“CLASSIFICATION OF PROPERTY”

1)
Civil Case: PUNSALAN, JR. V. VDA. DE LACSAMANA G.R. No.
L-55729 March 28, 1983
PUNSALAN, JR. V. VDA. DE LACSAMANA G.R. No. L-55729
March 28, 1983

Immovable Property Case

FACTS:

Punsalan was the owner of a piece of land, which he mortgaged in favor of PNB. Due to his failure to
pay, the mortgage was foreclosed and the land was sold in a public auction to which PNB was the
highest bidder.

On a relevant date, while Punsalan was still the possessor of the land, it secured a permit for the
construction of a warehouse.

A deed of sale was executed between PNB and Punsalan. This contract was amended to include the
warehouse and the improvement thereon. By virtue of these instruments, respondent Lacsamana
secured title over the property in her name.

Petitioner then sought for the annulment of the deed of sale. Among his allegations was that the bank
did not own the building and thus, it should not be included in the said deed.

Petitioner’s complaint was dismissed for improper venue. The trial court held that the action being
filed in actuality by petitioner is a real action involving his right over a real property.

ISSUE:

W/N the trial court erred in dismissing the case on the ground of improper venue.
W/N the warehouse is an immovable and must be tried in the province where the property lies.

HELD:

Warehouse claimed to be owned by petitioner is an immovable or real property. Buildings are always
immovable under the Code. A building treated separately from the land on which it is stood is
immovable property and the mere fact that the parties to a contract seem to have dealt with it
separate and apart from the land on which it stood in no wise changed its character as immovable
property.

2)

May 31, 1982

MERALCO SECURITIES INDUSTRIAL CORPORATION, petitioner,

 vs.

CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF

ASSESSMENT APPEALS OF LAGUNA and PROVINCIAL ASSESSOR OF
LAGUNA, respondents.
Facts:
Pursuant to a pipeline concession issued under the Petroleum Act of 1949,
Republic Act No. 387, Meralco Securities installed from Batangas to Manila a
pipeline system consisting of cylindrical steel pipes joined together and buried
not less than one meter below the surface along the shoulder of the public
highway. The pipes are embedded in the soil and are firmly and solidly welded
together so as to preclude breakage or damage thereto and prevent leakage
or seepage of the oil. The valves are welded to the pipes so as to make the
pipeline system one single piece of property from end to end.

In order to repair, replace, remove or transfer segments of the pipeline, the

pipes have to be cold-cut by means of a rotary hard-metal pipe-cutter after
digging or excavating them out of the ground where they are buried. In points
where the pipeline traversed rivers or creeks, the pipes were laid beneath the
bed thereof. Hence, the pipes are permanently attached to the land.

Pursuant to the Assessment Law, Commonwealth Act No. 470, the provincial
assessor of Laguna treated the pipeline as real property and issued tax
declarations, containing the assessed values of portions of the pipeline.

Meralco appealed the assessments to the defendants, but the latter ruled that
pipeline is subject to realty tax. The defendants argued that the pipeline is
subject to realty tax because they are contemplated in Assessment Law and
Real Property Tax Code; that they do not fall within the category of property
exempt from realty tax under those laws; that Articles 415 & 416 of the Civil
Code, defining real and personal property have no applications to this case
because these pipes are constructions adhered to soil and things attached to
the land in a fixed manner, and that Meralco Securities is not exempt from
realty tax under petroleum law.

Meralco insists that its pipeline is not subject to realty tax because it is not real
property within the meaning of Art. 415.

Issue:
Whether the aforementioned pipelines are subject to realty tax.
Held:
Yes, the pipelines are subject to realty tax.
Section 2 of the Assessment Law provides that the realty tax is due “on real
property, including land, buildings, machinery, and other improvements.” This
provision is reproduced with some modification in Section 38, Real Property
Tax Code, which provides that “there shall be levied, assessed, and collected
xxx annual ad valorem tax on real property such as land, buildings,
machinery, and other improvements affixed or attached to real property xxx.”

It is incontestable that the pipeline of Meralco Securities does not fall within
any of the classes of exempt real property enumerated in section 3 of the
Assessment Law and section 40 of the Real Property Tax Code.

Pipeline means a line of pipe connected to pumps, valves and control devices
for conveying liquids, gases or finely divided solids. It is a line of pipe running
upon or in the earth, carrying with it the right to the use of the soil in which it is
placed.

Article 415[l] and [3] provides that real property may consist of constructions
of all kinds adhered to the soil and everything attached to an immovable in a
fixed manner, in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object.

The pipeline system in question is indubitably a construction adhering to the

soil. It is attached to the land in such a way that it cannot be separated
therefrom without dismantling the steel pipes which were welded to form the
pipeline.

WHEREFORE, the questioned decision and resolution are affirmed. The petition is
dismissed. No costs.

3)

MANILA ELECTRIC COMPANY v. CITY ASSESSOR, GR No. 166102, 2015-08-05

Facts:
MERALCO is a private corporation organized and existing under Philippine laws to operate
as a public utility engaged in electric distribution.
MERALCO received from the City Assessor of Lucena a copy of Tax Declaration No. 019-
6500[13] covering the following electric facilities, classified as capital investment, of the
company: (a) transformer and electric post; (b)... transmission line; (c) insulator; and (d)
electric meter, located in Quezon Ave. Ext., Brgy. Gulang-Gulang, Lucena City. Under Tax
Declaration No. 019-6500, these electric facilities had a market value of P81,811,000.00
and an assessed value of P65,448,800.00, and were subjected... to real property tax as of
1985.
MERALCO claimed that its capital investment consisted only of its substation facilities, the
true and correct value of which was only P9,454,400.00; and that
MERALCO was exempted from payment of real property tax on said substation facilities.
Issues:
whether or not the poles, wires, insulators, transformers, and electric meters of MERALCO
were real properties
Ruling:
LBAA cited the 1964 case of Board of Assessment Appeals v. Manila Electric
Company[16] (1964 MERALCO case) in which the Court held that: (1) the steel towers fell
within the term "poles" expressly exempted from taxes under the franchise of MERALCO;
and (2) the steel towers were personal properties under the provisions... of the Civil Code
and, hence, not subject to real property tax. The LBAA lastly ordered that Tax Declaration
No. 019-6500 would remain and the poles, wires, insulators, transformers, and electric
meters of MERALCO would be continuously assessed, but the City Assessor would
stamp... on the said Tax Declaration the word "exempt.
Board overrules the claim of the [City Assessor of Lucena] and sustain the claim of
[MERALCO].
Appellant (Meralco) is hereby ordered to render an accounting to the City Treasurer of
Lucena and to pay the City Government of Lucena the amount corresponding to the Five
(5%) per centum of the gross earnings in compliance with paragraph 13 both Resolutions
108 and
2679, respectively, retroactive from November 9, 1957 to date, if said tax has not yet been
paid.

4)

Davao Saw Mill v. Castillo G.R. No. L-40411

August 7, 1935 Property
AUGUST 24, 2018

FACTS:

The Davao Saw Mill Co., Inc., operates a sawmill. However, the land upon which the business
was conducted belonged to another person. On the land the sawmill company erected a building
which housed the machinery used by it. Some of the machines were placed and mounted on
foundations of cement. In the contract of lease between the sawmill company and the owner of
the land there appeared the following provision:
 That on the expiration of the period agreed upon, all the improvements and buildings
introduced and erected by the lessee shall pass to the exclusive ownership of the lessor
without any obligation on its part to pay any amount for said improvements and
buildings; also, in the event the lessee should leave or abandon the land leased before the
time herein stipulated, the improvements and buildings shall likewise pass to the
ownership of the lessor as though the time agreed upon had expired: Provided, however,
That the machineries and accessories are not included in the improvements which will
pass to the lessor on the expiration or abandonment of the land leased.

In another action, wherein Davao Saw Mill was the defendant, a judgment was rendered in favor of the
plaintiff in that action against the defendant in that action; a writ of execution issued thereon, and the
properties now in question were levied upon as personalty by the sheriff.

Davao Saw Mill has on a number of occasions treated the machinery as personal property by
executing chattel mortgages in favor of third persons. One of such persons is the appellee by
assignment from the original mortgages.

ISSUE:

Whether or not the machinery in dispute is a personal property.

RULING:

Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real
property consists of —

1. Land, buildings, roads and constructions of all kinds adhering to the soil;

xxx xxx xxx

5. Machinery, liquid containers, instruments or implements intended by the owner of any

building or land for use in connection with any industry or trade being carried on therein
and which are expressly adapted to meet the requirements of such trade of industry.

Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph.

While not conclusive, the characterization of the property as chattels by the appellant is
indicative of intention and impresses upon the property the character determined by the parties.
It is machinery which is involved; moreover, machinery not intended by the owner of any
building or land for use in connection therewith, but intended by a lessee for use in a building
erected on the land by the latter to be returned to the lessee on the expiration or abandonment of
the lease.

Machinery which is movable in its nature only becomes immobilized when placed in a plant by
the owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any
person having only a temporary right, unless such person acted as the agent of the owner.

“Machinery, vessels, instruments or implements intended by the owner of the tenements for the
industrial or works that they may carry on in any building or upon any land and which tend
directly to meet the needs of the said industry or works.”

Machinery which is movable in its nature only becomes immobilized when placed in a
plant by the owner of the property or plant. Such result would not be accomplished,
therefore, by the placing of machinery in a plant by a tenant or a usufructuary or any
person having only a temporary right.

5)

Sibal vs. Valdez (G.R. No. L-26278, August 4, 1927)

Facts: Plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, , attached and
sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants on parcels of land.
Within one year from the date of the attachment and sale the plaintiff offered to redeem said sugar cane and tendered
to the defendant Valdez the amount sufficient to cover the price paid by the latter, the interest thereon and any
assessments or taxes which he may have paid thereon after the purchase, and the interest corresponding thereto and
that Valdez refused to accept the money and to return the sugar cane to the plaintiff.
Plaintiff alleged that the defendant Emiliano J. Valdez was attempting to harvest the palay planted in four of the seven
parcels of land and that he had harvested and taken possession of the palay in one of said seven parcels and in another
parcel and that all of said palay belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J. Valdez his attorneys
and agents, restraining them (1) from distributing him in the possession of the parcels of land described in the
complaint; (2) from taking possession of, or harvesting the sugar cane in question; and (3) from taking possession, or
harvesting the palay in said parcels of land.
Plaintiff also prayed that a judgment be rendered in his favor and against the defendants ordering them to consent to
the redemption of the sugar cane in question, and that the defendant Valdez be condemned to pay to the plaintiff the
sum of P1,056 the value of palay harvested by him in the two parcels of land, with interest and costs.
The trial court rendered a judgment against the plaintiff and in favor of the defendants. It appeared that the eight
parcels of land belonging to Sibal were attached and Macondray Co., Inc. bought the eight parcels of land. Within 1 year
from the sale, Sibal paid Macondray Co., Inc. for the account of the redemption price.
The deputy sheriff attached the personal property of Sibal, which included the sugar cane now in question in the seven
parcels of land. Said personal properties were sold to Valdez in a public auction. Real property of Sibal was also attached,
consisting of 11 parcels of land, 8 of which were bought by Valdez in an auction held by the sheriff. The remaining 3
parcels were released by virtue of claims of Cuyugan and Tizon.
On that same date, Macondray sold all of its rights to Valdez in the eight parcels of land acquired, for the unpaid balance
of the redemption price of said eight parcels of land. Valdez became the absolute owner of the land.
Issue: Whether or not pending crops which have potential existence may be the valid subject matter of a sale.
Held: Yes, it can be a valid subject matter of a sale.
From an examination of the reports and codes of the State of California and other states we find that the settle doctrine
followed in said states in connection with the attachment of property and execution of judgment is, that growing crops
raised by yearly labor and cultivation are considered personal property.
Mr. Floyd R. Mechem (He is the author of A Treatise on the Law of Sale of Personal Property) says that a valid sale may
be made of a thing, which though not yet actually in existence, is reasonably certain to come into existence as the natural
increment or usual incident of something already in existence, and then belonging to the vendor, and then title will vest
in the buyer the moment the thing comes into existence. Things of this nature are said to have a potential existence.
A man may sell property of which he is potentially and not actually possessed. He may make a valid sale of the wine
that a vineyard is expected to produce; or the gain a field may grow in a given time; or the milk a cow may yield during
the coming year; or the wool that shall thereafter grow upon sheep; or what may be taken at the next cast of a
fisherman’s net; or fruits to grow; or young animals not yet in existence; or the good will of a trade and the like. The
thing sold, however, must be specific and identified. They must be also owned at the time by the vendor. (Hull vs. Hull,
48 Conn., 250 [40 Am. Rep., 165].)
The Supreme Court held that pending crops which have potential existence may be the valid subject matter of sale and
may be dealt with separately from the land on which they grow. Judgment appealed from AFFIRMED.

6)

Serg's v. PCI Leasing

Serg’s Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000

FACTS:

PCI Leasing and Finance filed a complaint for sum of money, with an application for a writ of replevin.

Judge issued a writ of replevin directing its sheriff to seize and deliver the machineries and equipment to
PCI Leasing after 5 days and upon the payment of the necessary expenses.

The sheriff proceeded to petitioner's factory, seized one machinery, with word that he would return for
other machineries.

Petitioner (Serg’s Products) filed a motion for special protective order to defer enforcement of the writ
of replevin.

PCI Leasing opposed the motion on the ground that the properties were still personal and therefore can
still be subjected to seizure and writ of replevin.

Petitioner asserted that properties sought to be seized were immovable as defined in Article 415 of the
Civil Code.

Sheriff was still able to take possession of two more machineries

In its decision on the original action for certiorari filed by the Petitioner, the appellate court, Citing the
Agreement of the parties, held that the subject machines were personal property, and that they had
only been leased, not owned, by petitioners; and ruled that the "words of the contract are clear and
leave no doubt upon the true intention of the contracting parties."

ISSUE: Whether or not the machineries became real property by virtue of immobilization.
Ruling:

Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ
issued by the RTC, because they were in fact real property.

Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery
of personal property only.

Article 415 (5) of the Civil Code provides that machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or works which may be carried on in a building
or on a piece of land, and which tend directly to meet the needs of the said industry or works

In the present case, the machines that were the subjects of the Writ of Seizure were placed by
petitioners in the factory built on their own land.They were essential and principal elements of their
chocolate-making industry.Hence, although each of them was movable or personal property on its own,
all of them have become “immobilized by destination because they are essential and principal elements
in the industry.”

However, 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.

Section 12.1 of the Agreement between the parties provides “The PROPERTY is, and shall at all times be
and remain, personal property notwithstanding that the PROPERTY or any part thereof may now be, or
hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon,
real property or any building thereon, or attached in any manner to what is permanent.”

