Property DigestsContinuation Part 3............

German Management and Services, Inc. vs Court of Appeals177 SCRA 495 Civil Law Property Doctrine of Self-HelpIn February 1982, the spouses Manuel and Cynthia Jose contracted withGerman Management and Services, Inc. for the latter to develop their landholdings into a residential subdivision. The spouses also executed a special power of attorney to that effect.German Management started the project in February 1983, however, German Management discovered that the land was being possessed by Ernest0 Villeza et al who were the farmers tilling the said land at that time. German Management spoke with Villeza et al but the farmers refused to vacate the land as the farmers claimed that they have been occupying the land for twelve years.Nevertheless, German Management went on to develop the property and demolished the properties of the farmers without acquiring a court order. In turn, Villeza et al filed a case of forcible entry against German Management. In its defense, German Management invoked the Doctrine of Self-help which provides that:The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel orprevent an actual or threatened unlawful physical invasion or usurpation of his property. (Article 429, Civil Code)ISSUE:Whether or not the doctrine of self-help is applicable in this case.HELD:No. The Doctrine of Self-help is not applicable because at the time when German Management excluded the farmers, theres no longer an actual or threatened unlawful physical invasion or usurpation. That actual or threatened unlawful physical invasion by the farmers have already lapsed 12 years ago when they began occupying the said land. In fact, they were already peaceably farming the land.What should have been the remedy by German Management?German Management should have filed eitheraccion publicianaoraccion reivindicatoriato lawfully eject the farmers.But the farmers are not the real owners and in fact, the spouses Jose have a lawful title over the land?Regardless of the actual condition of the title to the property, the party in peaceable quiet possession shall not be turned out by a strong hand, violence or terror. Further, there is now a presumption of ownership in favor of the farmers since they are the ones occupying the said property. They can only be ejected either byaccion publicianaoraccion reivindicatoriathrough which the spouses Joses better right may be proven

People vs. Narvaez, 121 SCRA 389 (1983)FACTS: Mamerto Narvaez has been convicted of murder (qualified by treachery) of David Fleischer and Flaviano Rubia. On August 22, 1968, Narvaez shot Fleischer and Rubia duringthe time the two were constructing a fence that would prevent Narvaez from getting into his house and rice mill. The defendant was taking a nap when he heard sounds of construction andfound fence being made. He addressed the group and asked them to stop destroying his house and asking if they could talk things over. Fleischer responded with "No, gadamit, proceed, goahead." Defendant lost his "equilibrium," and shot Fleisher with his shotgun. He also shot Rubia who was running towards the jeep where the deceased's gun was placed. Prior to theshooting, Fleischer and Co. (the company of Fleischer's family) was involved in a legal battle with the defendant and other land settlers of Cotabato over certain pieces of property. At the timeof the shooting, the civil case was still pending for annulment (settlers wanted granting of property to Fleisher and Co. to be annulled). At time of the shooting, defendant had leased hisproperty from Fleisher (though case pending and ownership uncertain) to avoid trouble. On June 25, defendant received letter terminating contract because he allegedly didn't pay rent.He was given 6 months to remove his house from the land. Shooting was barely 2 months after letter. Defendant claims he killed in defense of his person and property. CFI ruled thatNarvaez was guilty. Aggravating circumstances of evident premeditation offset by the mitigating circumstance of voluntary surrender. For both murders, CFI sentenced him to reclusion perpetua, to indemnify the heirs, and to pay for moral damages.

ISSUES:1. Whether or not CFI erred in convicting defendant-appellant despite the fact that he acted in defense of his person.No. The courts concurred that the fencing and chiselling of the walls of the house of the defendant was indeed a form of aggression on the part of the victim. However, thisaggression was not done on the person of the victim but rather on his rights to property. On the first issue, the courts did not err. However, in consideration of the violation of property rights, the courts referred to Art. 30 of the civil code recognizing the right of owners to close and fence their land.Although is not in dispute, the victim was not in the position to subscribe to the article because his ownership of the land being awarded by the government was still pending, therefore putting ownership into question. It is accepted that the victim was the original aggressor.

