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REPUBLIC v. NORMELITO J. BALLOCANAG

FACTS:

The petitioner in this case is the Republic of the Philippines, represented by the Bureau of Forest Development (BFD), while the private respondent is Danilo Reyes. The case involves a 182,941-square-meter land in Pinamalayan, Oriental Mindoro, which Reyes bought from Regina Castillo. Reyes introduced improvements and planted fruit trees on the land and had the title transferred in his name. However, it was later discovered that about 162,500 square meters of the land is part of the timberland of Oriental Mindoro and is not subject to disposition or acquisition under any existing law. The Office of the Solicitor General (OSG) filed a Complaint for "Cancellation of Title and/or Reversion" on behalf of the Republic. The OSG argued that the original title issued to Castillo is spurious, fictitious, and irregularly issued. The Republic presented evidence, including Land Classification Maps and witness testimonies, to support its claims. Reyes argued that the absence of certification from the Bureau of Forestry on his title does not necessarily mean that none was issued. The Regional Trial Court held in favor of the Republic, citing the inalienability and indisposability of the disputed land.

The case involves a two-hectare lot owned by Regina Castillo, who obtained a free patent and a title for the land. However, it was later discovered that the land was timberland and therefore not disposable and alienable without certification from the Bureau of Forest Development. As a result, the free patent, title, and subsequent transfer certificate of title in the name of Danilo Reyes were declared null and void. The land was ordered reverted to the government and formed part of the public domain. Reyes appealed the decision but was denied by the Court of Appeals. He then filed a motion to remove the improvements he introduced on the property, claiming that he occupied the land in good faith for thirty years and had invested a significant amount in planting fruit-bearing trees. Reyes requested at least one year to remove his trees and to appropriate the unharvested fruits. The petitioner opposed the motion, arguing that the land being timberland cannot be the subject of any contract or improvements. Meanwhile, Atty. Marte filed a complaint against Reyes for encroaching upon leased land and planting trees without permission. The RTC dismissed the complaint and granted Reyes' motion to remove improvements, citing equity and the need to allow him to enjoy the fruits of his labor. The OSG filed a motion for reconsideration, which was denied by the RTC. Petitioner then filed a petition for certiorari with the Court of Appeals, alleging grave abuse of discretion by the RTC.

The case involves a petition for certiorari filed by the petitioner, Eugenio Arana, Jr., assailing the decision of the Court of Appeals (CA) that affirmed the ruling of the Regional Trial Court (RTC). The RTC granted the motion of private respondent, Jeovanni Reyes, to remove improvements from the disputed land in a suit for "Cancellation of Title and/or Reversion." Reyes claimed that he planted perennial plants on the land in good faith and should be entitled to appropriate provisions under Articles 445 and 448 of the Civil Code, which govern right accession. The CA dismissed Arana's petition and upheld the ruling of the RTC, stating that there was no evidence presented to show Reyes' bad faith in acquiring the land or planting on it. The petitioner filed the present petition asserting that the RTC had no jurisdiction over the matter.

ISSUES:

  1. Whether the motion to remove improvements filed by the private respondent is barred by res judicata.

  2. Whether the trial court still has jurisdiction over the motion to remove improvements despite the finality of the decision in the reversion case.

  3. Whether the denial of the counterclaim in the reversion case foreclosed the rights of the petitioner over the improvements on the land.

  4. Whether the petitioner is entitled to the benefits of Articles 448 and 546 of the Civil Code as a builder or planter in good faith.

  5. Whether or not Reyes is entitled to remove the fruit-bearing trees he planted on the subject land.

  6. Whether or not the Republic is obligated to indemnify Reyes for the improvements he introduced on the property.

  7. Whether or not the Republic has the right of subrogation against the lessee, Atty. Marte, for reimbursement of the amount it will have to pay Reyes.

RULING:

  1. The Court of Appeals affirmed the ruling of the trial court that the motion to remove improvements is not barred by res judicata. There was no evidence presented in the reversion case that the private respondent was in bad faith in acquiring the land and planting improvements on it. Therefore, the private respondent sowed and planted in good faith, and the appropriate provisions on right accession are applicable.

