or is it sufficient that such classification occur at any time prior to the filing of the applicant
for registration provided that it is established that the applicant has been in open, continuous, exclusive and notorious
possession of the land under a bona fide claim of ownership since June 12, 1945 or earlier?

2. For purposes of Section 14(2) of the Property Registration Decree may a parcel of land classified as alienable and
disposable be deemed private land and therefore susceptible to acquisition by prescription in accordance with the Civil
Code?

3. May a parcel of land established as agricultural in character either because of its use or because its slope is below that of
forest lands be registrable under Section 14(2) of the Property Registration Decree in relation to the provisions of the Civil
Code on acquisitive prescription?

4. Are petitioners entitled to the registration of the subject land in their names under Section 14(1) or Section 14(2) of the
Property Registration Decree or both?

HELD:
The Pertition is denied.
(1) In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the Public Land Act recognizes
and confirms that those who by themselves or through their predecessors in interest have been in open, continuous,
exclusive, and notorious possession and occupation of alienable and disposable lands of the public domain, under a bona fide
claim of acquisition of ownership, since June 12, 1945 have acquired ownership of, and registrable title to, such lands based
on the length and quality of their possession.

(a) Since Section 48(b) merely requires possession since 12 June 1945 and does not require that the lands should have been
alienable and disposable during the entire period of possession, the possessor is entitled to secure judicial confirmation of his
title thereto as soon as it is declared alienable and disposable, subject to the timeframe imposed by Section 47 of the Public
Land Act.

(b) The right to register granted under Section 48(b) of the Public Land Act is further confirmed by Section 14(1) of the
Property Registration Decree.

(2) In complying with Section 14(2) of the Property Registration Decree, consider that under the Civil Code, prescription is
recognized as a mode of acquiring ownership of patrimonial property. However, public domain lands become only
patrimonial property not only with a declaration that these are alienable or disposable. There must also be an express
government manifestation that the property is already patrimonial or no longer retained for public service or the development
of national wealth, under Article 422 of the Civil Code. And only when the property has become patrimonial can the
prescriptive period for the acquisition of property of the public dominion begin to run.

(a) Patrimonial property is private property of the government. The person acquires ownership of patrimonial property by
prescription under the Civil Code is entitled to secure registration thereof under Section 14(2) of the Property Registration
Decree.

(b) There are two kinds of prescription by which patrimonial property may be acquired, one ordinary and other extraordinary.
Under ordinary acquisitive prescription, a person acquires ownership of a patrimonial property through possession for at
least ten (10) years, in good faith and with just title. Under extraordinary acquisitive prescription, a persons uninterrupted
adverse possession of patrimonial property for at least thirty (30) years, regardless of good faith or just title, ripens into
ownership.

It is clear that the evidence of petitioners is insufficient to establish that Malabanan has acquired ownership over the subject
property under Section 48(b) of the Public Land Act. There is no substantive evidence to establish that Malabanan or
petitioners as his predecessors-in-interest have been in possession of the property since 12 June 1945 or earlier. The earliest
that petitioners can date back their possession, according to their own evidencethe Tax Declarations they presented in
particularis to the year 1948. Thus, they cannot avail themselves of registration under Section 14(1) of the Property
Registration Decree.

Neither can petitioners properly invoke Section 14(2) as basis for registration. While the subject property was declared as
alienable or disposable in 1982, there is no competent evidence that is no longer intended for public use service or for the
development of the national evidence, conformably with Article 422 of the Civil Code. The classification of the subject
property as alienable and disposable land of the public domain does not change its status as property of the public dominion
under Article 420(2) of the Civil Code. Thus, it is insusceptible to acquisition by prescription.
 SARMIENTO v. AGANA

FACTS:
Before Ernesto Valentino and Rebecca Lorenzo wed, Rebeccas mother offered a lot in Paranaque that they could build their
house on. In 1967, they finally built their home which cost about PhP8,000-10,000, thinking that someday, the lot would be
transferred to them in their name. It turns out, though, that the lot was owned by the Spouses Santos who , in turn, sold the
same to Leonila Sarmiento in 1974. A year later, Sarmiento ordered the Valentinos to vacate their lot, then eventually filed
and Ejection Suit against them.