2. WON the court erred in convicting defendant-appellant although he acted in defence of his rights.Yes. However, the argument of the justifying circumstance of self-defense is applicable only if the 3 requirements are fulfilled. Art. 11(1) RPC enumerates these requisites:Unlawful aggression. In the case at bar, there was unlawful aggression towards appellant's property rights. Fleisher had given Narvaez 6 months and he should have left him in peace before time was up, instead of chiseling Narvaez's house and putting up fence. Art. 536 of the Civil Code also provides that possession may not be acquired through force or intimidation; while Art. 539 provides that every possessor has the right to be respected in his possessionReasonable necessity of means employed to prevent or repel attack. In the case, killing was disproportionate to the attack.Lack of sufficient provocation on part of person defending himself. Here, there was no provocation at all since he was asleepSince not all requisites present, defendant is credited with the special mitigating circumstance of incomplete defense, pursuant to Art. 13(6) RPC. These mitigating circumstances are: voluntary surrender and passion and obfuscation (read p. 405 explanation) Crime is homicide (2 counts) not murder because treachery is not applicable on account of provocation by the deceased. Also, assault was not deliberately chosen with view to kill since slayer acted instantaneously. There was also no direct evidence of planning or preparation to kill. Art. 249 RPC: Penalty for homicide is reclusion temporal. However, due to mitigating circumstances and incomplete defense, it can be lowered three degrees (Art. 64) to arrestomayor.

3. WON he should be liable for subsidiary imprisonment since he is unable to pay the civil indemnity due to the offended party.No. He is not liable to be subsidiarily imprisoned for nonpayment of civil indemnity. RA 5465 made the provisions of Art. 39 applicable to fines only and not to reparation of damage caused, indemnification of consequential damages and costs of proceedings. Although it was enacted only after its conviction, considering that RA 5465 is favorable to the accused who is not a habitual delinquent, it may be given retroactive effect pursuant to Art. 22 of the RPC.Judgment: Defendant guilty of homicide but w/ mitigating circumstances and extenuating circumstance of incomplete self defense. Penalty is 4 months arresto mayor and to indemnifyeach group of heirs 4,000 w/o subsidiary imprisonment and w/o award for moral damages. Appellant has already been detained 14 years so his immediate release is ordered.Gutierrez, dissenting. Defense of property can only be invoked when coupled with form of attack on person defending property. In the case at bar, this was not so. Appellant should then be sentenced to prision mayor. However, since he has served more than that, he should be released.

Villafuerte vs CA

City Government of Quezon vs. Judge Ericta GR No. L-34915 June 24, 1983

Facts:An ordinance was promulgated in Quezon city which approved the the regulation ofestablishment of private cemeteries in the said city. According to the ordinance, 6% of the total area of the private memorial park shall be set aside for charity burial of deceased persons who are paupers and have been residents of QC. Himlayang Pilipino, a private memorial park, contends that the taking or confiscation of property restricts the use of property such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of his property. It also contends that the taking is not a valid exercise of police power, since the properties taken in the exercise of police power are destroyed and not for the benefit of the public.Issue:Whether or not the ordinance made by Quezon City is a valid taking of private propertyRuling:No, the ordinance made by Quezon City is not a valid way of taking private property. The ordinace is actually a taking without compensation of a certain area from a private cemetery to benefit paupers who are charges of the municipal corporation. Instead of building or maintaing a public cemeteries. State's exercise of the power of expropriation requires payment of just compensation. Passing the ordinance without benefiting the owner of the property with just compensation or due process, would amount to unjust taking of a real property. Since the property that is needed to be taken will be used for the public's benefit, then the power of the state to expropriate will come forward and not the police power of the state.