The machines are personal property and they are proper subjects of the Writ of Replevin

7)

Manila Lodge No. 761 Benevolent and Protective Order

of the Elks v. CA
G.R. No. L-41001, 30 September 1976
FACTS:

The Philippine Commission enacted Act No. 1360 which authorized the City of Manila to reclaim a
portion of Manila Bay. Subsequently Act No. 1657 amended the former act which states that the City
of Manila was authorized to sell or lease the set aside for hotel site. The City of Manila sells the land
to Manila Lodge No. 761 then the latter sold the land to Tarlac Development Corporation. The City of
Manila filed a petition for re-annotation of its right to repurchased. The TDC then filed a complaint that
the City of Manila was estopped from repurchasing the property.

ISSUE:

Whether or not the City of Manila was estopped from quetioning the validity of the sale.

RULING:

The Government is never estopped by mistakes or errors on the pan of its agents, and estoppel does
not apply to a municipal corporation to validate a contract that is prohibited by law or is against
Republic policy, and the sale executed by the City of Manila to Manila Lodge was certainly a contract
prohibited by law. Moreover, estoppel cannot be urged even if the City of Manila accepted the benefits
of such contract of sale and the Manila Lodge No. 761 had performed its part of the agreement, for to
apply the doctrine of estoppel against the City of Manila in this case would be tantamount to enabling
it to do indirectly what it could not do directly.

The sale of the subject property executed by the City of Manila to the Manila Lodge No. 761, BPOE,
was void and inexistent for lack of subject matter. It suffered from an incurable defect that could not
be ratified either by lapse of time or by express ratification. The Manila Lodge No. 761 therefore
acquired no right by virtue of the said sale. Hence to consider now the contract inexistent as it always
has seen, cannot be, as claimed by the Manila Lodge No. 761, an impairment of the obligations of
contracts, for there was it, contemplation of law, no contract at all.

8)

July 24, 2013

DREAM VILLAGE NEIGHBORHOOD ASSOCIATION, INC., represented by

its Incumbent President, GREG SERIEGO, Petitioner,
vs.

BASES DEVELOPMENT AUTHORITY, Respondent.

Facts:
Dream Village claims to represent more than 2000 families who have been
occupying a 78,466-square meter lot in Western Bicutan, Taguig City since
1985 “in the concept of owners continuously, exclusively, and notoriously.”

The lot used to be part of Hacienda de Maricaban, owned by Dolores Casal y

Ochoa and registered under OCT 291. Following the purchase of Maricaban
by the government of USA, it was converted into the military reservation
known as Fort William Mckinley. TCT 192 was issued in the name of USA to
cancel OCT 291. USA later transferred 30 has. of Maricaban to Manila
Railroad Company, for which TCT 192 was cancelled by TCT 1218 and 1219,
the first in the name of Manila Railroad Company, and the second in the name
of USA.

TCT 1219 was cancelled and replaced by TCT 1688, and was then replaced
by TCT 2288, both in the name of USA. USA formally ceded Fort William
Mckinley to the Republic of the Philippines, and it was documented by
cancelling TCT 2288 and replacing it with TCT 61524. Pres. Garcia issued
Proclamation No. 423, withdrawing from sale or settlement the tracts of land
within Fort William Mckinley, now renamed Fort Bonifacio, and reserving them
for military purposes.

Pres. Marcos issued Proclamation No. 2476, declaring portions of Fort

Bonifacio alienable and disposable, thus allowing the sale to the settlers of
home lots in Upper Bicutan, Lower Bicutan, Signal Village, and Western
Bicutan.

Pres. C. Aquino issued Proclamation 172, amending Proclamation 2476, by

limiting to Lots 1 and 2 in Western Bicutan as open for disposition.

RA 7227 was passed, creating the Bases Conversion and Development

Authority (BCDA) to oversee and accelerate the conversion of Clark and
Subic military reservations and their extension camps (John Hay Station,
Wallace Air Station, O’Donnell Transmitter Station, San Miguel Naval
Communications Station and Capas Relay Station) to productive civilian uses.
Section 820 of the said law provides that the capital of the BCDA will be
provided from sales proceeds or transfers of lots in nine (9) military camps in
Metro Manila, including 723 has. of Fort Bonifacio. The law, thus, expressly
authorized the President of the Philippines “to sell the above lands, in whole
or in part, which are hereby declared alienable and disposable pursuant to the
provisions of existing laws and regulations governing sales of government
properties,” specifically to raise capital for the BCDA. Titles to the camps were
transferred to the BCDA for this purpose,22 and TCT No. 61524 was
cancelled on January 3, 1995 by TCT Nos. 23888, 23887, 23886, 22460,
23889, 23890, and 23891, now in the name of the BCDA.23
Excepted from disposition by the BCDA are: a) approximately 148.80 has.
reserved for the National Capital Region (NCR) Security Brigade, Philippine
Army officers’ housing area, and Philippine National Police jails and support
services (presently known as Camp Bagong Diwa); b) approximately 99.91
has. in Villamor Air Base for the Presidential Airlift Wing, one squadron of
helicopters for the NCR and respective security units; c) twenty one (21) areas
segregated by various presidential proclamations; and d) a proposed 30.15
has. as relocation site for families to be affected by the construction of
Circumferential Road 5 and Radial Road 4, provided that the boundaries and
technical description of these exempt areas shall be determined by an actual
ground survey.

Now charging the BCDA of wrongfully asserting title to Dream Village and
unlawfully subjecting its members to summary demolition, resulting in unrest
and tensions among the residents, on November 22, 1999, the latter filed a
letter-complaint with the COSLAP to seek its assistance in the verification
survey of the subject 78,466-sq m property, which they claimed is within Lot 1
of Swo-13-000298 and thus is covered by Proclamation No. 172. They claim
that they have been occupying the area for thirty (30) years “in the concept of
owners continuously, exclusively and notoriously for several years,” and have
built their houses of sturdy materials thereon and introduced paved roads,
drainage and recreational and religious facilities. Dream Village, thus, asserts
that the lot is not among those transferred to the BCDA under R.A. No. 7227,
and therefore patent applications by the occupants should be processed by
the Land Management Bureau (LMB).

On August 15, 2000, Dream Village formalized its complaint by filing an

Amended Petition in the COSLAP. Among the reliefs it sought were:

1. DECLARING the subject property as alienable and disposable by virtue of

applicable laws;
2. Declaring the portion of Lot 1 of subdivision Plan SWO-13-000298, situated in the
barrio of Western Bicutan, Taguig, Metro Manila, which is presently being
occupied by herein petitioner as within the coverage of Proclamation Nos. 2476
and 172 and outside the claim of AFP-RSBS INDUSTRIAL PARK COMPLEX
and/or BASES CONVESION DEVELOPMENT AUTHORITY.
3. ORDERING the Land Management Bureau to process the application of the
ASSOCIATION members for the purchase of their respective lots under the
provisions of Acts Nos. 274 and 730.
Respondent BCDA in its Answer dated November 23, 2000 questioned the
jurisdiction of the COSLAP to hear Dream Village’s complaint, while asserting
its title to the subject property pursuant to R.A. No. 7227. It argued that under
Executive Order (E.O.) No. 561 which created the COSLAP, its task is merely
to coordinate the various government offices and agencies involved in the
settlement of land problems or disputes, adding that BCDA does not fall in the
enumeration in Section 3 of E.O. No. 561, it being neither a pastureland-lease
holder, a timber concessionaire, or a government reservation grantee, but the
holder of patrimonial government property which cannot be the subject of a
petition for classification, release or subdivision by the occupants of Dream
Village.

In its Resolution dated April 28, 2004, the COSLAP narrated that it called a
mediation conference on March 22, 2001, during which the parties agreed to
have a relocation/verification survey conducted of the subject lot. On April 4,
2001, the COSLAP wrote to the Department of Environment and Natural
Resources (DENR)-Community Environment and Natural Resources Office-
NCR requesting the survey, which would also include Swo-00-0001302,
covering the adjacent AFP-RSBS Industrial Park established by Proclamation
No. 1218 on May 8, 1998 as well as the abandoned Circumferential Road 5
(C-5 Road).

On April 1, 2004, the COSLAP received the final report of the verification
survey and a blueprint copy of the survey plan from Atty. Rizaldy Barcelo,
Regional Technical Director for Lands of DENR. Specifically, Item No. 3 of the
DENR report states:

3. Lot-1, Swo-000298 is inside Proclamation 172. Dream Village Neighborhood

Association, Inc. is outside Lot-1, Swo-13-000298 and inside Lot-10, 11 & Portion
of Lot 13, Swo-00-0001302 with an actual area of 78,466 square meters. Likewise,
the area actually is outside Swo-00-0001302 of BCDA.
COSLAP (Commission on the Settlement of Land Problems) Ruling: On the
basis of the DENR’s verification survey report, the COSLAP resolved that
Dream Village lies outside of BCDA, and particularly, outside of Swo-00-
0001302, and thus directed the LMB of the DENR to process the applications
of Dream Village’s members for sales patent, noting that in view of the length
of time that they “have been openly, continuously and notoriously occupying
the subject property in the concept of an owner, x x x they are qualified to
apply for sales patent on their respective occupied lots pursuant to R.A. Nos.
274 and 730 in relation to the provisions of the Public Land Act.”
In its Motion for Reconsideration filed on May 20, 2004, the BCDA questioned
the validity of the survey results since it was conducted without its
representatives present, at the same time denying that it received a
notification of the DENR verification survey. It maintained that there is no
basis for the COSLAP’s finding that the members of Dream Village were in
open, continuous, and adverse possession in the concept of owner, because
not only is the property not among those declared alienable and disposable,
but it is a titled patrimonial property of the State. COSLAP denied BCDA’s
motion for reconsideration.
CA Ruling: The BCDA argued that the dispute is outside the jurisdiction of the
COSLAP because of the land’s history of private ownership and because it is
registered under an indefeasible Torrens title; that Proclamation No. 172
covers only Lots 1 and 2 of Swo-13-000298 in Western Bicutan, whereas
Dream Village occupies Lots 10, 11 and part of 13 of Swo-00-0001302, which
also belongs to the BCDA; that the COSLAP resolution is based on an
erroneous DENR report stating that Dream Village is outside of BCDA,
because Lots 10, 11, and portion of Lot 13 of Swo-00-0001302 are within the
DA; that the COSLAP was not justified in ignoring BCDA’s request to
postpone the survey to the succeeding year because the presence of its
representatives in such an important verification survey was indispensable for
the impartiality of the survey aimed at resolving a highly volatile situation; that
the COSLAP is a mere coordinating administrative agency with limited
jurisdiction; and, that the present case is not among those enumerated in
Section 3 of E.O. No. 56145.
The COSLAP, on the other hand, maintained that Section 3(2)(e) of E.O. No.
561 provides that it may assume jurisdiction and resolve land problems or
disputes in “other similar land problems of grave urgency and magnitude,” and
the present case is one such problem.

The CA in its Decision dated September 10, 2009 ruled that the COSLAP has
no jurisdiction over the complaint because the question of whether Dream
Village is within the areas declared as available for disposition in Proclamation
No. 172 is beyond its competence to determine, even as the land in dispute
has been under a private title since 1906, and presently its title is held by a
government agency, the BCDA, in contrast to the case of Bañaga relied upon
by Dream Village, where the disputed land was part of the public domain and
the disputants were applicants for sales patent thereto.

Issue:
Whether or not Dream Village holds title to lots in Fort Bonifacio.

Held:
No. SC found no merit in Dream Village’s petition. In fact, it is the BCDA that
holds title to Fort Bonifacio.
That the BCDA has title to Fort Bonifacio has long been decided with finality.
In Samahan ng Masang Pilipino sa Makati, Inc. v. BCDA, it was categorically
ruled as follows: “First, it is unequivocal that the Philippine Government, and
now the BCDA, has title and ownership over Fort Bonifacio. xxx”
The facts in Samahan ng Masang Pilipino sa Makati are essentially not much
different from the controversy below. There, 20,000 families were long-time
residents occupying 98 has. of Fort Bonifacio in Makati City, who vainly
sought to avert their eviction and the demolition of their houses by the BCDA
upon a claim that the land was owned by the USA under TCT No. 2288. The
Supreme Court found that TCT No. 2288 had in fact been cancelled by TCT No.
61524 in the name of the Republic, which title was in turn cancelled on January
3, 1995 by TCT Nos. 23888, 23887, 23886, 22460, 23889, 23890, and 23891, all in
the name of the BCDA. The Court ruled that the BCDA’s aforesaid titles over
Fort Bonifacio are valid, indefeasible and beyond question, since TCT No. 61524
was cancelled in favor of BCDA pursuant to an explicit authority under R.A. No.
7227, the legal basis for BCDA’s takeover and management of the subject lots.
Dream Village sits on the abandoned C-5 Road, which lies outside the area
declared in Proclamation Nos. 2476 and 172 as alienable and disposable. xxx
However, the survey plan for Western Bicutan, Swo-13-000298, shows that
Lots 3, 4, 5 and 6 thereof are inside the area segregated for the Libingan ng
mga Bayani under Proclamation No. 208, which then leaves only Lots 1 and 2
of Swo-13-000298 as available for disposition. For this reason, it was
necessary to amend Proclamation No. 2476. Thus, in Proclamation No. 172
only Lots 1 and 2 of Swo-13-000298 are declared alienable and disposable.

The DENR verification survey report states that Dream Village is not situated
in Lot 1 of Swo-13-000298 but actually occupies Lots 10, 11 and part of 13 of
Swo-00-0001302. xxx The area is actually outside SWO-00-0001302 of
BCDA.” Inexplicably and gratuitously, the DENR also states that the area is
outside of BCDA, completely oblivious that the BCDA holds title over the
entire Fort Bonifacio, even as the BCDA asserts that Lots 10, 11 and 13 of
SWO-00-0001302 are part of the abandoned right-of-way of C-5 Road. This
area is described as lying north of Lot 1 of Swo-13-000298 and of Lots 3, 4, 5
and 6 of Swo-13-000298 (Western Bicutan) inside the Libingan ng mga
Bayani, and the boundary line of Lot 1 mentioned as C-5 Road is really the
proposed alignment of C-5 Road, which was abandoned when, as
constructed, it was made to traverse northward into the Libingan ng mga
Bayani. Dream Village has not disputed this assertion.

The mere fact that the original plan for C-5 Road to cross Swo-00-0001302 was
abandoned by deviating it northward to traverse the southern part of Libingan
ng mga Bayani does not signify abandonment by the government of the bypassed
lots, nor that these lots would then become alienable and disposable. They
remain under the title of the BCDA, even as it is significant that under Section
8(d) of R.A. No. 7227, a relocation site of 30.5 has. was to be reserved for
families affected by the construction of C-5 Road. It is nowhere claimed that
Lots 10, 11 and 13 of Swo-00-0001302 are part of the said relocation site.
These lots border C-5 Road in the south, making them commercially valuable
to BCDA, a farther argument against a claim that the government has
abandoned them to Dream Village.
While property of the State or any of its subdivisions patrimonial in character
may be the object of prescription, those “intended for some public service or for
the development of the national wealth” are considered property of public
dominion and therefore not susceptible to acquisition by prescription.
Article 1113 of the Civil Code provides that “property of the State or any of its
subdivisions not patrimonial in character shall not be the object of
prescription.” Articles 420 and 421 identify what is property of public dominion
and what is patrimonial property:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks, shores, roadsteads, and others
of similar character;

(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national wealth.