The lower court ruled in Sarmientos favor and ordered her to pay 20,000 as the value of the house. But the case was then
elevated to the CFI of Pasay (w/ Agana as Judge), and pursuant to Art.448 of the CC (March 1979), the Court ordered
Sarmiento to exercise the option in 60 days to pay Ernesto 40,000 as the value of the house or to let them purchase the land
for 25,000. Sarmiento was not able to exercise this option, and the CFI allowed Ernesto to deposit the 25,000 purchase price
with the Court.

ISSUE:
Whether or not the land owner is compelled to exercise either option: to buy the building or to sell the land?

HELD:
Ernesto and his wife (BPS) were clearly in good faith as they believed that Rebeccas mother has the capacity to eventually
transfer the title of the land to them. In line with this, Sarmiento (LO) was required to exercise only 2 options: To purchase
the house or to sell the land to them, in this case, based on the value decided by the courts. Since Sarmiento failed to exercise
the option within the allotted period, and based on Art. 448, the LO is compelled by law to exercise either option. Not
choosing either is a violation of the law.
PECSON V. CA
244 SCRA 407

FACTS:
Petitioner was the owner of a parcel of land wherein he built an apartment complex. Due to his failure to pay for realty
taxes, his land was sold in a public auction and was sold to spouses Nuguid. He moved for the setting aside of the auction
but was denied.

HELD:
Article 448 doesn't apply to a case where the owner of the land is the builder who then later loses ownership of the
land by sale or auction.

Nevertheless, the provision therein on indemnity may be applied by analogy considering that the primary intent of this
provision is to avoid a state of forced ownership.

The current market value of the improvements which should be made the basis of reimbursement to the builder in
good faith

The right to retain the improvements while the corresponding indemnity is not paid implies the tenancy or
possession in fact of the land on which it is built, planted or sown and retention of ownership of the improvements,
and necessarily, the income therefrom
 TECHNOGAS PHILIPPINES vs. CA
G.R. No. 108894 February 10, 1997
FACTS:
The parties in this case are owners of adjoining lots in Paraaque, Metro Manila. It was discovered in a survey, that a
portion of a building of Technogas, which was presumably constructed by its predecessor-in-interest, encroached on a
portion of the lot owned by private respondent Edward Uy.
Upon learning of the encroachment or occupation by its buildings and wall of a portion of private respondents land, the
petitioner offered to buy from defendant that particular portion of Uys land occupied by portions of its buildings and wall
with an area of 770 square meters, more or less, but the latter, however, refused the offer
The parties entered into a private agreement before a certain Col. Rosales in Malacaang, wherein petitioner agreed to
demolish the wall at the back portion of its land thus giving to the private respondent possession of a portion of his land
previously enclosed by petitioner's wall.
Uy later filed a complaint before the office of Municipal Engineer of Paraaque, Metro Manila as well as before the Office
of the Provincial Fiscal of Rizal against Technogas 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; so Uy dug or caused to be dug a canal along
Technogas wall, a portion of which collapsed in June, 1980, and led to the filing by the petitioner of the supplemental
complaint in the above-entitled case and a separate criminal complaint for malicious mischief against Uy and his wife which
ultimately resulted into the conviction in court Uy's wife for the crime of malicious mischief;
ISSUE:
WON the petitioner is builder in good faith.
HELD: YES.
We disagree with Respondent Courts reliance on the cases of
J.M. Tuason & Co., Inc vs. Vda. de Lumanlan and J.M. Tuason & Co., Inc .vs. Macalindong, in ruling that the petitioner
"cannot be considered in good faith" because as a land owner, it is "presumed to know the metes and bounds of his own
property, specially if the same are reflected in a properly issued certificate of title. One who erroneously builds on the
adjoining lot should be considered a builder in (b)ad (f)aith, there being presumptive knowledge of the Torrens title, the area,
and the extent of the boundaries." There is nothing in those cases which would suggest that bad faith is imputable to a
registered owner of land when a part of his building encroaches upon a neighbor's land, simply because he is supposedly
presumed to know the boundaries of his land as described in his certificate of title,
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. 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.
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 Zenaida Resuma Razon Property Builder in Good Faith 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
In view of the good faith of both petitioner and private respondent, their rights and obligations are to be governed by Art.
448. 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.
 DEPRA v. DUMLAO
136 SCRA 475

