G.R. No. 146735 - Villamor vs. National Power Corp.

In 1970, Danilo Reyes purchased a 182,941-square-meter land in Barangay Banus, Pinamalayan, Oriental Mindoro from Regina Castillo, whose name was on the Original Transfer Certificate of Title (OCT) No. P-2388 issued pursuant to Free Patent No. V-79606.
Reyes immediately made improvements and planted about a thousand mango trees, over a hundred Mandarin citrus trees, and over a hundred guyabano trees. He also secured a transfer of title to his name (TCT No. 45232).
Reyes believed in good faith that he was the rightful owner of the land.

The Republic of the Philippines, represented by the Office of the Solicitor General (OSG) on behalf of the Bureau of Forest Development (BFD), filed a complaint for cancellation of title and/or reversion, alleging:

Approximately 162,500 square meters of the land is part of the timberland of Oriental Mindoro, hence inalienable and indisposable.
OCT No. P-2388 of Castillo, source of Reyes’ title, was irregularly issued since it covered timberland classified as public forest.
The disputed area was also covered by Agro-Forestry Farm Lease Agreement (AFFLA) No. 175 issued to Atty. Augusto D. Marte by the Ministry of Natural Resources in 1986, making him the rightful occupant.
Reyes and his predecessors did not truly possess the property because public forest cannot be subject of private ownership or registration under existing law.

Documentary and testimonial evidence was presented establishing that only about 2 hectares were alienable and disposable; the rest was timberland and public domain.
Reyes failed to effectively contest the inalienability and indisposability of the major portion of the land or present a valid forestry certification.

The RTC ruled in favor of the Republic, declaring the Free Patent, OCT, and subsequent TCT null and void, ordering cancellation of TCT No. 45232, reversion of the land to the government subject to AFFLA No. 175.
The two-hectare portion was also declared void for lack of proper forestry certification.
Reyes was ordered to surrender the title and vacate the premises. Reyes appealed.

The CA affirmed the RTC decision. Reyes’ motions for reconsideration were denied by the CA and later by the Supreme Court.
Reyes filed a motion under Rule 39, Section 10(d) of the Rules of Civil Procedure to remove his improvements (fruit-bearing trees) on the property, seeking a one-year period to cut and remove the trees and claim unharvested fruits.
The petitioner opposed, citing the principle of accession and the inalienability of timberland, arguing that Reyes’ improvements do not legally exist since ownership had reverted to the State and Reyes was no longer a planter in good faith after the reversion case was filed in 1987.

Atty. Marte filed a complaint for injunction alleging Reyes encroached and planted trees on leased timberland without consent. The RTC dismissed the complaint and granted Reyes’ motion to remove improvements, allowing one year to cut and remove trees.
The OSG’s motion for reconsideration was denied by the RTC.
The petitioner filed a petition for certiorari before the CA, alleging grave abuse of discretion and lack of jurisdiction by the RTC in granting the removal motion. The CA dismissed the petition, upholding the RTC’s rulings.
Reyes maintained that he planted in good faith, entitled under Civil Code Articles 445 and 448 to remove and be reimbursed for improvements. He stressed denial of removal would unjustly enrich the State and the lessee, Marte.

The petitioner argued that the issue of improvements was already decided with finality in the reversion case and was barred by res judicata. They contended the RTC lacked jurisdiction to modify a final judgment and granting the motion violated finality principles.
Reyes countered that the removal motion was a legal incident of the reversion case and a remedy for an overlooked issue, properly allowing him relief as a good-faith planter under the Civil Code and Rule 39.
The SC took note that the improvements issue was not resolved in the prior rulings, and that Reyes had demonstrated good faith and substantial improvements before 1987.

Whether the RTC acted without jurisdiction or grave abuse of discretion in granting Reyes’ motion to remove improvements under Rule 39, Section 10(d) after the reversion case had become final and executory.
Whether Reyes is entitled to remove or be reimbursed for the improvements (fruit-bearing trees) he planted on the disputed land classified as timberland and reverted to the State.
Whether the principle of res judicata or finality of judgment bars the present motion and petition to remove improvements.
Whether the State’s interest under the existing Agro-Forestry Farm Lease Agreement No. 175 and environmental protection policies restrict or affect Reyes’ right to remove improvements.
Whether the doctrine of unjust enrichment applies to grant Reyes relief despite the final reversion of ownership to the State.