Case Digest: Republic vs. Ballocanag, G.R. No. 163794. November 28, 2008.

CASE TITLE: Republic vs. Ballocanag
GR No/ Date: G.R. No. 163794. November 28, 2008.
PONENTE: Nachura, J.
CASE WITH THE SC: Petition for Review on Certiorari under Rule 45
PROCEDURAL ANTECEDENTS: RTC - Cancellation of Title and/or Reversion, Motion to Remove Improvements CA - Certiorari under Rule 65
FACTS: In 1970, Danilo Reyes bought a 182,941-square-meter land in Bgy. Banus, Pinamalayan, Oriental Mindoro from Regina Castillo, whose title was based on Free Patent No. V-79606. Reyes improved the land by planting fruit trees (approximately 1,000 mango trees, over 100 Mandarin citrus, and more than 100 guyabanos) and transferred the title to his name (TCT No. 45232). About 162,500 square meters of the land were found to be part of Oriental Mindoro's timberland, which cannot be legally owned or registered. The Office of the Solicitor General (OSG) filed a complaint for "Cancellation of Title and/or Reversion," arguing that the original title (OCT No. P-2388) was invalid because it included non-disposable timberland. Evidence Presented: Bureau of Forest Development Maps: Showed the timberland classification, supporting the claim that the majority of the land was non-disposable. Witnesses: Armando Cruz (supervising cartographer), Alberto Cardiño (surveyor), and Vicente Mendoza (geodetic engineer) testified that only two hectares of the land were alienable and disposable. RTC: Ruled in favor of the Republic, declaring Reyes’ title (TCT No. 45232) null and void and ordered the land's reversion to the government. CA: Denied the Appeal. SC: Dismissed petition for review on certiorari. In 1997, Reyes requested to remove his fruit trees and remain on the land for a year to do so. RTC: Granted the motion. CA: Affirmed RTC’s decision.
ISSUE: Whether the improvements cannot be made the subject of the assailed motion on the pretext that such removal of improvements is merely incidental to the reversion case. NO
ARGUMENTS/LEGAL BASES
PETITIONER	RESPONDENTS
The subject land, being timber land, is property of public dominion and, therefore, outside the commerce of man and cannot be leased, donated, sold, or be the object of any contract.  This being the case, there are no improvements to speak of, because the land in question never ceased to be a property of the Republic, even if Reyes claimed that he was a purchaser for value and in good faith and was in possession for more than thirty (30) years.  Assuming Reyes was initially a planter/sower in good faith, Article 448 of the Civil Code cannot be of absolute application since from the time the reversion case was filed by the petitioner on May 13, 1987, Reyes ceased to be a planter/sower in good faith and had become a planter/sower in bad faith.	He occupied in good faith the subject land for around thirty years; he had already spent millions of pesos in planting fruit-bearing trees thereon; and he employed many workers who regularly took care of the trees and other plants. Reyes prayed that he and/or his agents be given at least one (1) year from the issuance of the corresponding order to remove his mango, citrus and guyabano trees, and that they be allowed to stay in the premises within that period to work on the cutting and removal of the said trees.
PREVAILING PARTY:  Reyes
DECISION/DOCTRINE: The instant Petition lacks merit. In an action for reversion, the pertinent allegations in the complaint would admit State ownership of the disputed land. Indeed, the ownership over the subject land reverted to the State by virtue of the decisions of the RTC and CA and our Resolution on the matter. But these decisions simply ordered the reversion of the property to the State, and did not consider the improvements that Reyes had introduced on the property or provide him with any remedy relative thereto. Thus, Reyes was left out in the cold, faced with the prospect of losing not only the land which he thought he owned, but also of forfeiting the improvements that he painstakingly built with his effort, time and money. We cannot agree with the OSG that the denial by the CA of Reyes' counterclaim in the reversion case had the effect of completely foreclosing whatever rights Reyes may have over these improvements. We note that the counterclaim was denied because Reyes failed to prove that it was in the nature of a compulsory counterclaim, and he did not pay docket fees thereon, even as the CA found that Reyes "never testified to prove his allegations as regards his counterclaims." Yet, the records of the reversion case reveal that Reyes adduced ample evidence of the extent of the improvements he introduced and the expenses he incurred therefor. This is reflected in the findings of the CA in the case at bench, and we concur with the appellate court when it said: But this Court notes that while Reyes was half-hearted in his opposition to the reversion, he instead focused on proving the improvements he has introduced on the land, its extent and his expenses. Despite these proofs, the Decision of April 13, 1992 made no mention nor provision for the improvements on the land. With this legal vacuum, Reyes could not exercise the options allowed the sower and planter in good faith. This thus left him no other alternative but to avail of Paragraph (d) of Section 10 of Rule 39 of the 1997 Rules of Civil Procedure in order to collect or get a return of his investment as allowed to a sower and planter in good faith by the Civil Code. Correlatively, the courts in the reversion case overlooked the issue of whether Reyes, vis-à-vis his improvements, is a builder or planter in good faith. In the instant case, the issue assumes full significance, because Articles 448 and 546 of the Civil Code grant the builder or planter in good faith full reimbursement of useful improvements and retention of the premises until reimbursement is made. 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 to the land at the time he builds or plants on it.  On this issue, we are disposed to agree with the CA that Reyes was a planter in good faith. Reyes was of the belief that he was the owner of the subject land; in fact, a TCT over the property was issued in his name. He tilled the land, planted fruit trees thereon, and invested money from 1970. He received notice of the Republic's claim only when the reversion case was filed on May 13, 1987. The trees are now full-grown and fruit-bearing. To order Reyes to simply surrender all of these fruit-bearing trees in favor of the State -- because the decision in the reversion case declaring that the land is part of inalienable forest land and belongs to the State is already final and immutable -- would inequitably result in unjust enrichment of the State at the expense of Reyes, a planter in good faith. Nemo cum alterius detrimento locupletari potest. This basic doctrine on unjust enrichment simply means that a person shall not be allowed to profit or enrich himself inequitably at another's expense. There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience. Article 22 of the Civil Code states the rule in this wise: ART. 22. Every person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. The requisites for the application of this doctrine are present in the instant case.  