Art. 421. All other property of the State, which is not of the character stated in
the preceding article, is patrimonial property.

Issue 2:
Whether the area occupied by Dream Village is susceptible of acquisition by
prescription.

Held 2:
No. The area is not susceptible of acquisition by prescription.
In Heirs of Mario Malabanan v. Republic, it was pointed out that from the
moment R.A. No. 7227 was enacted, the subject military lands in Metro
Manila became alienable and disposable. However, it was also clarified that
the said lands did not thereby become patrimonial, since the BCDA law
makes the express reservation that they are to be sold in order to raise funds
for the conversion of the former American bases in Clark and Subic. The
Court noted that the purpose of the law can be tied to either “public service” or
“the development of national wealth” under Article 420(2) of the Civil Code,
such that the lands remain property of the public dominion, albeit their status
is now alienable and disposable. The Court then explained that it is only upon
their sale to a private person or entity as authorized by the BCDA law that
they become private property and cease to be property of the public dominion:

For as long as the property belongs to the State, although already classified as
alienable or disposable, it remains property of the public dominion if when it is
“intended for some public service or for the development of the national wealth.”
Thus, under Article 422 of the Civil Code, public domain lands become
patrimonial property only if there is a declaration that these are alienable or
disposable, together with an express government manifestation that the property
is already patrimonial or no longer retained for public service or the
development of national wealth. Only when the property has become patrimonial
can the prescriptive period for the acquisition of property of the public dominion
begin to run. Also under Section 14(2) of Presidential Decree (P.D.) No. 1529, it is
provided that before acquisitive prescription can commence, the property sought
to be registered must not only be classified as alienable and disposable, it must
also be expressly declared by the State that it is no longer intended for public
service or the development of the national wealth, or that the property has been
converted into patrimonial. Absent such an express declaration by the State, the
land remains to be property of public dominion.
Since the issuance of Proclamation No. 423 in 1957, vast portions of the
former Maricaban have been legally disposed to settlers, besides those
segregated for public or government use. Proclamation No. 1217 (1973)
established the Maharlika Village in Bicutan, Taguig to serve the needs of
resident Muslims of Metro Manila; Proclamation No. 2476 (1986), as amended
by Proclamation No. 172 (1987), declared more than 400 has. of Maricaban in
Upper and Lower Bicutan, Signal Village, and Western Bicutan as alienable
and disposable; Proclamation No. 518 (1990) formally exempted from
Proclamation No. 423 the Barangays of Cembo, South Cembo, West Rembo,
East Rembo, Comembo, Pembo and Pitogo, comprising 314 has., and
declared them open for disposition.

The above proclamations notwithstanding, Fort Bonifacio remains property of

public dominion of the State, because although declared alienable and
disposable, it is reserved for some public service or for the development of the
national wealth, in this case, for the conversion of military reservations in the
country to productive civilian uses. Needless to say, the acquisitive
prescription asserted by Dream Village has not even begun to run.
Ownership of a land registered under a Torrens title cannot be lost by
prescription or adverse possession. It is a settled rule that lands under a
Torrens title cannot be acquired by prescription or adverse possession.
Section 47 of P.D. No. 1529, the Property Registration Decree, expressly
provides that no title to registered land in derogation of the title of the
registered owner shall be acquired by prescription or adverse possession.
And, although the registered landowner may still lose his right to recover the
possession of his registered property by reason of laches, nowhere has
Dream Village alleged or proved laches, which has been defined as such
neglect or omission to assert a right, taken in conjunction with lapse of time
and other circumstances causing prejudice to an adverse party, as will
operate as a bar in equity. Put any way, it is a delay in the assertion of a right
which works disadvantage to another because of the inequity founded on
some change in the condition or relations of the property or parties. It is based
on public policy which, for the peace of society, ordains that relief will be
denied to a stale demand which otherwise could be a valid claim.

Issue 3:
Whether or not COSLAP has jurisdiction over the case.

Held 3:
No. The subject property having been expressly reserved for a specific public
purpose, the COSLAP cannot exercise jurisdiction over the complaint of the
Dream Village settlers.
In fine, it is apparent that the COSLAP acted outside its jurisdiction in taking
cognizance of the case. It would have been more prudent if the COSLAP has
[sic] just referred the controversy to the proper forum in order to fully thresh
out the ramifications of the dispute at bar. As it is, the impugned Resolution is
a patent nullity since the tribunal which rendered it lacks jurisdiction. Thus, the
pronouncements contained therein are void.

SC added that Fort Bonifacio has been reserved for a declared specific public
purpose under R.A. No. 7227, which unfortunately for Dream Village does not
encompass the present demands of its members. Indeed, this purpose was
the very reason why title to Fort Bonifacio has been transferred to the BCDA,
and it is this very purpose which takes the dispute out of the direct jurisdiction
of the COSLAP. A review of the history of the COSLAP will readily clarify that
its jurisdiction is limited to disputes over public lands not reserved or declared
for a public use or purpose.

Administrative agencies, like the COSLAP, are tribunals of limited jurisdiction

and, as such, could wield only such as are specifically granted to them by the
enabling statutes.
Under the law, E.O. No. 561, the COSLAP has two options in acting on a land
dispute or problem lodged before it, namely, (a) refer the matter to the agency
having appropriate jurisdiction for settlement/resolution; or (b) assume
jurisdiction if the matter is one of those enumerated in paragraph 2(a) to (e) of
the law, if such case is critical and explosive in nature, taking into account the
large number of the parties involved, the presence or emergence of social
tension or unrest, or other similar critical situations requiring immediate action.
In resolving whether to assume jurisdiction over a case or to refer the same to
the particular agency concerned, the COSLAP has to consider the nature or
classification of the land involved, the parties to the case, the nature of the
questions raised, and the need for immediate and urgent action thereon to
prevent injuries to persons and damage or destruction to property. The law
does not vest jurisdiction on the COSLAP over any land dispute or problem.

9)

CASE DIGEST: REPUBLIC OF THE PHILIPPINES,Petitioner,v.

EMMANUEL C. CORTEZ,Respondent.

FACTS: Respondent Emmanuel C. Cortez (Cortez) filed with the RTC an

applicationfor judicial confirmation of title over a parcel of land located at
Barangay (Poblacion) Aguho, P. Herrera Street, Pateros, Metro Manila. In
support of his application, Cortez submitted, inter alia, the following documents:
(1) tax declarations for various years from 1966 until 2005; (2) survey plan of the
property, with the annotation that the property is classified as alienable and
disposable; (3) technical description of the property, with a certification issued by
a geodetic engineer; (4) tax clearance certificate; (5) extrajudicial settlement of
estate conveying the subject property to Cortez; and (6) escritura de particion
extrajudicial dated July 19, 1946, allocating the subject property to Felicisima
Cotas Cortez mother.

As there was no opposition, the RTC issued an Order of General Default and
Cortez was allowed to present his evidence ex-parte.

Cortez claimed that the subject parcel of land is a portion of Lot No. 2697, which
was declared for taxation purposes in the name of his mother. He alleged that Lot
No. 2697 was inherited by his mother from her parents in 1946; that, after his
parents died, he and his siblings executed an Extra-Judicial Settlement of Estate
over the properties of their deceased parents and one of the properties allocated
to him was the subject property. He alleged that the subject property had been in
the possession of his family since time immemorial; that the subject parcel of
land is not part of the reservation of the Department of Environment and Natural
Resources (DENR) and is, in fact, classified as alienable and disposable by the
Bureau of Forest Development (BFD).

Ernesto Santos, who testified that he has known the family of Cortez for over
sixty (60) years and that Cortez and his predecessors-in-interest have been in
possession of the subject property since he came to know them.

The RTC granted Cortez application for registration, however, The Republic of
the Philippines (petitioner), represented by the Office of the Solicitor General,
appealed to the CA, alleging that the RTC erred in granting the application for
registration despite the failure of Cortez to comply with the requirements for
original registration of title. The petitioner pointed out that, although Cortez
declared that he and his predecessors-in-interest were in possession of the
subject parcel of land since time immemorial, no document was ever presented
that would establish his predecessors-in-interests possession of the same during
the period required by law. That petitioner claimed that Cortez assertion that he
and his predecessors-in-interest had been in open, adverse, and continuous
possession of the subject property for more than thirty (30) years does not
constitute well-neigh incontrovertible evidence required in land registration
cases; that it is a mere claim, which should not have been given weight by the
RTC.

The CA found that Cortez and his predecessors-in-interest had been in open,
continuous, and exclusive possession of the subject property for more than 30
years, which, under Section 14(2) of Presidential Decree (P.D.) No. 1529, sufficed
to convert it to private property. Hence, the instant petition.

ISSUE:

Did the CA err in affirming the grant of the application for

registration?
HELD: The Court finds that Cortez failed to comply with the legal requirements
for the registration of the subject property under Section 14(1) and (2) of P.D. No.
1529.

Section 14(1) of P.D. No. 1529 refers to the judicial confirmation of imperfect or
incomplete titles to public land acquired under Section 48(b) of C.A. No. 141, as
amended by P.D. No. 1073. "Under Section 14(1) [of P.D. No. 1529], applicants
for registration of title must sufficiently establish first, that the subject land forms
part of the disposable and alienable lands of the public domain; second, that the
applicant and his predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession and occupation of the same; and third, that it
is under a bona fide claim of ownership since June 12, 1945, or earlier."
In the case at bar, while the Advance Plan bearing the notation was certified by
the Lands Management Services of the DENR, the certification refers only to the
technical correctness of the survey plotted in the said plan and has nothing to do
whatsoever with the nature and character of the property surveyed.

Respondents failed to submit a certification from the proper government agency

to prove that the lands subject for registration are indeed alienable and
disposable.

Section 14(2) of P.D. No. 1529 sanctions the original registration of lands
acquired by prescription under the provisions of existing laws. "As Section 14(2)
[of P.D. No. 1529] categorically provides, only private properties may be acquired
thru prescription and under Articles 420 and 421 of the Civil Code, only those
properties, which are not for public use, public service or intended for the
development of national wealth, are considered private."

***

The Civil Code makes it clear that patrimonial property of the State may be
acquired by private persons through prescription. This is brought about by
Article 1113, which states that "all things which are within the commerce of man
are susceptible to prescription," and that property of the State or any of its
subdivisions not patrimonial in character shall not be the object of prescription."

The Court further stressed that the period of acquisitive prescription would only
begin to run from the time that the State officially declares that the public
dominion property is no longer intended for public use, public service, or for the
development of national wealth.

Accordingly, although lands of the public domain that are considered patrimonial
may be acquired by prescription under Section 14(2) of P.D. No. 1529, before
acquisitive prescription could commence, the property sought to be registered
must not only be classified as alienable and disposable; it must also be declared
by the State that it is no longer intended for public use, public service or the
development of the national wealth. Thus, absent an express declaration by the
State, the land remains to be property of public dominion.

The Court finds no evidence of any official declaration from the state attesting to
the patrimonial character of the subject property. Cortez failed to prove that
acquisitive prescription has begun to run against the State, much less that he has
acquired title to the subject property by virtue thereof. It is of no moment that
Cortez and his predecessors-in-interest have been in possession of the subject
property for 57 years at the time he applied for the registration of title thereto. lt
is not the notorious, exclusive and uninterrupted possession and occupation of an
alienable and disposable public land for the mandated periods that converts it to
patrimonial.

“OWNERSHIP”

1)

G.R. No. L-20851 September 3, 1966

JESUS AGUIRRE, petitioner,

vs.
VICTOR S. PHENG, in his capacity as General Manager of the LEONORA & COMPANY, and
NATIONAL SHIPYARDS AND STEEL CORPORATION, respondents.

Sisenando Villaluz for petitioner.

M. C. Virata for respondent National Shipyards and Steel Corporation.

BARRERA, J.:

Antecedents.—On June 28, 1954, Vicente Aldaba and Teresa V. Aldaba sold to Jesus Aguirre a
circular bolted steel tank with a capacity of 5,000 gallons, for the sum of P900.00, for which the latter
delivered to the sellers duly endorsed, Security Bank & Trust Company check No. 281912, in the
amount of P900.00. Aguirre, however, failed to, take physical possession of the tank, having been
prevented from doing so by the municipal authorities of Los Baños, Laguna (where the tank was
located), in view of the claim of ownership being made by the Bureau of Public Highways. It appears,
however, that Vicente and Teresa Aldaba again sold the same tank on December 2, 1954 to Zosimo
Gabriel, for P900.000. Gabriel, in turn, sold it to the Leonora & Company on December 5, 1954, for
P2,500.00. After some alterations and improvements made on the tank, Leonora & Company was
able to sell the tank to National Shipyards & Steel Corporation (Nassco), for P14,500.00. 1

Aguirre immediately filed with Nassco a formal notice of his claim of ownership of the tank, as a
consequence of which, payment of the purchase price to Leonora & Company was suspended.
Then, Aguirre instituted Civil Case No. 24914 in the Court of First Instance of Manila, against
Leonora & Company and the Aldabas, for delivery to him of the tank, with damages. On the other
hand, because of the suspension of payment of the purchase price, Leonora & Company filed Civil
Case No. 27988, against the Nassco, praying for the delivery of the purchase price of P14,500.00, or
the reimbursement of the sum of P2,299.00 allegedly representing the actual investment and
expenses made and incurred to put the tank in usable condition. Jesus Aguirre intervened in this
proceeding. These two cases were jointly heard by the trial court.

Thereafter, decision was rendered in Civil Case No. 24914, the dispositive portion of which reads as
follows:
 IN VIEW OF THE FOREGOING, the Court hereby declares Jesus Aguirre the absolute
owner of the property described in his complaint. The subsequent sale made by defendants
Aldaba to Zosimo Gabriel, the sale made by Zosimo Gabriel to defendant Leonora and Co.;
and the sale made by defendant Leonora and Co. to the National Shipyards and Steel
Corporation, are hereby declared null and void and of no effect. Defendants Aldaba and
Leonora and Co. and the National Shipyards and Steel Corporation, are hereby ordered to
deliver to plaintiff Jesus Aguirre the tank in question. Failure to make such delivery,
defendant National Shipyards and Steel Corporation, in whose possession the tank is at
present, shall pay to the said Jesus Aguirre the original purchase price of the tank in the
amount of P900.00.

No appeal having been perfected on time, this decision became final.