FACTS:
Dumlao is the owner of a parcel of land in Iloilo, while Depra owns the lot adjoining his. Dumlao built his house on his own
land, but the kitchen encroached about 34 sq.m on Depras property. Upon finding this, Depras mom ordered Dumlao to
move back from his encroachment, then subsequently filed an action for unlawful detainer against Dumlao.

The lower court found that Dumlao was a builder in good faith, and ordered him to pay rent (PhP5.00/month) forced lease
between the parties. Depra refused to accept the rentals so Dumlao deposited this with the MTC. Neither party appealed
judgment so this became final and executory.

1 year later, though, Depra filed an complaint for Quieting of Title. Dumlao contested this, stating that the suit is barred by
res judicata. But Depra averred that the lower court did not have jurisdiction to rule on encumbrances of real property only
the CFI has jurisdiction.

ISSUE:
1. Whether or not res judicata would apply to the case at bar?
2. Whether or not the landowner can be compelled to accept rent payments by the court (with both LO and BPS being in
good faith)?

HELD:
In the first issue, res judicata would not apply should the first case be one for ejectment and the other for quieting of title.
Article 448 of the Civil Code provides that the land owner has 2 options to buy the building or to sell/rent his land. This is
so because the rights of the owner of the land is older, and by the principle of accession, he also has a right to the accessories.

The Court remanded the case to the RTC to determine the fair price of the land, the expenses incurred by the BPS (Dumlao),
the increase in value of the land, and whether the value of the land is considerably more than the value of the kitchen built on
it. The RTC shall then give Depra 15 days to exercise such option.
 PNB V. DE JESUS
411 SCRA 557

FACTS:
It would appear that on 10 June 1995, respondent filed a complaint against petitioner before the Regional Trial Court of
Occidental Mindoro for recovery of ownership and possession, with damages, over the questioned property. In his complaint,
respondent stated that he had acquired a parcel of land situated in Mamburao, Occidental Mindoro, with an area of 1,144
square meters covered by TCT No. T-17197, and that on 26 March 1993, he had caused a verification survey of the property
and discovered that the northern portion of the lot was being encroached upon by a building of petitioner to the extent of 124
square meters. Despite two letters of demand sent by respondent, petitioner failed and refused to vacate the area. Petitioner,
in its answer, asserted that when it acquired the lot and the building sometime in 1981 from then Mayor Bienvenido Ignacio,
the encroachment already was in existence and to remedy the situation, Mayor Ignacio offered to sell the area in question
(which then also belonged to Ignacio) to petitioner at P100.00 per square meter which offer the latter claimed to have
accepted. The sale, however, did not materialize when, without the knowledge and consent of petitioner, Mayor Ignacio later
mortgaged the lot to the Development Bank of the Philippines. He also contends that he is a builder in good faith.

ISSUE:
Whether or not being a builder in good faith matters under article 448.

HELD:
Article 448, of the Civil Code refers to a piece of land whose ownership is claimed by two or more parties, one of whom has
built some works (or sown or planted something) and not to a case where the owner of the land is the builder, sower, or
planter who then later loses ownership of the land by sale or otherwise for, elsewise stated, where the true owner
himself is the builder of works on his own land, the issue of good faith or bad faith is entirely irrelevant.
FILIPINAS COLLEGES INC. vs. MARIA GARCIA TIMBANG, ET AL.
[G.R. No. L-1281, September 29, 1959]