Spouses Custodio vs.CA

Spouses Cristino and Brigida Custodio and Spouses Lito and Maria Cristina Santos vs. Court of Appeals, Heirs of Pacifico C. MabasaG.R. No. 116100, February 9, 1996Regalado, J.:Doctrine: Every owner has an absolute right over his property and his act of fencing and enclosing the same was an act which he may lawfully perform in the employment and exercise of said right. Whatever injury or damage that may have been sustained by others by reason of the rightful use of the said land by the owner is damnum absque injuria.Facts:The respondent (Pacifico Mabasa) owns a parcel of land with a two-door apartment erected thereon situated at Interior P. Burgos St., Palingon, Tipas, Tagig, Metro Manila. Said property may be described to be surrounded by other immovables pertaining to respondents herein.As an access to P. Burgos Street from respondents property, there are two possible passageways. The first passageway is approximately one meter wide and is about 20 meters distan(t) from Mabasas residence to P. Burgos Street. Such path is passing in between the previously mentioned row of houses of the petitioners The second passageway is about 3 meters in width and length from Mabasas residence to P. Burgos Street; it is about 26 meters. In passing thru said passageway, a less than a meter wide path through the septic tank and with 5-6 meters in length, has to be traversed.When said property was purchased by Mabasa, there were tenants occupying the remises and who were acknowledged by Mabasa as tenants. However, sometime in February, 1982, one of said tenants vacated the apartment and when Mabasa went to see the premises, he saw that there had been built an adobe fence in the first passageway making it narrower in width. Said adobe fence was first constructed by Petitioners Santoses along their property which is also along the first passageway. Petitioner Morato constructed her adobe fence and even extended said fence in such a way that the entire passageway was enclosed. And it was then that the remaining tenants of said apartment vacated the area.Petitioner Ma. Cristina Santos testified that she constructed said fence because of some other inconveniences of having (at) the front of her house a pathway such as when some of the tenants were drunk and would bang their doors and windows.Trial court rendered a decision ordering the Petitioners Custodios and Santoses to give Respondent Mabasa permanent access ingress and egress, to the public street and Mabasa to pay the Custodios and Santoses the sum of Eight Thousand Pesos (P8,000) as indemnity for the permanent use of the passageway.Respondent Mabasa went to the CA raising the sole issue of whether or not the lower court erred in not awarding damages in their favor. The CA rendered its decision affirming the judgment of the trial court with modification only insofar as the. grant of damages to Mabasa The motion for reconsideration filed by the petitioners was denied.Issues:Whether the grant of right of way to herein private respondent Mabasa is proper.Whether the award of damages is in order.Held:No. Herein petitioners are already barred from raising the same. Petitioners did not appeal from the decision of the court a quo granting private respondents the right of way, hence they are presumed to be satisfied with the adjudication therein. With the finality of the judgment of the trial court as to petitioners, the issue of propriety of the grant of right of way has already been laid to rest.No. A reading of the decision of the CA will show that the award of damages was based solely on the fact that the original plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals when the tenants vacated the leased premises by reason of the closure of the passageway.However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover damages.There is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. (damnum absque injuria). In order that a plaintiff may maintain an action for the injuries of which he complains, he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff a concurrence of injury to the plaintiff and legal responsibility by the person causing it (damnum et injuria.)In the case at bar, although there was damage, there was no legal injury. The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners, hence not contrary to morals, good customs or public policy. The law recognizes in the owner the right to enjoy and dispose of a thing, without other limitations than those established by law. It is within the right of petitioners, as owners, to enclose and fence their property. Article 430 of the Civil Code provides that (e)very owner may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted thereon.At the time of the construction of the fence, the lot was not subject to any servitudes. There was no easement of way existing in favor of private respondents, either by law or by contract. The fact that private respondents had no existing right over the said passageway is confirmed by the very decision of the trial court granting a compulsory right of way in their favor after payment of just compensation.Hence, prior to said decision, petitioners had an absolute right over their property and their act of fencing and enclosing the same was an act which they may lawfully perform in the employment and exercise of said right. To repeat, whatever injury or damage may have been sustained by private respondents by reason of the rightful use of the said land by petitioners is damnum absque injuria.Caveat: Anyone who claims this digest as his own without proper authority shall be held liable under the law of Karma.

PROPERTY DIGEST PART 4Accession CasesPacific farms Inc vs Esguerra 30 scra 684 (1969)Facts:Carried Lumber Company sold and delivered lumber and construction materials to the Insular Farms, Inc. which the latter used in the construction of the aforementioned six buildings at its compound. However, the value of the materials was not paid by Insular Farms, Inc. Company instituted civil case with the Court of First Instance of Pangasinan to recover the said unpaid balance from the Insular Farms, Inc. Trial court rendered judgment sustaining the Company's claim. The judgment debtor did not appeal; so the corresponding writ of execution was issued. Pacific Farms, Inc. filed a third party claim, asserting ownership over levied buildings which it acquired from Insular Farms. Thereafter, sheriff proceeded with public auction. Meanwhile, Pacific Farms filed a complaint against the Company and the sheriff with the court a quo, praying that judgment be rendered, (a) declaring null and void the levy and judicial sale of the six buildings, and (b) adjudging the defendants jointly and severally liable to the plaintiff in the sum of P2,000 by way of actual damages and for such amount as the court may deem proper and just to impose by way of exemplary damages and for costs of the suit. Trial Court annulled the levy but denied claim for actual and exemplary damages.Issue: Whether or not the appellant acted correctly in bringing an action against the Insular Farms, Inc. and enforcing its right of reimbursement.Held:Yes, the appellant acted correctly in bringing an action (D-775) against the Insular Farms, Inc. and enforcing its right of reimbursement through the execution of the final judgment it obtained in the said case against the six buildings in the possession of the appellee who now stands to benefit therefrom. It follows, as a necessary corollary, that the sale at public auction conducted by the defendant sheriff of the six buildings described in the certificate of sale dated February12, 1962, exhibit 7, was valid and effective. Also, the application by analogy of the rules of accession would suffice for a just adjudication. Article 447 of the Civil Code provides: The owner of the land who makes thereon personally or through another, plantings, constructions or works with the materials of another, shall pay their value; and, if he acted in bad faith, he shall also be obliged to the reparation of damages. The owner of the materials shall have the right to remove them only in case he can do so without injury to the work constructed, or without the plantings, constructions or works being destroyed. However, if the landowner acted in bad faith, the owner of the materials may remove them in any event with a right to be indemnified for damages.The above quoted legal provision contemplated a principal and an accessory, the land being considered the principal, and the plantings, costructions or works, the accessory. The owner of the land who in good faith whether personally or through another- makes constructions or works thereon, using materials belonging to somebody else, becomes the owner of the said materials with the obligation however of praying for their value. The owner of the materials, on the other hand, is entitled to recover them, provided no substantial injury is caused to the landowner. Otherwise, he has the right to reimbursement for the value of his materials.