In Civil Case No. 27988, the court rendered decision based on a stipulation of facts by the parties,
wherein the existence of Civil Case No. 24914 was admitted, the dispositive portion of which
provides:

IN VIEW OF THE FOREGOING AGREEMENT, judgment is hereby rendered as follows:

Intervenor Jesus Aguirre, as we have already declared in Civil Case No. 24914, is hereby
adjudged owner of the oil tank in question. Defendant National Shipyards and Steel
Corporation is hereby ordered to deliver to the said Jesus Aguirre such tank, but in the event
that delivery is not possible, to pay to Aguirre the purchase price of P900.00, and to Leonora
and Co. the amount of P11,299.00 which represents the costs of the improvements made by
the said Leonora & Co.

In the event that the National Shipyards and Steel Corporation shall deliver the oil tank to
Jesus Aguirre as it is, the latter shall pay to Leonora and Co. the amount of P11,299.00
which, as already stated, was spent by Leonora and Co. for the improvement of the tank.

From this decision, Aguirre perfected an appeal to the Court of Appeals.

The present case.—On January 9, 1963, the Court of Appeals rendered decision affirming the
judgment of the lower court in Civil Case No. 27988, to return to intervenor Aguirre the sum of
P900.00 in case delivery of the tank to him will not be possible —

because this was all the amount that Aguirre had parted with when he purchased said tank.
It was Leonora & Co. who had 5 spent the sum of P11,299.00 for the rehabilitation of said
tank and against this amount Aguirre has no rightful claim whatsoever. Of course, in the
event of delivery of the tank to Aguirre as improved, it would be just for him to reimburse
Leonora & Co. the sum of P11,299.00. The trial court, therefore, acted properly in denying
Aguirre's claim to be paid the fair and reasonable value of the tank as improved in case the
same could no longer be delivered to him.

Aguirre filed the present petition for review, alleging that the judgment of the Court of Appeals,
ordering the return to him of the sum of P900.00 (when the value of the property is at least
P14,500.00), nullifies the declaration of his ownership of the tank. He contends that under Article
440 of the Civil Code, his ownership of the property entitles him to everything that is produced
thereby, or is incorporated or attached thereto, either naturally or artificially. Thus, he reiterates the
claim to the fair and reasonable value of the tank at the time of its delivery to Nassco which is
P14,500.00.
It is clear that we have here a case of accession by specification: Leonora and Company, as
purchaser acting in good faith, spending P11,299.00 for the reconditioning of the tank which is later
adjudged to belong to petitioner Aguirre. There is no showing that without the works made by
Leonora & Company, the tank in its original condition when Aguirre paid P900.00 therefor, would
command the price of P14,500 which Nassco was willing to pay. Although ordinarily, therefore,
Aguirre, as owner of the tank, would be entitled to any accession thereto, the rule is different where
the works or improvements or the accession was made on the property by one who acted in good
faith.2 And, it is not contended that the making of the improvements and incurring of expenses
amounting to P11,299.00 by Leonora & Company was done in bad faith. Furthermore, to uphold
petitioner's contention that he is entitled to the sum of P14,500.00 the price of the tank in its present
condition, would be to allow him to enrich himself at the expense of another. The lower courts,
therefore, acted correctly in ordering the reimbursement to Leonora & Company of the expenses it
made on the tank. 1awphîl .nèt

It must also be remembered that the judgment in Civil Case No. 24914 of the Court of First Instance
of Manila, wherein Nassco was directed to pay to Aguirre the of P900.00, in case delivery of the
same tank is no longer possible, has already become final. This ruling cannot be disregarded in the
present proceeding which involves the same parties and practically the same issue, arising from the
same set of facts.

Nassco cannot also be compelled to pay more than P14,500.00 for the tank, the bid offered by
Leonora & Company and accepted by this buyer, and which must be the actual market value of the
property at the time of its delivery to the latter. It has nothing to do at all with the various transactions
or sales and the deprivation of Aguirre's right to possession of the tank, which culminated in this
legal suit.

Wherefore finding no error in the decision of the Court of Appeals under review, the present petition
is hereby dismissed, with costs against the petitioner. So ordered.

2)

272 Phil. 439

GANCAYCO, J.:
Between the one who has actual possession of an island that forms in a
non-navigable and non-flotable river and the owner of the land along the
margin nearest the island, who has the better right thereto? This is the
issue to be resolved in this petition.

The parties to this case dispute the ownership of a certain parcel of land
located in Sta. Cruz, Tagoloan, Misamis Oriental with an area of 16,452
square meters, more or less, forming part of an island in a non-navigable
river, and more particularly described by its boundaries as follows:
North - by the Tagoloan River,
South - by the Tagoloan River,
East - by the Tagoloan River and
West - by the portion belonging to Vicente Neri.
Private respondents filed with the Regional Trial Court of Misamis
Oriental[1] an action to quiet title and/or remove a cloud over the property
in question against petitioners.

Respondent Court of Appeals[2] summarized the evidence for the parties as

follows:

The appellant [private respondent Janita Eduave] claims that she inherited
the land from his [sic] father, Felomino Factura, together with his co-heirs,
Reneiro Factura and Aldenora Factura, and acquired sole ownership of the
property by virtue of a Deed of Extra Judicial Partition with sale (Exh.
D). The land is declared for tax purposes under Tax Decl. No. 26137 (Exh.
E) with an area of 16,452 square meters more or less (Exh. D). Since the
death of her father on May 5, 1949, the appellant had been in possession of
the property although the tax declaration remains in the name of the
deceased father.

The appellants further state that the entire land had an area of 16,452
square meters appearing in the deed of extrajudicial partition, while in
[the] tax declaration (Exh. E) the area is only 4,937 square meters, and she
reasoned out that she included the land that was under water. The land
was eroded sometime in November 1964 due to typhoon Ineng, destroying
the bigger portion and the improvements leaving only a coconut tree. In
1966 due to the movement of the river deposits on the land that was not
eroded increased the area to almost half a hectare and in 1970 the appellant
started to plant bananas [sic].

In 1973 the defendants-appellees [petitioners herein] asked her permission

to plant corn and bananas provided that they prevent squatters to come to
the area.

The appellant engaged the services of a surveyor who conducted a survey

and placed concrete monuments over the land. The appellant also paid
taxes on the land in litigation, and mortgaged the land to the Luzon Surety
and Co., for a consideration of P6,000.00.
The land was the subject of a reconveyance case, in the Court of First
Instance of Misamis Oriental, Branch V, at Cagayan de Oro City, Civil Case
No. 5892, between the appellant Janita Eduave vs. Heirs of Antonio
Factura which was the subject of judgment by compromise in view of the
amicable settlement of the parties, dated May 31, 1979. (Exh. R);

That the heirs of Antonio Factura, who are presently the defendants-
appellees in this case had ceded a portion of the land with an area of 1,289
square meters more or less, to the appellant, Janita Eduave, in a notarial
document of conveyance, pursuant to the decision of Court of First
Instance, after a subdivision of the lot No. 62 Pls-799, and containing 1,289
square meters more or less was designated as Lot No. 62-A [sic], and the
subdivision plan was approved as Pls-799-Psd-10-001782. (Exh. R; R-1
end R-2);

The portion Lot No. 62-A, is described as follows:

"A parcel of land (Lot No. 62-A, Psd-10-001782 being a portion of Lot 62,
Pls-799, Tagoloan Public Land Subdivision) situated in Bo. Sta. Cruz,
Municipality of Tagoloan, Province of Misamis Oriental. Bounded on the
W, and on the N along lines 4-5-1 by Lot 62-B of the subdivision plan-10-
001782; on the E by line 1-2 by Lot 64; Pls-799; on the S, along line 2-3-4
by Saluksok Creek, containing an area of one thousand two hundred eighty
nine (1,289) square meters more or less."
Appellant also applied for concession with the Bureau of Mines to extract
200 cubic meters of gravel (Exh. G & G-1); and after an ocular inspection
the permit was granted (Exh. K, and K-1 and K-2). That the appellant after
permit was granted entered into an agreement with Tagoloan Aggregates to
extract sand and gravel (Exh. L; L-1; and L-2), which agreement was
registered in the office of the Register of Deeds (Exh. M; M-1; and M-2).

The defendants-appellees [petitioners herein] denied the claim of

ownership of the appellant, and asserted that they are the real owners of
the land in litigation containing an area of 18,000 square meters more or
less. During the typhoon Ineng in 1964 the river control was washed away
causing the formation of an island, which in now the land in litigation. The
defendants started occupying the land in 1969, paid land taxes as evidenced
by tax declaration No. 26380 (Exh. 4) and tax receipts (Exhs. 7 to 7-G), and
tax clearances (Exhs. 8 & 9). Photographs showing the actual occupation of
the land the defendants including improvements and the house were
presented as evidence (Exh. 11 to 11-E). The report of the commissioner
who conducted the ocular inspection was offered as evidence of the
defendants (Exh. G).

The sketch plan prepared by Eng. Romeo Escalderon (Exh. 12) shows that
the plaintiffs' [private respondents'] land was across the land in litigation
(Exh. 12-A), and in going to the land of the plaintiff, one has to cross a
distance of about 68 meters of the Tagoloan river to reach the land in
litigation.[3]
On 17 July 1987 the trial court dismissed the complaint for failure of private
respondents as plaintiffs therein to establish by preponderance of evidence
their claim of ownership over the land in litigation. The court found that
the island is a delta forming part of the river bed which the government
may use to reroute, redirect or control the course of the Tagoloan
River. Accordingly, it held that it was outside the commerce of man and
part of the public domain, citing Article 420 of the Civil Code.[4] As such it
cannot be registered under the land registration law or be acquired by
prescription. The trial court, however, recognized the validity of
petitioners' possession and gave them preferential rights to use and enjoy
the property. The trial court added that should the State allow the island to
be the subject of private ownership, the petitioners have rights better than
that of private respondents.[5]

On appeal to the Court of Appeals, respondent court found that the island
was formed by the branching off of the Tagoloan River and subsequent
thereto the accumulation of alluvial deposits. Basing its ruling on Articles
463 and 465 of the Civil Code[6] the Court of Appeals reversed the decision
of the trial court, declared private respondents as the lawful and true
owners of the land subject of this case and ordered petitioners to vacate the
premises and deliver possession of the land to private respondents.[7]

In the present petition, petitioners raise the following as errors of

respondent court, to wit:

1. Whether [or not] respondent court correctly applied the provisions of

Articles 463 and 465 of the new Civil Code to the facts of the case at bar;
and

2. Whether [or not] respondent court gravely abused its discretion in the
exercise of its judicial authority in reversing the decision appealed from.[8]
Petitioners point out as merely speculative the finding of respondent court
that the property of private respondents was split by the branching off or
division of the river. They argue that because, as held by the trial court,
private respondents failed to prove by preponderance of evidence the
identity of their property before the same was divided by the action of the
river, respondent court erred in applying Article 463 of the Civil Code to the
facts of this case.

It must be kept in mind that the sole issue decided by respondent court is
whether or not the trial court erred in dismissing the complaint for failure
of private respondents [plaintiffs below] to establish by preponderance of
evidence their claim of ownership over the island in question. Respondent
court reversed the decision of the trial court because it did not take into
account the other pieces of evidence in favor of the private
respondents. The complaint was dismissed by the trial court because it did
not accept the explanation of private respondents regarding the initial
discrepancy as to the area they claimed: i.e., the prior tax declarations of
private respondents refer to an area with 4,937 square meters, while the
Extra-Judicial Partition with Sale, by virtue of which private respondents
acquired ownership of the property, pertains to land of about 16,452 square
meters.

The trial court favored the theory of petitioners that private respondents
became interested in the land only in 1979 not for agricultural purposes but
in order to extract gravel and sand. This, however, is belied by other
circumstances tantamount to acts of ownership exercised by private
respondents over the property prior to said year as borne out by the
evidence, which apparently the trial court did not consider at all in favor of
private respondents. These include, among others, the payment of land
taxes thereon, the monuments placed by the surveyor whose services were
engaged by the private respondent, as evidenced by the pictures submitted
as exhibits, and the agreement entered into by private respondents and
Tagoloan Aggregates to extract gravel and sand, which agreement was duly
registered with the Register of Deeds.

Private respondents also presented in evidence the testimony of two

disinterested witnesses: Gregorio Neri who confirmed the metes and
bounds of the property of private respondents and the effects of the
typhoon on the same, and Candida Ehem who related on the agreement
between private respondents and petitioners for the latter to act as
caretakers of the former.[9] The trial court disregarded their testimony
without explaining why it doubted their credibility and instead merely
relied on the self-serving denial of petitioners.[10]

From the evidence thus submitted, respondent court had sufficient basis for
the finding that the property of private respondents actually existed and
was identified prior to the branching off or division of the river. The Court
of Appeals, therefore, properly applied Article 463 of the Civil Code which
allows the ownership over a portion of land separated or isolated by river
movement to be retained by the owner thereof prior to such separation or
isolation.[11]

Notwithstanding the foregoing and assuming arguendo as claimed by

petitioners that private respondents were not able to establish the existence
and identity of the property prior to the branching off or division of the
Tagoloan River, and hence, their right over the same, private respondents
are nevertheless entitled under the law to their respective portion of the
island.

It is clear petitioners do not dispute that the land in litigation is an island

that appears in a non-flotable and non-navigable river; they instead anchor
their claim on adverse possession for about fifteen years. It is not even
controverted that private respondents are the owners of a parcel of land
along the margin of the river and opposite the island. On the other hand,
private respondents do not dispute that the island in question has been in
the actual physical possession of petitioners; private respondents insist only
that such possession by petitioners is in the concept of caretakers thereof
with the permission of private respondents.

This brings Us, as phrased earlier in this opinion, to the underlying nature
of the controversy in this case: between the one who has actual possession
of an island that forms in a non-navigable and non-flotable river and the
owner of the land along the margin nearest the island, who has the better
right thereto?

The parcel of land in question is part of an island that formed in a non-

navigable and non-flotable river; from a small mass of eroded or segregated
outcrop of land, it increased to its present size due to the gradual and
successive accumulation of alluvial deposits. In this regard the Court of
Appeals also did not err in applying Article 465 of the Civil Code.[12] Under
this provision, the island belongs to the owner of the land along the nearer
margin as sole owner thereof; or more accurately, because the island is
longer than the property of private respondents, they are deemed ipso
jure to be the owners of that portion which corresponds to the length of
their property along the margin of the river.

What, then, about the adverse possession established by petitioners? Are

their rights as such not going to be recognized? It is well-settled that lands
formed by accretion belong to the riparian owner.[13] This preferential right
is, under Article 465, also granted the owners of the land located in the
margin nearest the formed island for the reason that they are in the best
position to cultivate and attend to the exploitation of the same.[14] In fact,
no specific act of possession over the accretion is required.[15] If, however,
the riparian owner fails to assert his claim thereof, the same may yield to
the adverse possession of third parties, as indeed even accretion to land
titled under the torrens system must itself still be registered.[16]

Petitioners may, therefore, acquire said property by adverse possession for

the required number of years under the doctrine of acquisitive
prescription. Their possession cannot be considered in good faith,
however, because they are presumed to have notice of the status of private
respondents as riparian owners who have the preferential right to the
island as recognized and accorded by law; they may claim ignorance of the
law, specifically Article 465 of the Civil Code, but such is not, under Articles
3 and 526 of the same code, an adequate and valid defense to support their
claim of good faith.[17] Hence, not qualifying as possessors in good faith,
they may acquire ownership over the island only through uninterrupted
adverse possession for a period of thirty years.[18] By their own admission,
petitioners have been in possession of the property for only about fifteen
years. Thus, by this token and under the theory adopted by petitioners, the
island cannot be adjudicated in their favor.