  2. The trial court still has jurisdiction over the motion to remove improvements as it is considered an incident to the reversion case. Section 10, Rule 39 of the 1997 Rules of Civil Procedure allows the removal of improvements. The decision in the reversion case did not provide for the removal of the improvements, but it did not preclude the court from considering the issue.

  3. The denial of the counterclaim in the reversion case does not foreclose the rights of the petitioner over the improvements on the land. The petitioner presented evidence of the extent of the improvements and expenses incurred, and the court noted the omission of any mention or provision for the improvements in the decisions of the lower courts. Thus, the petitioner is entitled to exercise the options allowed to a sower and planter in good faith.

  4. The petitioner is considered a planter in good faith. The petitioner believed that he was the owner of the land, as evidenced by the issuance of a title in his name. He tilled the land, planted fruit trees, and invested money in its improvement. He only received notice of the state's claim when the reversion case was filed. To deny the petitioner's claim to the fruit-bearing trees and surrender them to the state would result in unjust enrichment of the state at the expense of the petitioner. Therefore, the petitioner is entitled to the benefits of Articles 448 and 546 of the Civil Code.

  5. Reyes is not entitled to remove the fruit-bearing trees he planted on the subject land. Allowing him to do so would risk substantial damage to the land and violate the policy consideration underlying the Agro-Forestry Farm Lease Agreement (AFFLA) and the mandate of Article 547 of the Civil Code. The equitable alternative is to order the Republic to pay Reyes the value of the improvements he introduced on the property.

  6. The Republic is obligated to indemnify Reyes for the improvements he introduced on the property. Upon the expiration or cancellation of the AFFLA, all permanent improvements on the land shall pass to the ownership of the Republic without any obligation on its part to indemnify the lessee. However, since the AFFLA is not due to expire until a later date, the Republic has the right of subrogation against the lessee who may have benefited from the improvements, thus allowing the Republic to demand reimbursement from the lessee.

  7. The Republic has the right of subrogation against the lessee, Atty. Marte, for reimbursement of the amount it will have to pay Reyes for the improvements. This is based on the assumption that the lessee will derive financial gain from the fruit-bearing trees planted by Reyes and may have already profited from them in the past years.

PRINCIPLES:

  • Right accession under Articles 445 and 448 of the Civil Code

  • Jurisdiction of the trial court over the motion to remove improvements as an incident to the reversion case

  • Res judicata in relation to the finality of decisions and orders of superior courts

  • A person shall not be allowed to profit or enrich himself inequitably at another's expense. (Nemo cum alterius detrimento locupletari potest)

  • Unjust enrichment occurs when a person unjustly retains a benefit to the loss of another.

  • Article 22 of the Civil Code provides that every person who acquires or comes into possession of something at the expense of another without just or legal ground shall return the same to him.

  • In an action for reversion, the ownership over the land may revert to the state but the improvements made on the land may still be subject to the rights of the builder or planter in good faith.

  • A builder or planter in good faith is one who builds or plants on land with the belief that he is the owner thereof, unaware of any flaw in his title at the time he builds or plants on it.

  • Article 448 of the Civil Code grants a builder in good faith full reimbursement of useful improvements and the right to retain the premises until reimbursement is made.

  • Article 546 of the Civil Code grants a planter in good faith the same rights as a builder in good faith.

  • The obligation to prevent any damage to the land subject of the lease is in consonance with the fundamental principles and state policies set forth in the Constitution.

  • Article 547 of the Civil Code provides that if the useful improvements can be removed without damage to the principal thing, the possessor in good faith may remove them unless the person who recovers the possession exercises the option to retain them.

  • The options under Articles 448 and 546 of the Civil Code in relation to the improvements introduced on the property have been restricted by the AFFLA.

  • A final judgment may only be modified in certain exceptions, such as the correction of clerical errors, nunc pro tunc entries with no prejudice to any party, void judgments, and circumstances that render the execution of the judgment unjust and inequitable.

  • The Court has the authority to rectify errors of judgment if blind and stubborn adherence to the doctrine of immutability of final judgments would sacrifice justice for technicality.