Tan Queto v. CA [G.R. No. L-35648. February 27, 1987.]; Facts: Restituta Tagalinar Guangco de Pombuena received the questioned lot (Lot 304-B of the Cadastre Survey of the Municipality of Centro, Misamis Occidental) either as a purported donation or by way of purchase on 11 February 1927 for P50.00 as the alleged consideration thereof. The transaction took place during her mothers lifetime (her father having predeceased the mother) and consummated while Restituta was already married to her husband Juan Pombuena. On 22 January 1935, Juan filed an application of Torrens title over the land for himself and his supposed co-owner Restituta. On 22 November 1938, a decision was promulgated (GLRC 1638, Cadastral Case 12) pronouncing Juan (married to Restituto) as the owner of the land. On 22 September 1949 a contract of lease over the lot was entered into between Pershing Tan Queto and Restituta (with the consent of her husband) for a period of 10 years.Meanwhile, On 27 December 1960 Restituta sued Tan Queto for unlawful detainer (the lease contract having expired) before the Municipal Court of Ozamis City.On 22 April 1962, as a consequence of the cadastral case, an OCT was issued in Juans name. On 10 October 1962, Tan Queto and Juan entered into a barter agreement whereby Tan Queto became the owner of the disputed lot, and the spouses in turn became the owners of a parcel of land with the house constructed thereon previously owned (that is, before the barter) by Tan Queto. Thereafter, Tan Queto constructed on the disputed land a concrete building, without any objection on the part of Restituta.The Municipal court ruled in favor of the spouses in the unlawful detainer case; but on appeal in the CFI, the entire case was dismissed because of an understanding (barter) entered into by Juan and Tan Queto.Restituta sued both Juan and Tan Queto for reconveyance of the title over the registered but disputed lot, for annulment of the barter, and for recovery of the land with damages. The CFI and the Court of Appeals found the disputed lot as paraphernal and that Tan Queto was a builder in bad faith. These findings were regarded by the Supreme Court as findings of facts and thus ordinarily conclusive upon the Court. Tan Queto filed for a motion for reconsideration of the Supreme Court decision dated 16 May 1983.

The Supreme Court set aside its decision promulgated on 16 May 1983, and rendered a new one declaring the questioned lot together with the building thereon, as Tan Quetos exclusive property; without costs.1. Findings of the lower courts ordinary conclusive upon the Court; exception, if erroneousThe findings of the Court of First Instance and the Court of Appeals were regarded by the Supreme Court as findings of facts and thus ordinarily conclusive upon the Court. Assuming they are factual findings, still if they are erroneous inferences from certain facts, they cannot bind the Court.2. Land not transferred to Restituta by donation, for it to be paraphernalThe oral donation of the lot cannot be a valid donation inter-vivos because it was not executed in a public instrument (Art. 749, Civil Code), nor as a valid donation mortis causa for the formalities of a will were not complied with. The allegation that the transfer was a conveyance to Restituta of her hereditary share in the estate of her mother (or parents) cannot be sustained for the contractual transmission of future inheritance is generally prohibited.3. Land is conjugal, not paraphernal; Ownership by traditionThe land is conjugal, not paraphernal. Ownership was acquired by the spouses by tradition (delivery) as a consequence of the contract of sale (See Art. 712, Civil Code) with P50.00 (then a considerable amount) as the cause or consideration of the transaction. The lot is therefore conjugal, having been acquired by the spouses thru onerous title (the money used being presumably conjugal, there being no proof that Restituta had paraphernal funds of her own).4. Sale not fictitious nor simulated; Allegation of simulation cannot prejudice a stranger