This case is not between parties as opposing riparian owners contesting

ownership over an accession but rather between a riparian owner and the
one in possession of the island. Hence, there is no need to make a final
determination regarding the origins of the island, i.e., whether the island
was initially formed by the branching off or division of the river and
covered by Article 463 of the Civil Code, in which case there is strictly no
accession because the original owner retains ownership, or whether it was
due to the action the river under Article 465, or, as claimed by petitioners,
whether it was caused by the abrupt segregation and washing away of the
stockpile of the river control, which makes it a case of avulsion under
Article 459.[19]

We are not prepared, unlike the trial court, to concede that the island is a
delta which should be outside the commerce of man and that it belongs to
the State as property of the public domain in the absence of any showing
that the legal requirements to establish such a status have been satisfied,
which duty properly pertains to the State.[20] However, We are also well
aware that this petition is an upshot of the action to quiet title brought by
the private respondents against petitioners. As such it is not technically an
action in rem or an action in personam, but characterized as quasi in
rem,[21] which is an action in personam concerning real property.[22]Thus,
the judgment in proceedings of this nature is conclusive only between the
parties[23] and does not bind the State or the other riparian owners who
may have an interest over the island involved herein.

WHEREFORE, We find no error committed by respondent court and

DENY the petition for lack of sufficient merit. The decision of respondent
Court of Appeals is hereby AFFIRMED, without pronouncement as to costs.

SO ORDERED.

3)

RODOLFO V. ROSALES v. MIGUEL CASTELLTORT, GR NO. 157044, 2005-10-05

Facts:
Spouses
Rosales (petitioners)... are the registered owners of a parcel of land... petitioners discovered
that a house was being constructed on their lot, without their knowledge and consent, by
respondent
(Castelltort).
It turned out that respondents... had purchased a lot, Lot 16 of the same Subdivision Plan,...
but that after a survey thereof by geodetic engineer... he pointed to Lot 17 as the Lot 16 the
Castelltorts purchased.
Petitioners... filed... for recovery of possession and damages... the Castelltorts claimed in
their Answer... that they were builders in good faith.
in constructing the house on petitioners' lot as they in fact consulted her before
commencing any construction thereon, they having relied on the technical... description of
the lot sold to them, Lot 16, which was verified by her officially designated geodetic
engineer.
Issues:
whether Castelltort is a builder in good faith.
Ruling:
In the case at bar, Lot 16 was sold by Lina... to Castelltort
While prior to the sale, what Villegas showed Castelltort as evidence of his mother
Lina's ownership of the property was only a photocopy of her title TCT No. (T-42171) T-
18550... he explaining that the owner's duplicate of the title was lost and that judicial
reconstitution thereof was ongoing, Castelltort acted in the manner of a... prudent man and
went to the Registry of Deeds of Laguna to procure a certified true copy of the TCT.
The certified true copy bore no annotation indicating any prior adverse claim on Lot 16.
The records indicate that at the time Castelltort began constructing his house on petitioners'
lot, he believed that it was the Lot 16 he bought and delivered to him by Villegas.
The confusion in the identification of Lot 16 was eventually traced to the error committed by
geodetic engineer... in placing stone monuments on petitioners' property, instead of on Lot
16, the lot sold to Castelltort
As correctly found by the CA, both parties having acted in good faith at least until August
21, 1995, the applicable provision in this case is Article 448 of the Civil Code
Under the... provision, the landowner can choose between appropriating the building by
paying the proper indemnity or obliging the builder to pay the price of the land, unless its
value is considerably more than that of the structures, in which case the builder in good...
faith shall pay reasonable rent.
The choice belongs to the owner of the land, a rule that accords 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.
Possession acquired in good faith does not lose this character except in the 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 or is legally... interrupted 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.
In the case at bar, Castelltort's good faith ceased... on August 21, 1995... when petitioners
personally apprised him of their title over the questioned lot.
As held by the CA, should petitioners then opt to appropriate the house, they should only be
made to pay for that part of the... improvement built by Castelltort on the questioned
property at the time good faith still existed on his part or until August 21, 1995.
the commencement of Castelltort's payment of reasonable rent should start on August 21,
1995 as well, to be paid until such time that the possession of the property is delivered to
petitioners, subject to the reimbursement of expenses, that is,... if such option is for
petitioners to appropriate the house.
If the option chosen by petitioners is compulsory sale, however, the payment of rent should
continue up to the actual transfer of ownership.

4)

Heirs of Marcelino Cabal vs. Sps. Lorenzo Cabal and Rosita Cabal

G.R. No. 153625

July 31, 2006

FACTS:

During his lifetime, Marcelo Cabal was the owner of a parcel of land situated. Sometime in 1954,
Marcelo died, survived by his wife and his children. It appears that sometime in 1949, five years before
he died, Marcelo allowed his son, Marcelino, to build his house on a portion of the lot. Since then,
Marcelino resided thereon. Later, Marcelino’s son also built his house on the disputed property.

In 1964, Marcelo’s heirs extra-judicially settled among themselves the lot. In the interim, based on a
consolidated subdivision plan, it was revealed that Marcelino and his son occupied and built their
houses on an area located on the southernmost portion of another lot and not the adjacent lot
designated to him. The spouses Lorenzo and Rosita Cabal (respondents) confronted Marcelino on this
matter which resulted to an agreement to a re-survey and swapping of lots for the purpose of
reconstruction of land titles. However, the agreed resurvey and swapping of lots did not materialize.

Hence, respondents filed a complaint for Recovery of Possession with Damages against Marcelino. They
alleged that Marcelino introduced improvements in bad faith on their land with knowledge that the
adjacent lot is titled in his name. Marcelino contends that respondents have no cause of action against
him because he has been in possession in good faith since 1949 with the respondents’ knowledge and
acquiescence. He further avers that acquisitive prescription has set in.

ISSUES:

1) Whether or not the lot where Marcelino built his house was co-owned by Marcelo’s children
2) Whether or not Marcelino is a builder in good faith

HELD:

1) NO. It is undisputed that Marcelino built his house on the disputed property in 1949 with the consent
of his father. Marcelino has been in possession of the disputed lot since then with the knowledge of his
co-heirs, such that even before his father died in 1954, when the co-ownership was created, his
inheritance or share in the co-ownership was already particularly designated or physically segregated.
Thus, even before the lot was subdivided, Marcelino already occupied the disputed portion and even
then co-ownership did not apply over the disputed lot. Elementary is the rule that there is no co-
ownership where the portion owned is concretely determined and identifiable, though not technically
described, or that said portion is still embraced in one and the same certificate of title does make said
portion less determinable or identifiable, or distinguishable, one from the other, nor that dominion over
each portion less exclusive, in their respective owners.

Thus, since Marcelino built a house and has been occupying the disputed portion since 1949, with the
consent of his father and knowledge of the co-heirs, it would have been just and equitable to have
segregated said portion in his favor and not one adjacent to it.

2) Marcelino is deemed a builder in good faith at least until the time he was informed by respondents of
his encroachment on their property. Marcelino’s possession of the disputed lot was based on a mistaken
belief that the lot covered by his title is the same lot on which he has built his house with the consent of
his father. There is no evidence, other than bare allegation, that Marcelino was aware that he intruded
on respondents’ property when he continued to occupy and possess the disputed lot after partition was
effected.

5)

SPS. DOMINADOR R. NARVAEZ AND LILIA W. NARVAEZ v. SPS. ROSE OGAS ALCISO
AND ANTONIO ALCISO, GR No. 165907, 2009-07-27
Facts:
L... arry A. Ogas (Ogas) owned a 1,329-square meter parcel of land situated in Pico, La
Trinidad, Benguet. The property was covered by Transfer Certificate of Title (TCT) No. T-
1068, and a portion was subject to a 30-year lease agreement[4] with Esso Standard
Eastern, Inc. Ogas sold the property to his daughter Rose O. Alciso (Alciso). TCT No. T-
1068 was cancelled and TCT No. T-12422[5] was issued in the name of Alciso.
On 25 August 1979, Alciso entered into a Deed of Sale with Right to Repurchase,[6] selling
the property to Jaime Sansano (Sansano) for P10,000. Alciso later repurchased the
property from Sansano and, on 28 March 1980, she entered into another Deed of
Absolute Sale,[7] this time selling the property to Celso S. Bate (Bate) for P50,000.
TCT No. T-12422 was cancelled and TCT No. T-16066[9] was issued in the name of Bate.
On 14 August 1981, Bate entered into a Deed of Sale of Realty,[10] selling the property to
the spouses Dominador R. Narvaez and Lilia W. Narvaez
(Spouses Narvaez) for P80,000. TCT No. T-16066 was cancelled and TCT No. T-16528[11]
was issued in the name of the Spouses Narvaez. In 1982, the Spouses Narvaez built a
commercial building on the property amounting to P300,000.
Alciso alleged that she informed the Spouses Narvaez that she wanted to repurchase the
property. The Spouses Narvaez demanded P300,000, but Alciso was willing to pay only
P150,000. Alciso and the Spouses Narvaez failed to reach an agreement on the repurchase
price.
Issues:
The Spouses Narvaez elevated the case to the Court. In their Petition dated 15 December
2004, the Spouses Narvaez claimed that Alciso did not communicate her acceptance of the
favor contained in the stipulation pour autrui; thus, she could not repurchase the... property.
Ruling:
Article 1311, paragraph 2, of the Civil Code states the rule on stipulations pour autrui:
If a contract should contain some stipulation in favor of a third person, he may demand its
fulfillment provided he communicated his acceptance to the obligor before its revocation. A
mere incidental benefit or interest of a person is not sufficient. The contracting... parties
must have clearly and deliberately conferred a favor upon a third person.
In Limitless Potentials, Inc. v. Quilala,[15] the Court laid down the requisites of a stipulation
pour autrui: (1) there is a stipulation in favor of a third person; (2) the stipulation is a part,
not the whole, of the contract; (3) the... contracting parties clearly and deliberately conferred
a favor to the third person -- the favor is not an incidental benefit; (4) the favor is
unconditional and uncompensated; (5) the third person communicated his or her
acceptance of the favor before its revocation; and (6) the... contracting parties do not
represent, or are not authorized by, the third party.
All the requisites are present in the instant case: (1) there is a stipulation in favor of Alciso;
(2) the stipulation is a part, not the whole, of the contract; (3) Bate and the Spouses
Narvaez clearly and deliberately conferred a favor to Alciso; (4) the favor is unconditional...
and uncompensated; (5) Alciso communicated her acceptance of the favor before its
revocation -- she demanded that a stipulation be included in the 14 August 1981 Deed of
Sale of Realty allowing her to repurchase the property from the Spouses Narvaez, and she
informed the Spouses
Narvaez that she wanted to repurchase the property; and (6) Bate and the Spouses
Narvaez did not represent, and were not authorized by, Alciso.
WHEREFORE, the Court DENIES the petition.
6)

SARILI VS. LAGROSA G.R. No. 193517 January 15, 2014

Facts: Respondent is the owner of a certain parcel of land which he has been religiously
paying the real estate taxes for since its acquisition. Respondent is a resident of California,
USA, and during his vacation in the Philippines, he discovered that a new certificate of
title to the subject property was issued by the RD in the name of Victorino married to
Isabel Amparoby virtue of a falsified Deed of Absolute Sale dated February 16, 1978
(February 16, 1978 deed of sale) purportedly executed by him and his wife, Amelia U.
Lagrosa.
In their answer, Sps. Sarili maintained that they are innocent purchasers for value, having
purchased the subject property from Ramon B. Rodriguez, who possessed and presented
a Special Power of Attorney to sell/dispose of the same, and, in such capacity, executed
a Deed of Absolute Sale dated November 20, 1992 conveying the said property in their
favor. In this relation, they denied any participation in the preparation of the February
16, 1978 deed of sale, which may have been merely devised by the "fixer" they hired to
facilitate the issuance of the title in their names.
Issue: Whether there is a valid conveyance of the property?
Ruling: The strength of the buyer’s inquiry on the seller’s capacity or legal authority to
sell depends on the proof of capacity of the seller. If the proof of capacity consists of a
special power of attorney duly notarized, mere inspection of the face of such public
document already constitutes sufficient inquiry. If no such special power of attorney is
provided or there is one but there appears to be flaws in its notarial acknowledgment,
mere inspection of the document will not do; the buyer must show that his investigation
went beyond the document and into the circumstances of its execution.
Settled is the rule that a defective notarization will strip the document of its public
character and reduce it to a private instrument, and the evidentiary standard of its validity
shall be based on preponderance of evidence.
Since Sps. Sarili’s claim over the subject property is based on forged documents, no valid
title had been transferred to them.