There is enrichment on the part of the petitioner, as the State would come into possession of -- and may technically appropriate -- the more than one thousand fruit-bearing trees planted by the private respondent.  There is impoverishment on the part of Reyes, because he stands to lose the improvements he had painstakingly planted and invested in.  There is lack of valid cause for the State to acquire these improvements, because, as discussed above, Reyes introduced the improvements in good faith.  Thus, the Court of Appeals did not commit any error in ruling that Reyes is entitled to the benefits of Articles 448 and 546 of the Civil Code. Thus, even if we accept the OSG's submission that Reyes' entitlement to these benefits is not absolute because he can no longer claim good faith after the filing of the reversion case in 1987, still, there is no gainsaying that prior to that ― all the way back to 1970 ― he had possessed the land and introduced improvements thereon in good faith. At the very least, then, Reyes is entitled to these benefits for the 17 years that he had been a planter in good faith. However, we are mindful of the fact that the subject land is currently covered by Agro-Forestry Farm Lease Agreement (AFFLA) No. 175 issued by the Ministry of (now Department of Environment and) Natural Resources in favor of Atty. Augusto D. Marte, which will expire on December 21, 2011. By the terms of the AFFLA, the lessee shall, among others, do all in his power to suppress fires, cooperate with the Bureau of Forest Development (BFD) in the protection and conservation of the forest growth in the area and undertake all possible measures to insure the protection of watershed and environmental values within the leased area and areas adjacent thereto. This obligation to prevent any damage to the land subject of the lease is consonant with fundamental principles and state policies set forth in Section 16,31 Article II and Section 4,32 Article XII of the Constitution. To allow Reyes to remove the fruit-bearing trees now full-grown on the subject land, even if he is legally entitled to do so, would be risking substantial damage to the land. It would negate the policy consideration underlying the AFFLA -- to protect and preserve the biodiversity and the environment, and to prevent any damage to the land. Further, it would violate the implicit mandate of Article 547 of the Civil Code which provides: ART. 547. 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 under paragraph 2 of the preceding article. In this light, the options that Reyes may exercise under Articles 448 and 546 of the Civil Code have been restricted. It is no longer feasible to permit him to remove the trees he planted. The only equitable alternative would be to order the Republic to pay Reyes the value of the improvements he introduced on the property. This is only fair because, after all, by the terms of the AFFLA, upon the expiration of the lease or upon its cancellation if there be any violation or breach of its terms, 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, the AFFLA is not due to expire until December 21, 2011. In the interim, it is logical to assume that the lessee, Atty. Augusto D. Marte, will derive financial gain from the fruits that the trees planted by Reyes would yield. In fact, Atty. Marte may already have profited therefrom in the past several years. It is, therefore, reasonable to grant the Republic the right of subrogation against the lessee who may have benefited from the improvements. The Republic may, thus, demand reimbursement from Atty. Marte for whatever amount it will have to pay Reyes for these improvements. As to the OSG's insistent invocation of res judicata and the immutability of final judgments, our ruling in Temic Semiconductors, Inc. Employees Union (TSIEU)-FFW, et al. v. Federation of Free Workers (FFW), et al.33 is instructive: It is axiomatic that a decision that has acquired finality becomes immutable and unalterable. A final judgment may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law; and whether it be made by the court that rendered it or by the highest court in the land. Any act which violates such principle must immediately be struck down. Indeed, the principle of conclusiveness of prior adjudications is not confined in its operation to the judgments of what are ordinarily known as courts, but it extends to all bodies upon which judicial powers had been conferred. The only exceptions to the rule on the immutability of a final judgment are: (1) the correction of clerical errors; (2) the so-called nunc pro tunc entries which cause no prejudice to any party; (3) void judgments; and (4) whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable. In the exercise of our mandate as a court of justice and equity, we rule in favor of Reyes pro hac vice. We reiterate that this Court is not precluded from rectifying errors of judgment if blind and stubborn adherence to the doctrine of immutability of final judgments would involve the sacrifice of justice for technicality. Indubitably, to order the reversion of the subject land without payment of just compensation, in absolute disregard of the rights of Reyes over the improvements which he, in good faith, introduced therein, would not only be unjust and inequitable but cruel as well. WHEREFORE, the instant Petition is DENIED. The Decision dated June 4, 2004 of the Court of Appeals is AFFIRMED with MODIFICATION in that: 1) The Regional Trial Court of Pinamalayan, Oriental Mindoro, Branch 41, is hereby DIRECTED to determine the actual improvements introduced on the subject land, their current value and the amount of the expenses actually spent by private respondent Danilo Reyes for the said improvements thereon from 1970 until May 13, 1987 with utmost dispatch. 2) The Republic, through the Bureau of Forest Development of the Department of Environment and Natural Resources, is DIRECTED to pay private respondent Danilo Reyes the value of such actual improvements he introduced on the subject land as determined by the Regional Trial Court, with the right of subrogation against Atty. Augusto D. Marte, the lessee in Agro-Forestry Farm Lease Agreement No. 175.