The sale cannot be said to be fictitious or simulated (and therefore void) as there was a valid consideration therefor. Assuming that there had indeed been a simulation, the parties thereto cannot use said simulation to prejudice a stranger to said strategem (like petitioner herein).5. Tan Queto recognized Restituta as an owner, not the ownerTan Queto admitted Restituta was an owner (not the owner) of the lot in his Answer, and this is true, for she was a co-owner (with Juan, and therefore an owner.) There is no admission of Restitutas exclusive ownership.6. Assuming Tan Queto recognized Restituta as the owner; bad faith of one neutralizes the bad faith of the otherEven assuming that despite registration of the lot as conjugal, Tan Queto nursed the belief that the lot was actually Restitutas (making him in bad faith), still Restitutas failure to prohibit him from building despite her knowledge that construction was actually being done, makes her also in bad faith. The net resultant of mutual bad faith would entitle Tan Qyeto to the rights of a builder in good faith (Art. 448, Civil Code), ergo, reimbursement should be given him if Restituta decides to appropriate the building for herself (Art. 448, Civil Code).7. Tan Queto an owner-possessorTan Queto having bartered his own lot and small house with the questioned lot with Juan (who has been adverted to by a court decision and by the OCT a conjugal owner) may be said to be the owner-possessor of the lot. Certainly he is not merely a possessor or builder in good faith (this phrase presupposes ownership in another); much less is he a builder in bad faith. He is a builder-possessor (jus possidendi) because he is the owner himself.8. Jus possessionis, jus possidendi; good faith and bad faithThe Chapter on Possession (jus possessionis, not jus possidendi) in the Civil Code refers to a possessor other than the owner. The difference between a builder (or possessor) in good faith and one in bad faith is that the former is not aware of the defect or flaw in his title or mode of acquisition while the latter is aware of such defect or flaw (Art. 526, Civil Code). But in either case there is a flaw or defect. In the present case, there is no such flaw or defect because it is Tan Queto himself (not somebody else) who is the owner of the property.