7)

LEONEN, J.:
This resolves the Petition for Review on Certiorari[1] filed by Spouses Pablo
M. Padilla, Jr. and Maria Luisa P. Padilla (Spouses Padilla) assailing the
Decision[2] dated March 19, 2012 of the Court of Appeals, which reversed
and set aside the Decision[3] dated July 15, 2009 of Branch 30 of the
Regional Trial Court of Cabanatuan City.
Spouses Padilla bought a parcel of land in Magsaysay Norte, Cabanatuan
City in 1984.[4] The lot was covered by Transfer Certificate Title No. T-
45565 and had an area of 150 square meters.[5] It had an assessed value of
more than P20,000.00.[6]

Sometime in 1998, Spouses Padilla discovered that Leopoldo Malicsi, Lito

Casino, and Agrifino Guanes (Malicsi, et al.) constructed houses on their
lot.[7]

Spouses Padilla made repeated verbal and written demands for Malicsi, et
al. to vacate the premises and pay a monthly rental of P2,000.00, but
Malicsi, et al. refused to heed Spouses Padilla's demands.[8]

The matter was referred to the Katarungang Pambarangay for conciliation

proceedings and amicable settlement, but all efforts at conciliation failed.[9]

On August 6, 2007, Spouses Padilla filed a complaint for recovery of

possession against Malicsi, et al., along with three (3) others: Larry
Marcelo, Diosdado dela Cruz, and Rolando Pascua.[10]

In their Answer with Compulsory Counterclaim, Malicsi, et al. alleged that

they believed in all honesty and good faith that the lot belonged to Toribia
Vda. De Mossessgeld (De Mossessgeld).[11] They claimed that they
possessed the land and built their houses on the lot only after receiving De
Mossessgeld's permission.[12]

Malicsi, et al. also claimed that they and De Mossessgeld agreed that she
would sell them the areas occupied by their houses, provided that pending
full payment, they would pay her P40.00 per month as rent.[13]

Between 1980 and 1983, Malicsi, et al. constructed their respective houses
on the lot in the belief that they would eventually own the areas they were
occupying. Malicsi and Casino even introduced improvements to the houses
they had built.[14]

Malicsi, et al. stated that they first found out about Spouses Padilla's claim
of ownership sometime in 2002.[15]They admitted receiving the demand
letters to vacate and pay rentals, but they refused to leave the
premises.[16]They denied that conciliation and mediation proceedings for
amicable settlement were ever conducted before the Katarungang
Pambarangay.[17]

On September 3, 2008, a commission was created to determine the actual

valuation of the lot, including the improvements erected on it.[18] In its
Report, the Commission found that "the prevailing valuation of similar lots
in the vicinity ranges from P4,000 to P6,000 per [square] [meter] or an
average valuation of P5000.00/[square] [meter] as per information
gathered from several bank appraisers in the locality."[19]

The Commissioner's Report likewise quoted the appraised value of the

improvements on the lot, thus:

The Computation of the value of the property

The appraised value of the property subject of this case were [sic] computed
using the straightline method of depreciation with the formula:

Appraised Value = Market value x Remaining Life (building)/Life of the

building

A. The 2-level residential house occupied by Sps. Angelito & Carmelita

Casino:

Appraised Value = P183,040 x 22/25 = P161,075.20

B. The 2-level residential building house occupied by Sps. Larry &

Candida Marcelo:

Appraised Value = P199,280 x 22/25 = P175,366.40

C. The bungalow type residential building occupied by Mr. Diosdado

dela Cruz:

Appraised Value = P68,000 x 22/25 = P59,840

D. The 2-level residential house occupied by Sps. Leopoldo Malicsi

 Appraised Value = P183,040 x 22/25 = P161,075.20

E. [T]he 2-level residential house occupied by Sps. Agri[f]ino & Aida

Guane[s]:

Appraised Value = P208,000 x 22/25 = 183,040[20] (Emphasis in

the original)

On January 30, 2009, Spouses Padilla, exercising their option to sell the
land to Malicsi, et al. under Article 448 of the Civil Code in the amount of
P5,000.00 per square meter, filed a Motion and Manifestation with Offer to
Sell. In their Comment, Malicsi, et al. stated that by filing the Motion and
Manifestation, Spouses Padilla had, in effect, recognized Malicsi, et al.'s
standing as builders in good faith. They did not accept the offer to sell.[21]

In the Decision[22] dated July 15, 2009, the Regional Trial Court ruled that
Malicsi, et al. cannot be considered as builders in good faith.[23] The
dispositive of the Regional Trial Court Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in

favor of the [Spouses Padilla] and against [Malicsi, et al.] ordering the
latter:

1. To vacate the property covered by TCT-T-45565 of the Registry of

Deeds of Cabanatuan City and surrender possession of the same to
[Spouses Padilla];

2. To pay [Spouses Padilla] jointly and severally attorney's fees in the

amount of P20,000.00 and litigation expenses in the amount of
P10,000.00.

SO ORDERED.[24] (Emphasis in the original)

Malicsi, et al. appealed to the Court of Appeals. On March 19, 2012, the
Court of Appeals reversed and set aside the Regional Trial Court
Decision.[25]

The Court of Appeals gave credence to Malicsi, et al.'s allegation that they
relied on De Mossessgeld's representation that she owned the lot and gave
them permission to build their houses on it.[26] The dispositive of the Court
of Appeals Decision reads:

WHEREFORE, premises considered, the decision appealed from is

hereby REVERSED and SET ASIDE. In lieu thereof, another is entered
as follows:

1. Declaring [respondents] as builders in good faith.

2. Ordering [respondents] to purchase the subject land unless the fair

market value of the land is considerably more than the fair market
value of the improvements thereon, in which case, a forced lease shall
be created between the parties on terms to be mutually agreed upon
by them or, in case of disagreement, to be fixed by the court.

3. Deleting the award of attorney's fees and litigation expenses for lack
of basis.

SO ORDERED.[27] (Emphasis in the original)

Petitioners Spouses Pablo M. Padilla, Jr. and Maria Luisa P. Padilla
elevated the case to this Court. In their Petition for Review on
Certiorari,[28] they point out that respondents Leopoldo Malicsi, Lito
Casino, and Agrifino Guanes failed to substantiate their claim of being
builders in good faith:

While the law says, that presumption of good faith leans in favor of the
respondents and the burden rests upon the petitioners, yet from the
surroundings [sic] circumstances and the evidenced [sic] adduced before
the Regional Trial Court, it appears that respondents' declaration that
Toribia Vda. De Mossessgeld permitted them to stay in the premises in
question is not an evidence at all to prove them to be builders in good faith.
Mossessgeld was never presented as a witness nor there was an evidence
[sic], that Mossessgeld is the owner thereof. Is that sufficient evidence to
support the claim of the respondents that they are builders in good faith?[29]
In their Comment,[30] respondents maintain that the question of whether
they were builders in good faith has already been settled by the Court of
Appeals, and that there is no reason to deviate from its findings.[31]

The sole issue for this Court's resolution is whether respondents are
builders in good faith.

The Rules of Court categorically states that a review of appeals filed before
this Court is "not a matter of right, but of sound judicial discretion."[32]

The Rules of Court further requires that only questions of law should be
raised in petitions filed under Rule 45[33]since factual questions are not the
proper subject of an appeal by certiorari. It is not this Court's function to
analyze or weigh all over again evidence that has already been considered in
the lower courts.[34]

However, these rules admit exceptions. Medina v. Mayor Asistio,

Jr.[35] lists down 10 recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation,

surmises or conjectures; (2) When the inference made is manifestly
mistaken, absurd or impossible; (3) Where there is a grave abuse of
discretion; (4) When: the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting; (6) When the Court of
Appeals, in making its findings, went beyond the issues of the case and the
same is contrary to the admissions of both appellant and appellee; (7) The
findings of the Court of Appeals are contrary to those of the trial court; (8)
When the findings of fact are conclusions without citation of specific
evidence on which they are based; (9) When the facts set forth in the
petition as well as in the petitioner's main and reply briefs are not disputed
by the respondents; and (10) The finding of fact of the Court of Appeals is
premised on the supposed absence of evidence and is contradicted by the
evidence on record.[36]
Pascual v. Burgos[37] instructs that parties must demonstrate by convincing
evidence that the case clearly falls under the exceptions to the rule:

Parties praying that this court review the factual findings of the Court of
Appeals must demonstrate and prove that the case clearly falls under the
exceptions to the rule. They have the burden of proving to this court that a
review of the factual findings is necessary. Mere assertion and claim that
the case falls under the exceptions do not suffice.[38] (Citation omitted)
Petitioners claim that the Court of Appeals erred in reversing the trial
court's finding that respondents were not builders in good faith. However,
that the findings of the Court of Appeals and of the trial court are opposite
does not warrant this Court's automatic review of factual findings.[39] This
only presents a prima facie basis for recourse to this Court. Fernan v.
Court of Appeals[40] cautions that this Court's review of the factual findings
of the lower courts "must be invoked and applied only with great
circumspection and upon a clear showing that manifestly correct findings
have been unwarrantedly rejected or reversed."[41]

A careful study of the records leads this Court to conclude that this case
falls under the exceptions cited in Medina, particularly in that "the
inference made is manifestly mistaken";[42] and that "[t]he findings of the
Court of Appeals are contrary to those of the trial court, necessitating a
review of the question of fact raised before this Court."[43]

II

A builder in good faith is a builder who was not aware of a defect or flaw in
his or her title when he or she introduced improvements on a lot that turns
out to be owned by another.[44]

Philippine National Bank v. De Jesus[45] explains that the essence of good

faith is an honest belief of the strength and validity of one's right while
being ignorant of another's superior claim at the same time:

Good faith, here understood, is an intangible and abstract quality with no

technical meaning or statutory definition, and it encompasses, among other
things, an honest belief, the absence of malice and the absence of design to
defraud or to seek an unconscionable advantage. An individual's personal
good faith is a concept of his own mind and, therefore, may not conclusively
be determined by his protestations alone. It implies honesty of intention,
and freedom from knowledge of circumstances which ought to put the
holder upon inquiry. The essence of good faith lies in an honest belief in the
validity of one's right, ignorance of a superior claim, and absence of
intention to overreach another[.][46] (Citations omitted)
The following provisions of the Civil Code are relevant as regards the
remedies available to a landowner and builder in good faith:
Article 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.

....

Article 546. Necessary expenses shall be refunded to every possessor; but

only the possessor in good faith may retain the thing until he has been
reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with
the same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or of
paying the increase in value which the thing may have acquired by reason
thereof.

....

Article 548. Expense for pure luxury or mere pleasure shall not be refunded
to the possessor in good faith; but he may remove the ornaments with
which he has embellished the principal thing if it suffers no injury thereby,
and if his successors in the possession do not prefer to refund the amount
expended.
Article 448 of the1 Civil Code gives a builder in good faith the right to
compel the landowner to choose between two (2) options: (1) to appropriate
the building by paying the indemnity required by law; or (2) to sell the land
to the builder. Ignacio v. Hilario[47] summarized the respective rights of the
landowner and builder in good faith as follows:

The owner of the building erected in good faith on a land owned by another,
is entitled to retain the possession of the land until he is paid the value of
his building, under article [546]. The owner of the land, upon the other
hand, has the option, under article [448], either to pay for the building or to
sell his land to the owner of the building. But he cannot, as respondents
here did, refuse both to pay for the building and to sell the land and compel
the owner of the building to remove it from the land where it is erected. He
is entitled to such remotion only when, after having chosen to sell his land,
the other party fails to pay for the same.[48]
Rosales v. Castelltort[49] has emphasized that the choice belongs to the
landowner, but the landowner must choose from the two (2) available
options:

The choice belongs to the owner of the land, a rule that accords 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.[50] (Citations omitted)
Even before the Regional Trial Court rendered its Decision, petitioners had
already intimated their willingness to sell the property to respondents at
P5,000.00 per square meter, which was the valuation recommended in the
Commissioner's Report. However, respondents refused to accept the offer
to sell.[51]

Respondents claim to be builders in good faith because they believed that

the lot was owned by De Mossessgeld.[52] Operating under this belief, they
entered into an agreement with her where she would sell them the areas
occupied by their respective houses, and pending full payment, they would
each pay her P40.00 monthly as rent.[53]

However, the Regional Trial Court was not swayed by respondents'

assertion of being builders in good faith since it found that the property was
titled, as early as 1963, to petitioner Pablo M. Padilla, Jr.'s mother, while
respondents only entered the lot sometime between 1980 and 1983, thus:

Undoubtedly, [Malicsi, et al.] can not claim that they were builders in good
faith because they relied on the promise of one Mrs. Toribia Vda. De
Mossessgeld who will sell the same to them but such allegations are
contrary to the actual circumstances obtaining in this case.

A check with the Office of the Register of Deeds will show that the property
in question had already been registered in the name of the mother of [Pablo
M. Padilla, Jr.] way back in 1963 under TCT-T-8303 such that [Malicsi, et
al.] "can not claim good faith when they constructed their residential
houses thereon in 1980 and 1983. Said Mrs. Mossessgeld had never been an
owner thereof to sell the same to them.

[Pablo M. Padilla, Jr.] is merely giving [Malicsi, et al.] some liberalities by

allowing them to buy the lots they occupy but the latter adamantly refused
as can be gleaned from their written Comment dated March 27, 2009.[54]
Upon appeal, the Court of Appeals reversed the findings of the Regional
Trial Court and found respondents to be builders in good faith:

Here, [Malicsi, et al] constructed their houses on the subject parcel of land
on their mistaken belief that it was owned by Toribia vda de Mossessgeld. It
was the latter who gave them permission to build their houses thereat. This
situation is no different from that in Sarmiento vs. Agana where the
private respondents who constructed their residential house on a property
they had mistakenly believed to be owned by their mother but later turned
out to belong to another, were considered as builders in good faith.

This ruling was reiterated in the case of Spouses Ismael and Teresita
Macasaet vs. Spouses Vicente and Rosario
Macasaet[.][55] (Emphasis in the original, citations omitted)
We do not agree with the Court of Appeals.

The Court of Appeals relied heavily on Sarmiento v. Agana[56] and Spouses

Macasaet v. Spouses Macasaet[57]to support its reversal of the Regional
Trial Court Decision. A judicious reading of the cited jurisprudence,
however, shows that the facts in this case greatly differ from those
in Sarmiento and Spouses Macasaet.

In Sarmiento, Spouses Ernesto and Rebecca Valentino were allowed by

Ernesto's mother to build a house on what she claimed was her lot. The
couple then built their house on the lot, but later found out that the lot was
titled to Mr. and Mrs. Jose C. Santos, who had sold the lot to Leonila
Sarmiento.[58] This Court ruled that Spouses Ernesto and Rebecca
Valentino were builders in good faith "in view of the peculiar circumstances
under which they had constructed the residential house."[59]
In Spouses Macasaet, a mother and father owned a parcel of land. They
told their son and daughter-in-law to build a house on a part of the lot so
that the family could live near each other and they could help out in the
family business. After some time, relations became strained between the
family members.[60] The parents filed an ejectment suit against their son
and daughter-in-law, saying that their stay was only based on
tolerance.[61] This Court deemed the son and daughter-in-law to be builders
in good faith as they introduced improvements on the lot with the
knowledge and consent of their parents, the registered lot owners.[62]

No such peculiar circumstance of close family relations can be found here.

Respondents say that they believed De Mossessgeld when she told them
that the lot belonged to her. Yet, the records show that De Mossessgeld was
a complete stranger to them. The lack of blood relation should have been
enough to put respondents on guard and convince them not to rely on her
claim of ownership. If respondents had looked into the ownership of the lot,
they would have easily discovered that it was titled to petitioner Pablo M.
Padilla, Jr.'s mother as early as 1963 under Transfer Certificate of Title No.
T-8303.

In Baltazar v. Court of Appeals,[63] the burden of proving the status of a

purchaser in good faith lies on the person asserting that status.[64] It is not
enough to invoke the ordinary presumption of good faith; that is, that
everyone is presumed to act in good faith.[65] Respondents, as the party
asserting the status of builder in good faith, must substantiate their claim
through preponderance of evidence.[66]

To support their assertion, respondents claim that they were made to

believe by De Mossessgeld that she owned the lot. Respondents also claim
that they received permission from De Mossessgeld to build their houses on
the land, subject to their eventual purchase of the portions where their
houses stood. However, aside from this naked and self-serving testimony,
respondents failed to present any evidence to bolster their claim.

Respondents likewise failed to adduce evidence that they entered into an

agreement to sell with De Mossessgeld, or that they paid her P40.00 per
month as rent, pending full payment of the areas they were occupying.