FACTS:
This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957 (a) declaring the Sheriff's
certificate of sale covering a school building sold at public auction null and void unless within 15 days from notice of said
order the successful bidders, defendants-appellants spouses Maria Garcia Timbang and Marcelino Timbang, shall pay to,
appellee Maria Gervacio Blas directly or through the Sheriff of Manila the sum of P5,750.00 that the spouses Timbang had
bid for the building at the Sheriff's sale; (b) declaring the other appellee Filipinas Colleges, Inc. owner of 24,500/3,285,934
undivided interest in Lot No. 2-a covered by certificate of tile No 45970, on which the building sold in the auction sale is
situated; and (c) ordering the sale in public auction of the said undivided interest of the Filipinas Colleges, Inc., in lot No. 2-a
aforementioned to satisfy the unpaid portion of the judgment in favor of appellee Blas and against Filipinas Colleges, Inc. in
the amount of P8,200.00 minus the sum of P5,750.00 mentioned in (a) above. The order appealed from is the result of three
motions filed in the court a quo in the course of the execution of a final judgment of the Court of Appeals rendered in 2 cases
appealed to it in which the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas were the parties. The
Timbang spouses presented their opposition to each and all of this motion. In assailing the order of the court a quo directing
the appellants to pay appellee Blas the amount of their bid (P5,750.00) made at the public auction, appellants' counsel has
presented a novel, albeit ingenious, argument. They contend that since the builder in good faith has failed to pay the price of
the land after the owners thereof exercised their option under Article 448 of the Civil Code, the builder has lost his right and
the appellants as owners of the land automatically became the owners ipso facto.

ISSUE/S:
1.Whether or not the contention of the appellants is valid. If not, what are the remedies left to the owner of the land if the
builder fails to pay?

2.Whether or not the appellants, as owner of the land, may seek recovery of the value of their land by a writ of execution;
levy the house of the builder and sell it in public auction.

HOLDING & RATIO DECIDENDI:

NO, THE APPELLANTS CONTENTION IS SUPERFLUOUS.
There is nothing in the language of these two articles, 448 and 546, which would justify the conclusion of appellants that,
upon the failure of the builder to pay the value of the land, when such is demanded by the land-owner, the latter becomes
automatically the owner of the improvement under Article 445. Although it is true, it was declared therein that in the event of
the failure of the builder to pay the land after the owner thereof has chosen this alternative, the builder's right of retention
provided in Article 546 is lost, nevertheless there was nothing said that as a consequence thereof, the builder loses entirely all
rights over his own building. The remedy left to the parties in such eventuality where the builder fails to pay the value of the
land, though the Code is silent on this Court, a builder in good faith not be required to pay rentals. He has right to retain the
land on which he has built in good faith until he is reimbursed the expenses incurred by him. Possibly he might be made to
pay rental only when the owner of the land chooses not to appropriate the improvement and requires the builder in good faith
to pay for the land but that the builder is unwilling or unable to pay the land, and then they decide to leave things as they are
and assume the relation of lessor and lessee, and should they disagree as to the amount of rental then they can go to the court
to fix that amount. This was ruled in the case of Miranda vs. Fadullon, et al ., 97 Phil., 801. A further remedy is indicated in
the case of Bernardo vs. Bataclan, supra, where this Court approved the sale of the land and the improvement in a public
auction applying the proceeds thereof first to the payment of the value of the land and the excess, if any, to be delivered to
the owner of the house in payment thereof.

The second contention was without merit.

In the instant case, the Court of Appeals has already adjudged that appellee Blas is entitled to the payment of the unpaid
balance of the purchase price of the school building. With respect to the order of the court declaring appellee Filipinas
Colleges, Inc. part owner of the land to the extent of the value of its personal properties sold at public auction in favor of the
Timbang, this Court likewise finds the same as justified, for such amount represents, in effect, a partial payment of the value
of the land. Failure of the Timbang spouses to pay to the Sheriff or to Manila Gervacio Blas said sum of P5,750.00 within
fifteen (15) days from notice of the final judgment, an order of execution shall issue in favor of Maria Gervasio Blas to be
levied upon all properties of the Timbang spouses not exempt from execution for the satisfaction of the said amount.