Pleasantville Development v. CA [G.R. No. 79688. February 1, 1996.] Facts: Edith Robillo purchased from Pleasantville Development Corporation a parcel of land designated as Lot 9, Phase II and located at Taculing Road, Pleasantville Subdivision, Bacolod City. Eldred Jardinico bought the rights to the lot from Robillo. At that time, Lot 9 was vacant. On the other hand, on 26 March 1974, Kee bought on installment Lot 8 of the same subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real estate agent of Pleasantville Development. Under the Contract to Sell on Installment, Kee could possess the lot even before the completion of all installment payments. On 20 January 1975, Kee paid CTTEI the relocation fee of P50.00 and another P50.00 on 27 January 1975, for the preparation of the lot plan. These amounts were paid prior to Kees taking actual possession of Lot 8. After the preparation of the lot plan and a copy thereof to Kee, CTTEI through its employee, Zenaida Octaviano, accompanied Kees wife, Donabelle Kee, to inspect Lot 8. Unfortunately, the parcel of land pointed by Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence, a store, an auto repair shop and other improvements on the lot. Upon completing all payments, Jardinico secured on 19 December 1978 from the Register of Deeds of Bacolod City TCT 106367 in his name. It was then that he discovered that improvements had been introduced on Lot 9 by Wilson Kee, who had taken possession thereof. After the discovery, Jardinico confronted Kee. The parties tried to reach an amicable settlement, but failed. On 30 January 1981, Jardinicos lawyer wrote Kee, demanding that the latter remove all improvements and vacate Lot 9. When Kee refused to vacate, Jardinico filed with the MTCC a complaint for ejectment with damages against Kee. Kee, in turn, filed a third-party complaint against Pleasantville and CTTEI. The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI. The MTCC also found that Pleasantville had already rescinded its contract with Kee over Lot 8 for the latters failure to pay the installments due, and that Kee had not contested the rescission. The rescission was effected in 1979, before the complaint was instituted. The MTCC concluded that Kee no longer had any right over the lot subject of the contract between him and Pleasantville. Consequently, Kee must pay reasonable rentals for the use of Lot 9, and, furthermore, he cannot claim reimbursement for the improvements he introduced on said lot. The MTCC thus ordered Kee to vacate Lot 9, to remove all structures and improvements he introduced thereon, and to pay the Jardinico rentals of P15.00 a day computed from the time the suit was filed on 12 March 1981 Property, 2003 ( 156 ) Haystacks (Berne Guerrero) until he vacateds the premises; such amount bearing an interest of 12% per annum. The MTCC also ordered CTTI and Pleasantville to pay Jardinico in solidum for the amount of P3,000 as attorneys fees and P700 as cost and litigation expenses. On appeal, the RTC Bacolod City (Branch 48) ruled that Pleasantville and CTTEI were not at fault or were not negligent and found Kee a builder in bad faith. Thus, the appellate court affirmed the decision with respect to the order to vacate the premises of Lot 9, the removal of the structure and improvements introduced thereon at Kees expense, and to pay a rental of P15.00 a day until he vacates the premises, with an interest of 12% per annum. The Court further rendered judgment against Kee to pay Jardinico the sum of P3,000.00 as attorneys fees, plus costs of litigation; dismissed the third-party complaint against Pleasantville CTTEI, and reversed the order Pleasantville and CTTEI to pay Jardinico attorneys fees and costs of litigation. Following the denial of his motion for reconsideration on 20 October 1986, Kee appealed directly to the Supreme Court, which referred the matter to the Court of Appeals. Pending resolution of the case before the Court of Appeals, Jardinico and Kee on 24 July 1987 entered into a deed of sale, wherein the former sold Lot 9 to Kee. Jardinico and Kee did not inform the Court of Appeals of such deal. The appellate court ruled that Kee was a builder in good faith (entitled to rights under Articles 448, 546 and 548 of the Civil Code), as he was unaware of the mix-up when he began construction of the improvements on Lot 8. It further ruled that the erroneous delivery was due to the negligence of CTTEI, and that such wrong delivery was likewise imputable to its principal, Pleasantville; and thus ordered the CTTEI and Pleasantville to be solidarily liable for the demolition expenses and value of improvements destroyed or rendered useless in case Jardinico decides to appropriate the improvements and thereafter remove the structures; or for the amount representing the value of Lot 9 that Kee should pay to Jardinico if Jardinico chose to sell the land to Kee. The appellate court ordered CTTEI and Pleasantville to pay in solidum the amount of P3,000.00 to Jardinico as attorneys fees, as well as litigation expenses; and ruled that the award of rentals was without basis. Further, the appellate court remanded the case to the court of origin for the determination of the actual value of the improvements and the property (Lot 9). Pleasantville filed the petition for review on certiorari. The Supreme Court partially granted the petition, and modified the decision of the Court of Appeals by declaring Wilson Kee a builder in good faith; and that Pleasantville Development and C.T. Torres Enterprises solidarily liable for damages due to negligence (however, since the amount and/or extent of such damages was proven during the trial, the same cannot now be quantified and awarded). The Court also ordered Pleasantville Development and C.T. Torres Enterprises to pay in solidum the amount of P3,000.00 to Jardinico as attorneys fees, as well as litigation expenses. The Court dispensed with the award of rentals to Jardinico. 