Furthermore, respondents neither presented De Mossessgeld herself nor

submitted proof on which she might have based her purported ownership
of the lot. If De Mossessgeld proved elusive, respondents could then have
presented statements from disinterested third parties who could testify that
it was so well-known in the community that De Mossessgeld owned the lot
that they had to believe her claim of ownership. Respondents likewise failed
to prove that they exercised the necessary diligence required by their
situation. They did not examine the tax declarations or the title to the
property before they built on it.

Failing to substantiate their claim, respondents cannot be considered as

builders in good faith. Therefore, the benefits and rights provided under
Article 448 of the Civil Code do not apply.

As builders in bad faith, respondents have no right to recover their

expenses over the improvements they have introduced to petitioners' lot
under Article 449 of the Civil Code, which provides:

Article 449. He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to indemnity.
Under Article 452[67] of the Civil Code, a builder in bad faith is entitled to
recoup the necessary expenses incurred for the preservation of the land.
However, respondents neither alleged nor presented evidence to show that
they introduced improvements for the preservation of the land.

Therefore, petitioners as landowners became the owners[68] of the

improvements on the lot, including the residential buildings constructed by
respondents, if they chose to appropriate the accessions. However, they
could instead choose the demolition of the improvements at respondents'
expense or compel respondents to pay the price of the land under Article
450 of the Civil Code, which provides:

Article 450. The owner of the land on which anything has been built,
planted or sown in bad faith may demand the demolition of the work, or
that the planting or sowing be removed, in order to replace things in their
former condition at the expense of the person who built, planted or sowed;
or he may compel the builder or planter to pay the price of the land, and the
sower the proper rent.
Whether petitioners choose to appropriate the improvements, compel their
demolition, or compel respondents to pay the price of the land, they are
entitled to damages under Article 451[69] of the Civil Code.

Heirs of Durano v. Spouses Uy[70] has summarized the remedies available

to the landowner:

The Civil Code provides:

Art. 449. He who builds, plants or sows in bad faith on the land of another,
loses what is built, planted or sown without right of indemnity.

Art. 450. The owner of the land on which anything has been built, planted
or sown in bad faith may demand the demolition of the work, or that the
planting or sowing be removed, in order to replace things in their former
condition at the expense of the person who built, planted or sowed; or he
may compel the builder or planter to pay the price of the land, and the
sower the proper rent.

Art. 451. In the cases of the two preceding articles, the landowner is entitled
to damages from the builder, planter or sower.
Based on, these provisions, the owner of the land has three alternative
rights: (1) to appropriate what has been built without any obligation to pay
indemnity therefor, or (2) to demand that the builder remove what he had
built, or (3) to compel the-builder to pay the value of the land. In any case,
the landowner is entitled to damages under Article 451,
abovecited.[71] (Citations omitted)
Considering that petitioners pray for the reinstatement of the Regional
Trial Court Decision ordering respondents to vacate the lot and surrender
its possession to them, petitioners are deemed to have chosen to
appropriate the improvements built on their lot without any obligation to
pay indemnity to respondents.

WHEREFORE, premises considered, the Decision dated March 19, 2012

of the Court of Appeals in CA-G.R. CV No. 96141 is REVERSED and SET
ASIDE. The Decision dated July 15, 2009 of Branch 30 of the Regional
Trial Court of Cabanatuan City in Civil Case No. 5469 is REINSTATED IN
TOTO.

SO ORDERED.
8)

G.R. No. 199353

LEVISTAE MANAGEMENT SYSTEM, INC., Petitioner

vs
LEGASPI TOWERS 200, INC., and VIVAN Y. LOCSIN and PITONG MARCORDE, Respondents

x-----------------------x

ENGR. NELSON Q. IRASGA, in his capacity as Municipal Building Official of Makati, Metro
Manila and HON. JOSE P. DE JESUS, in his capacity as Secretary of the Dept.

DECISION

LEONARDO-DE CASTRO, J.:

The Civil Code provisions on builders in good faith presuppose that the owner of the land and
the builder are two distinct persons who are not bound either by specific legislation on the subject
property or by contract. Properties recorded in accordance with Section 41 of Republic Act No.
47262 (otherwise known as the Condominium Act) are governed by said Act; while the Master Deed
and the By Laws of the condominium corporation establish the contractual relations between said
condominium corporation and the unit owners.

These are consolidated petitions under Rule 45 filed by Leviste Management System, Inc.
(LEMANS) and Legaspi Towers 200, Inc. (Legaspi Towers), both assailing the Decision3 dated May
26, 2011 of the Court of Appeals in CA-G.R. CV No. 88082. The assailed Decision4 affirmed the
October 25, 2005 Decision of the Regional Trial Court (RTC), Branch 135 of Makati City in Civil
Case No. 91-634.

The facts, as culled by the Court of Appeals from the records, follow:

Legaspi Towers is a condominium building located at Paseo de Roxas, Makati City. It consists of
seven (7) floors, with a unit on the roof deck and two levels above said unit called Concession
2 and Concession 3. The use and occupancy of the condominium building is governed by the
Master Deed with Declaration of Restrictions of Legaspi Towers (hereafter "Master Deed") annotated
on the transfer certificate of title of the developer, Legaspi Towers Development Corporation.

Concession 3 was originally owned by Leon Antonio Mercado. On 9 March 1989, Lemans, through
Mr. Conrad Leviste, bought Concession 3 from Mercado.

Sometime in 1989, Lemans decided to build another unit (hereafter "Concession 4") on the roof deck
of Concession 3. Lemans was able to secure the building permit for the construction of Concession
4 and commenced the construction thereof on October 1990.

Despite Legaspi Corporation's notice that the construction of Concession 4 was illegal, Lemans
refused to stop its construction. Due to this, Legaspi Corporation forbade the entry of Lemans'
construction materials to be used in Concession 4 in the condominium. Legaspi Corporation similarly
wrote letters to the Building Official Nelson Irasga ("hereafter Irasga"), asking that the [building
permit of Lemans for Concession 4 be cancelled. Trasga, however, denied the requested
cancellation, stating that the applicant complied with the requirements for a building permit and that
the application was signed by the then president of Legaspi Corporation.

Lemans filed the Complaint dated February 20, 1991 with the RTC, praying among others that a writ
of mandatory injunction be issued to allow the completion of the construction of Concession 4. On 3
April 1991, the RTC issued the writ prayed for by Lemans.

Later, Legaspi Corporation filed the Third Party Complaint dated October 7, 1991. This was against
Irasga, as the Municipal Building Official of Makati, and Jose de Jesus (herafter "De Jesus"), as the
Secretary of Public Works and Highways (collectively referred to as the ""third-party defendants-
appellees") so as to nullify the building permit issued in favor of Lemans for the construction of
Concession 4.

After the parties had presented and formally offered their respective pieces of evidence, but before
the rendition of a judgment on the main case, the RTC, in its Order dated May 24, 2002, found the
application of Article 448 of the Civil Code and the ruling in the Depra vs. Dumlao [case]
(hereafter "Depra Case") to be proper.

Lemans moved for the reconsideration o[f] the aforementioned order. The RTC denied this and
further ruled:

The main issue in this case is whether or not [LEMANS] owns the air space above its condominium
unit. As owner of the said air space, [LEMANS) contends that its construction of another floor was in
the exercise of its rights.

It is the [finding] of the Court that [LEMANS) is not the owner of the air space above its unit.
[LEMANS'] claim of ownership is without basis in fact and in law. The air space which [LEMANS]
claims is not on top of its unit but also on top of the condominium itself, owned and operated by
defendant Legaspi Towers.

Since it appears that both plaintiff and defendant Legaspi Towers were in good faith, the Court finds
the applicability of the ruling in Depra vs. Dumlao, 136 SCRA 475.

From the foregoing, Lemans filed the Petition for Certiorari dated November 13, 2002 with the Court
of Appeals], docketed as CA G.R. SP. No. 73621, which was denied in the Decision promulgated on
March 4, 2004. The Court did not find grave abuse of discretion, amounting to lack or excess of
jurisdiction, on the RTC's part in issuing the above orders. Lemans sought reconsideration of this
decision but failed.

Meanwhile, Lemans adduced evidence before the RTC to establish that the actual cost for the
construction of Concession 4 was Eight Hundred Thousand Eight Hundred Ninety-seven and 96/100
Pesos (PhP800,897.96) and that the fair market value of Concession 4 was Six Million Pesos
(PhP6,000,000.00). Afterwards, the RTC rendered the Assailed Decision.5

Reiterating its previous ruling regarding the applicability of Article 448 of the Civil Code to the case,
the RTC in its October 25, 2005 Decision disposed of the dispute in this wise:

WHEREFORE, judgment is hereby rendered ordering defendant Legaspi Towers 200, Inc. to
exercise its option to appropriate the additional structure constructed on top of the penthouse owned
by plaintiff Leviste Management Systems, Inc. within sixty [60] days from the time the Decision
becomes final and executory. Should defendant Legaspi Towers 200, Inc. choose not to appropriate
the additional structure 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.

For lack of merit, the third party complaint and the counterclaims are hereby dismissed.

Costs against the plaintiff.6

When the parties respective motions for reconsideration were denied by the trial court, both elevated
the matter to the Court of Appeals.

On May 26, 2011, the Court of Appeals, acting on the consolidated appeals of LEMANS and Legaspi
Towers, rendered its Decision affirming the decision of the RTC of Makati City.

The Court of Appeals held that the appeal of LEMANS should be dismissed for failure to comply with
Section 13, Rule 44 in relation to Section 1(f), Rule 50 of the Rules of Court, as the subject index of
LEMANS' brief did not contain a digest of its arguments and a list of textbooks and statutes it
cited.7 For this reason, the appellate court no longer passed upon the sole issue raised by LEMANS,
i.e., whether its construction of Concession 4 should be valued at its actual cost or its market value.

As regards the appeal of Legaspi Towers, the Court of Appeals held that while Concession 4 is
indeed a nuisance, LEMANS has been declared a builder in good faith, and noted that Legaspi
Towers failed to contest this declaration. Since Concession 4 was built in good faith, it cannot be
demolished. The Court of Appeals likewise affirmed the validity of the building permit for Concession
4, holding that if the application and the plans appear to be in conformity with the requirements of
governmental regulation, the issuance of the permit may be considered a ministerial duty of the
building official. 8

The Motion for Partial Reconsideration of Legaspi Towers and the Motion for Reconsideration of
LEMANS were denied for lack of merit in the appellate court's Resolution9 dated November 17, 2011.

Consequently, LEMANS and Legaspi Towers filed separate Petitions for Review on Certiorari with
this Court based on the following grounds:

[LEMANS PETITION:]

THE COURT OF APPEALS ERRED WHEN IT FAILED TO APPLY THE DEPRA VS. DUMLAO
DOCTRINE WHEN IT REFUSED TO RULE ON THE PROPER VALUATION OF THE SUBJECT
PROPERTY FOR THE PURPOSE OF DETERMINING THE PURCHASE PRICE IN THE EVENT
THAT RESPONDENT LEGASPI TOWERS EXERCISES ITS OPTION TO PURCHASE

II

THE PROPERTY THE COURT OF APPEALS ERRED WHEN, REFUSING TO RULE ON THE
VALUATION OF THE SUBJECT PROPERTY, IT DISREGARDED THE EVIDENCE ALREADY
SUBMITTED AND PART OF THE RECORDS.10

[LEGASPI TOWERS PETITION:]

I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT [LEGASPI TOWERS] HAS THE
RIGHT TO DEMOLISH CONCESSION 4 FOR BEING AN ILLEGAL CONSTRUCTION.

II. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BUILDING PERMIT OF
CONCESSION 4 IS NOT VALIDLY ISSUED.11

At the crux of the present controversy is the legal issue whether Article 448 of the Civil Code and our
ruling in Depra v. Dumlao12 are applicable to the parties' situation.

Prior to answering this key question, we dispose of a procedural matter. LEMANS has taken the
position that in light of the finality of the trial court's Order dated May 24, 2002 holding that Article
448 of the Civil Code and the Depra case should be applied in this case, Legaspi Towers is now
bound by same and may no longer question the former's status as a builder in good faith. The Court
of Appeals in its assailed Decision appears to subscribe to the same view when it ruled that, despite
the fact that Concession 4 was a nuisance, the previous declaration that LEMANS is a builder in
good faith limits Legaspi Towers' options to those provided in Article 448.

The Court does not agree with LEMANS and the Court of Appeals.

At the outset, it must be pointed out that the May 24, 2002 RTC Order is an interlocutory order that
did not finally dispose of the case and, on the contrary, set the case for hearing for reception of
evidence on the amount of expenses spent by LEMANS in the construction of Concession 4. For this
reason, it is apropos to discuss here the remedies available to a party aggrieved by interlocutory
orders of the trial court.

Section 1, Rule 41 of the Rules of Court pertinently states:

RULE 41
Appeal from the Regional Trial Courts

SECTION 1. Subject of appeal. — An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to
be appealable.

No appeal may be taken from:

(a) An order denying a motion for new trial or reconsideration;

(b) An order denying a petition for relief or any similar motion seeking relief from judgment;

(c) An interlocutory order;

(d) An order disallowing or dismissing an appeal;

(e) An order denying a motion to set aside a judgment by consent, confession or

compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent;

(f) An order of execution;

 (g) A judgment or final order for or against one or more of several parties or in separate
claims, counterclaims, cross-claims and third-party complaints, while the main case is
pending, unless the court allows an appeal therefrom; and

(h) An order dismissing an action without prejudice.

In all the above instances where the judgment or final order is not appealable, the aggrieved party
may file an appropriate special civil action under Rule 65. (Emphases supplied.)

Hence, we explained in Crispino v. Tansay13 that:

The remedy against an interlocutory order is not appeal but a special civil action for certiorari under
Rule 65 of the Rules of Court. The reason for the prohibition is to prevent multiple appeals in a single
action that would unnecessarily cause delay during trial. In Rudecon v. Singson:

The rule is founded on considerations of orderly procedure, to forestall useless appeals and avoid
undue inconvenience to the appealing party by having to assail orders as they are promulgated by
the court, when all such orders may be contested in a single appeal.

Faced with an interlocutory order, parties may instantly avail of the special civil action
of certiorari. This would entail compliance with the strict requirements under Rule 65 of the
Rules of Court. Aggrieved parties would have to prove that the order was issued without or in
excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction
and that there is neither appeal nor any plain, speedy, and adequate remedy in the ordinary course
of law.

This notwithstanding, a special civil action for certiorari is not the only remedy that aggrieved
parties may take against an interlocutory order, since an interlocutory order may be appealed
in an appeal of the judgment itself. In Investments, Inc. v. Court of Appeals it was held:

Unlike a "final" judgment or order, which is appealable, as above pointed out, an

"interlocutory" order may not be questioned on appeal except only as part of an appeal that
may eventually be taken from the final judgment rendered in the case. (Emphases supplied;
citations omitted.)