1. Kee a builder in good faith; Prudent acts to ascertain land to build on Under the Torrens system of land registration, Kee is presumed to have knowledge of the metes and bounds of the property with which he is dealing. But as Kee is a layman not versed in the technical description of his property, he had to find a way to ascertain that what was described in TCT 69561 matched Lot 8. Thus, he went to the subdivision developers agent and applied and paid for the relocation of the lot, as well as for the production of a lot plan by CTTEIs geodetic engineer. Upon Kees receipt of the map, his wife went to the subdivision site accompanied by CTTEIs employee, Octaviano, who authoritatively declared that the land she was pointing to was indeed Lot 8. Having full faith and confidence in the reputation of CTTEI, and because of the companys positive identification of the property, Kee saw no reason to suspect that there had been a misdelivery. The steps Kee had taken to protect his interests were reasonable. There was no need for him to have acted ex-abundantia cautela. such as being present during the geodetic engineers relocation survey or hiring an independent geodetic engineer to countercheck for errors, for the final delivery of subdivision lots to their owners is part of the regular course of everyday business of CTTEI. Because of Property, 2003 ( 157 ) Haystacks (Berne Guerrero) CTTEIs blunder, what Kee had hoped to forestall did in fact transpire. Kee had acted in the manner of a prudent man in ascertaining the identity of his property. 2. Scenario of bad faith improbable; Good faith presumed It is thus highly improbable that a purchaser of a lot would knowingly and willingly build his residence on a lot owned by another, deliberately exposing himself and his family to the risk of being ejected from the land and losing all improvements thereon, not to mention the social humiliation that would follow. Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or flaw in his title. And as good faith is presumed, the one alleging bad faith has the burden of proving bad faith. 3. Contractual breach cannot be the basis to negate the presumption of builder in good faith Violations of paragraphs 22 and 26 of the Contract of Sale on Installment have no bearing whatsoever on whether Kee was a builder in good faith, i.e. on his state of mind at the time he built the improvements on Lot 9. These alleged violations may give rise to Pleasantvilles cause of action against Kee under the said contract (contractual breach), but may not be bases to negate the presumption that Kee was a builder in good faith. 4. Rescission does not negate the negligence of CTTEI The Contract of Sale on Installment covering Lot 8 between Pleasantville and Kee, which was rescinded long before the present action was instituted, has no relevance on the liability of Pleasantville, as such fact does not negate the negligence of its agent in pointing out the wrong lot to Kee. Such circumstance is relevant only as it gives Jardinico a cause of action for unlawful detainer against Kee. 5. Recovery of damages not waived Kee did not contracted away his right to recover damages resulting from Pleasantvilles negligence. Such waiver would be contrary to public policy and cannot be allowed. Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. 6. Principal responsible for acts of agent if damaged caused to third persons; Agent is personally liable for damages if he exceeds his authority The principal is responsible for the acts of the agent, done within the scope of his authority, and should bear the damage caused to third persons. On the other hand, the agent who exceeds his authority is personally liable for the damages. In the present case, CTTEI was acting within its authority as the sole real estate representative of Pleasantville when it made the delivery to Kee. In acting within its scope of authority, it was, however, negligent. It is this negligence that is the basis of Pleasantvilles liability, as principal of CTTEI, per Articles 1909 and 1910 of the Civil Code. 7. Deed of Sale between Kee and Jardinico merely regulates the reciprocal rights of the parties and has no effect on the liability of Pleasantville The deed of sale regulates the reciprocal rights of Kee and Jardinico; it stressed that they had reached an agreement independent of the outcome of the case. The terms and conditions in the said deed of sale are strictly for the parties thereto and that there is no waiver made by either of the parties in said deed of whatever favorable judgment or award the Court of Appeals may make in Kees and Jardinicos favor against Pleasantville and CTTEI. The deed of sale can have no effect on the liability of Pleasantville. Pleasantvilles liability is grounded on the negligence of its agent. 8. Pleasantville supposedly liable for damages due to agents negligence; Due to lack of evidence, no damages due Pleasantvilles liability lies in the negligence of its agent CTTEI. For such negligence, Pleasantvilles should be held liable for damages. The extent and/or amount of damages to be awarded is a factual issue which should be determined after evidence is adduced. However, there is no showing that such evidence was Property, 2003 ( 158 ) Haystacks (Berne Guerrero) actually presented in the trial court; hence no damages could be awarded. 9. Appellate court erred in modification of the application of the law on ground of equity The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and owner in good faith, respectively, are regulated by law (i.e., Arts. 448, 546 and 548 of the Civil Code). It was error for the Court of Appeals to make a slight modification in the application of such law, on the ground of equity. At any rate, Kee and Jardinico have amicably settled through their deed of sale their rights and obligations with regards to Lot 9. Thus, the Court deleted the dispositive portion of the Court of Appeals Decision holding Pleasantville and CTTEI solidarily liable for demolition expenses or the amount pertaining to the value of the lot, whichever is applicable in the exercise of the landowners options. 