From the foregoing disquisition in Crispino, a party who wishes to assail an interlocutory order may
(a) immediately file a petition for certiorari if appropriate and compliant with the stringent
requirements of Rule 65 or (b) await judgment and question the interlocutory order in the appeal of
the main decision. Notably, in the case at bar, LEMANS filed a petition for certiorari against the
RTC's May 24, 200214 and August 19, 200215 Orders while Legaspi Towers chose to simply appeal
the main decision.

This Court is not bound by the interlocutory orders of the trial court nor by the Court of Appeals'
Decision dated March 4, 2004 in CA-G.R. SP No. 73621, i.e., LEMANS' petition for certiorari of said
interlocutory orders.

To begin with, the Court of Appeals' decision in CA-G.R. SP No. 73621 was never evelated to this
Court. Secondly, in resolving LEMANS' petition for certiorari, the Court of Appeals itself ruled, among
others, that:
It is noteworthy to state that the petitioner imputes grave abuse of discretion on the part of the
respondent judge in ruling that Article 448 and the case of Depra v. Dumlao (136 SCRA 475) are
applicable in the case at bar. At most, these are considered mere errors of judgment, which are
not proper for resolution in a petition for certiorari under Rule 65.

The error is not jurisdictional, and certiorari is not available to correct errors in judgment or
conclusions of law and fact not amounting to excess or lack of jurisdiction. In the
extraordinary writ of certiorari, neither questions of fact nor even of law are entertained, but only
questions of lack or excess of jurisdiction or grave abuse of discretion.16 (Emphases supplied.)

We are not so constrained in these consolidated petitions under Rule 45 for as we observed in E.I.
Dupont De Nemours and Co. v. Francisco17:

The special civil action of certiorari under Rule 65 is intended to correct errors of jurisdiction. Courts
lose competence in relation to an order if it acts in grave abuse of discretion amounting to lack or
excess of jurisdiction. A petition for review under Rule 45, on the other hand, is a mode of
appeal intended to correct errors of judgment. Errors of judgment are errors committed by a
court within its jurisdiction. This includes a review of the conclusions of law of the lower court
and, in appropriate cases, evaluation of the admissibility, weight, and inference from the
evidence presented. (Emphases supplied; citations omitted.)

In all, there is no procedural bar for this Court to pass upon the previous interlocutory orders of the
court a quo and examine the legal conclusions therein in the present consolidated appeals of the
trial court's decision. We are compelled to undertake such a review in light of the novelty of the main
issue presented in these petitions. The Court, after all, is the final arbiter of all legal questions
properly brought before it.18

We proceed to the merits of these consolidated cases.

First, we find no cogent reason to disturb the finding of the lower courts that it is Legaspi Towers
which owns the air space above Concession 3 as the same is in keeping with the facts and the
applicable law. We quote with approval the following discussion from the Court of Appeals Decision
dated March 4, 2004 in CA-G.R. SP No. 73621:

As correctly pointed out by the private respondent Legaspi, the air space wherein Concession 4 was
built is not only above Concession 3, but above the entire condominium building. The petitioner's
[LEMANS'] ownership of Concession 3 does not necessarily extend to the area above the same,
which is actually the "air space" of the entire condominium building. The ownership of the air space
above Concession 3 is not a necessary incident of the ownership of Concession 3.

It may be well to state here the following provisions of Republic Act No. 4726, otherwise known as
The Condominium Act:

Section 2. A condominium is an interest in real property consisting of a separate interest in a unit in

a residential, industrial or commercial building and an undivided interest in common directly or
indirectly, in the land on which it is located and in other common areas of the building. A
condominium may include, in addition, a separated interest on other portions of such real property.
Title to the common areas, including the land, or the appurtenant interests in such areas, may be
held by a corporation specially formed for the purpose (hereinafter known as the "condominium
corporation") in which the holders of separate interests shall automatically be members or
shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective
units in the common areas. (RA 4726, The Condominium Act)
Section 3 (d). "Common areas" means the entire project excepting all units separately granted or
held or reserved.

Section 6. Unless otherwise expressly provided in the enabling or master deed or the declaration of
restrictions, the incidents of the condominium grant are as follows:

(a) The boundary of the unit granted are the interior surfaces of the perimeter walls, ceilings,
windows and doors thereof. The following are not part of the unit - bearing walls, columns, walls,
1âw phi 1

roofs, foundations and other common structural elements of the building x x x.

Evidently, what a unit includes is only the four walls, ceilings, windows and doors thereof. It certainly
does not include the roof or the areas above it.

In a condominium, common areas and facilities are "portions of the condominium property not
included in the units," whereas, a unit is a part of the condominium property which is to be subject to
private ownership." Inversely, that which is not considered a unit should fall under common areas
and facilities.

Inasmuch as the air space or the area above Concession 3 is not considered as part of the unit, it
logically forms part of the common areas.

The petitioner's efforts to establish that Concession 3 and the open area in the roof deck are
reserved and separately granted from the condominium project are futile, inasmuch as even if the
same is established, it would not prove that the area above it is not part of the common area.
Admittedly, there is nothing in the Master Deed which prohibits the construction of an additional unit
on top of Concession 3, however, there is also nothing which allows the same. The more logical
inference is that the unit is limited to that stated in the Condominium Act, considering that the Master
Deed with Declaration of Restrictions does not expressly declare otherwise.

To allow the petitioner's claim over the air space would not prevent the petitioner from further
constructing another unit on top of Concession 4 and so on. This would clearly open the door to
further "impairment of the structural integrity of the condominium building" which is explicitly
proscribed in the Master Deed.19

Significantly, the parties are no longer questioning before us the past rulings regarding Legaspi
Towers' ownership of the air space above Concession 3 which is the air space above the
condominium building itself. The principal bones of contention here are the legal consequences of
such ownership and the applicability of Article 448 of the Civil Code and our ruling in Depra v.
Dumlao20 on the factual antecedents of these cases.

The ruling of this Court in Depra v. Dumlao extensively cited by both parties pertains to the
application of Articles 448 and 546 of the Civil Code, which respectively provide:

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.
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the thing may have acquired by
reason thereof.

To recap, the defendant in Depra constructed his house on his lot but, in good faith, encroached on
an area of 34 square meters of the property of plaintiff on which defendant's kitchen was built. The
Court ruled that pursuant to Article 448 of the Civil Code, plaintiff, as the owner of the land, has the
option either to pay for the encroaching part of the kitchen, or to sell the encroached 34 square
meters of his lot to the defendant, the builder in good faith. The owner of the land cannot refuse to
pay for the encroaching part of the building and to sell the encroached part of the land. Pursuant to
Articles 448 and 546 of the Civil Code, the Court remanded the case to the RTC to determine the
following:

(1) the present fair price of the 34-square meter encroached area of the land;

(2) the amount of expenses spent in building the kitchen;

(3) the increase in value the area may have acquired by reason of the building; and

(4) whether the value of the 34-square meter area is considerably more than that of the kitchen built
thereon.

After the RTC has determined the four items above, the RTC shall grant the owner a period of 15
days to exercise his option whether (a) to appropriate the kitchen by paying the amount of expenses
spent for building the same or the increase of such area's value by reason of the building or (b) to
oblige the builder in good faith to pay the price of said area. The Court thereafter provided for further
contingencies based on the RTC finding in the fourth item.

In the case at bar, LEMANS prays that, pursuant to Depra, the Court should determine the value of
Concession 4, and find such value to be Six Million Eight Hundred Thousand Eight Hundred Ninety-
Seven and 96/100 Pesos (₱6,800,897.96) plus legal interest. Legaspi Towers, on the other hand,
prays for the extrajudicial abatement of Concession 4, on the ground that the applicable provision of
the Civil Code is Article 699, which provides:

Article 699. The remedies against a public nuisance are:

(1) A prosecution under the Penal code or any local ordinance; or

(2) A civil action; or

(3) Abatement, without judicial proceedings.

Legaspi Towers also argues that Concession 4 is an illegal construction, for being in violation of the
Condominium Act and the By Laws of Legaspi Towers. Legaspi Towers stresses that LEMANS
failed to comply with the Condominium Act, which requires the consent of the registered owners of
the condominium project for the amendment of the Master Deed.
Indeed, the last paragraph of Section 4 of the Condominium Act provides:

The enabling or master deed may be amended or revoked upon registration of an instrument
executed by the registered owner or owners of the property and consented to by all registered
holders of any lien or encumbrance on the land or building or portion thereof. The term "registered
owner" shall include the registered owners of condominiums in the project. Until registration of a
revocation, the provisions of this Act shall continue to apply to such property.

The Master Deed of Legaspi Towers21 states the number of stories and basements, and the number
of units and accessories, and contains as an attachment a diagrammatic floor plan of the building as
required by Section 4(b)22of the Condominium Act. Section 2 of the Master Deed states:

Section 2. The Building and the Units. The building included in the condominium project is a
commercial building constructed of reinforced concrete and consisting of seven (7) storeys with a
basement, a ground floor, a deck roof, and two levels above the deck roof. x x x.23

The construction by LEMANS of Concession 4 contravenes the Master Deed by adding a third level
above the roof deck. As pointed out by Legaspi Towers and shown in the records, the Master Deed
was never amended to reflect the building of Concession 4. Furthermore, LEMANS failed to procure
the consent of the registered owners of the condominium project as required in the last paragraph of
Section 4 of the Condominium Act.

The By-Laws of Legaspi Towers 24 specifically provides that extraordinary improvements or additions
must be approved by the members in a regular or special meeting called for the purpose prior to the
construction:

ARTICLE V
IMPROVEMENTS AND ADDITIONS

XXXX

Section 2. Extraordinary Improvements. Improvements or additions to the common areas which shall
cost more than ₱100,000.00 or which involve structural construction or modification must be
approved by the members in a regular or special meeting called for the purpose before such
improvements or additions are made. x x x.25

Said By-Laws also provides for the process by which violations of the Master Deed are redressed,
and the same coincides with the prayer of Legaspi Towers:

ARTICLE VII
ABATEMENT OF VIOLATIONS

Section 1. Power to Abate Violations. In the event that any member or his tenant or lessee fails or
refuses to comply with any limitation, restriction, covenant or condition of the Master Deed with
Declaration of Restrictions, or with the rules and regulations on the use, enjoyment and occupancy
of office/units or other property in the project, within the time fixed in the notice given him by the
Board of Directors, the latter or its duly authorized representative shall have the right to enjoin, abate
or remedy the continuance of such breach or violation by appropriate legal proceedings.

The Board shall assess all expenses incurred in abatement of the violation, including interest, costs
and attorney's fees, against the defaulting member.26
Instead of procuring the required consent by the registered owners of the condominium project
pursuant to the Condominium Act, or having Concession 4 approved by the members in a regular or
special meeting called for the purpose pursuant to the By-Laws, LEMANS merely had an internal
arrangement with the then president of Legaspi Towers. The same, however, cannot bind
corporations, which includes condominium corporations such as Legaspi Towers, as they can act
only through their Board of Directors.27

Unperturbed, LEMANS argues that the internal arrangement shows its good faith in the construction
of Concession 4, and claims the application of the aforementioned Articles 448 and 546 of the Civil
Code. For reference, Article 448 provides:

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.

Firstly, it is recognized in jurisprudence that, as a general rule, Article 448 on builders in good faith
does not apply where there is a contractual relation between the parties.28

Morever, in several cases, this Court has explained that the raison d'etre for Article 448 of the Civil
Code is to prevent the impracticability of creating a state of forced co-ownership:

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 d'etre 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. 29

In the case at bar, however, the land belongs to a condominium corporation, wherein the builder, as
a unit owner, is considered a stockholder or member in accordance with Section 10 of the
Condominium Act, which provides:

SECTION 10. Whenever the common areas in a condominium project are held by a condominium
corporation, such corporation shall constitute the management body of the project. The corporate
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purposes of such a corporation shall be limited to the holding of the common areas, either in
ownership or any other interest in real property recognized by law, to the management of the project,
and to such other purposes as may be necessary, incidental or convenient to the accomplishment of
said purposes. The articles of incorporation or by-laws of the corporation shall not contain any
provision contrary to or inconsistent with the provisions of this Act, the enabling or master deed, or
the declaration of restrictions of the project. Membership in a condominium corporation, regardless
of whether it is a stock or non-stock corporation, shall not be transferable separately from the
condominium unit of which it is an appurtenance. When a member or stockholder ceases to own a
unit in the project in which the condominium corporation owns or holds the common areas, he shall
automatically cease to be a member or stockholder of the condominium corporation.

The builder is therefore already in a co-ownership with other unit owners as members or
stockholders of the condominium corporation, whose legal relationship is governed by a special law,
the Condominium Act. It is a basic tenet in statutory construction that between a general law and a
special law, the special law prevails. Generalia specialibus non derogant.30 The provisions of the Civil
Code, a general law, should therefore give way to the Condominium Act, a special law, with regard
to properties recorded in accordance with Section 431 of said Act. Special laws cover distinct
situations, such as the necessary co-ownership between unit owners in condominiums and the need
to preserve the structural integrity of condominium buildings; and these special situations deserve,
for practicality, a separate set of rules.

Articles 448 and 546 of the Civil Code on builders in good faith are therefore inapplicable in cases
covered by the Condominium Act where the owner of the land and the builder are already bound
by specific legislation on the subject property (the Condominium Act), and by contract (the Master
Deed and the By-Laws of the condominium corporation). This Court has ruled that upon acquisition
of a condominium unit, the purchaser not only affixes his conformity to the sale; he also binds
himself to a contract with other unit owners.32

In accordance therefore with the Master Deed, the By-Laws of Legaspi Towers, and the
Condominium Act, the relevant provisions of which were already set forth above, Legaspi Towers is
correct that it has the right to demolish Concession 4 at the expense of LEMANS. Indeed, the
application of Article 448 to the present situation is highly iniquitous, in that an owner, also found to
be in good faith, will be forced to either appropriate the illegal structure and impliedly be burdened
with the cost of its demolition) or to allow the continuance of such an illegal structure that violates the
law and the Master Deed, and threatens the structural integrity of the condominium building upon the
payment of rent. The Court cannot countenance such an unjust result from an erroneous application
of the law and jurisprudence.

We will no longer pass upon the issue of the validity of building permit for Concession 4 as the same
has no bearing on the right of Legaspi Towers to an abatement of Concession 4.

Finally, we are constrained to deny the Petition of LEMANS in view of our ruling that the doctrine
in Depra and Articles 448 and 546 of the Civil Code were improperly applied in these cases.

WHEREFORE, the Petition in G.R. No. 199353 is hereby DENIED for lack of merit. The Petition in
G.R. No. 199389 is GRANTED. The Decision dated May 26, 2011 and Resolution dated November
17, 2011 of the Court of Appeals in CA-G.R. CV No. 88082 are REVERSED and SET ASIDE.
Leviste Management System, Inc. is ORDERED to remove Concession 4 at its own expense.

No pronouncement as to costs.

SO ORDERED.

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