10. Award of attorneys fees lies with the discretion of the court depending on the cases circumstances The award of attorneys fees lies within the discretion of the court and depends upon the circumstances of each case. The Supreme Court shall not interfere with the discretion of the Court of Appeals. Jardinico was compelled to litigate for the protection of his interests and for the recovery of damages sustained as a result of the negligence of Pleasantviles agent. 11. No need to remand the case for the determination of the value and the land In view of the deed of sale entered into by Kee and Jardinico, which deed governs the rights of Jardinico and Kee as to each other, there is also no further need to remand the case to the court of origin for determination of the actual value of the improvements and the property (Lot 9), as well as for further proceedings in conformity with Article 448 of the New Civil Code. Baltazar v. Caridad [G.R. No. L-23509. June 23, 1966.] Facts: In the cadastral proceeding (Cadastral Case 54, GLRO Cadastral Case 1222), the trial court rendered decision, dated 23 January 1941, awarding Lot 8864 of the Laoag (Ilocos Norte) cadastre to the spouses Julio Baltazar and Constancia Valencia as their conjugal partnership property. Said decision having become final, the corresponding decree was issued on 12 July 1941, and pursuant thereto, said lot was registered in the names of applicant spouses under OCT O-1445, which was later transcribed, on 5 November 1959, in the office of the Register of Deeds of Ilocos Norte. In the meanwhile, Julio Baltazar, the registered owner of Lot 8864, died. On 6 December 1961, his surviving Property, 2003 ( 19 ) Haystacks (Berne Guerrero) wife and children filed a motion, in the cadastral case praying for writ of possession against Silvina Caridad and her daughter, Eduarda Caridad, who had been in possession of the southern portion of said Lot 8864 since 1939, while the cadastral case involving said lot was pending before the trial court, and before the decision was rendered and the corresponding decree issued in 1941. No writ having theretofore been issued in Baltazars favor, the trial court issued an order, on 11 December 1961, granting Baltazars motion, and overruled Caridads opposition but directed the sheriff not to remove or destroy the permanent improvements on the lot without an express command. On 2 January 1962, the order having become final, the sheriff enforced the writ and placed Baltazar in possession of the southern portion of the lot. On 23 January 1962, Baltazar presented a motion to compel Eduarda and Silvina Caridad to remove their respective houses which they built in 1958 and 1959, respectively, in the southern portion of the disputed lot, and, in the event of their failure to do so, to order the sheriff to demolish the same. On 20 March 1962, the trial court, after due hearing, granted Baltazars motion, ordering the Caridads to remove their respective houses from the southern portion of said lot 8864 within 30 days from receipt of said order. Not satisfied, the Caridads appealed (CA-GR 31289-R). The appellate court, however, certified the appeal to the Supreme Court for raising only questions of law. The Supreme Court affirmed the appealed order; with costs against the Caridads. 1. Order compelling Caridads to remove their respective houses from the disputed lot; Lack of opposition in previous proceedings The order, dated 20 March 1962, of the cadastral court, granting Baltazars motion to compel the Caridads to remove their respective houses from the disputed lot, is valid and enforceable against the latter. This may be concluded based on the circumstances that (1) that the Caridads do not dispute that during the pendency of the cadastral proceeding (to which judgment was rendered awarding said lot 8864, and consequent issuance of the final decree of registration of the same, in favor of Julio Baltazar), the late Andres Caridad, his surviving spouse Silvina Caridad, and their children, one of whom is Eduarda Caridad, were in possession of the southern portion of the disputed lot ; (2) that Eduarda Caridad claims right and title thereto as a mere heir and successor-in-interest of said Andres Caridad; and (3) that the Caridads do not dispute the propriety and validity of the order of the cadastral court, granting the writ of possession in favor of Baltazar as well as its enforcement. 2. Jurisdiction of the CFI, sitting as a land registration court, to issue writ of possession and order demolition of improvements In Marcelo vs. Mencias, etc., et al. (L-15609, 29 April 1960, 58 OG 3349), the Court had already upheld the jurisdiction or authority of the CFI, sitting as a land registration court, to order, as a consequence of the writ of possession issued by it, the demolition of improvements introduced by the successor-in-interest of a defeated oppositor in the land registration case. 3. Section 13, Rule 39 of the Rules of Court Section 13, Rule 39 of the Rules of Court (How execution for the delivery or restitution of property enforced), provides that the officer must enforce an execution for the delivery or restitution of property by placing the plaintiff in possession of such property, and by levying as hereinafter provided upon so much of the property of the judgment debtor as will satisfy the amount of costs, damages, rents, and profits included in the execution. However, the officer shall not destroy, demolish or remove the improvements made by the defendant or his agent on the property, except by special order of the court, which order may only issue upon petition of the plaintiff after due hearing and upon the defendants failure to remove the improvements within a reasonable time to be fixed by the court. 4. Rule applies to land registration cases in a suppletory character and not only to ordinary actions involving the delivery or restitution of property Property, 2003 ( 20 ) Haystacks (Berne Guerrero) The provision of the Rules of Court applies not only to ordinary actions involving the delivery or restitution of property, but also to proceedings under the land registration law. The provisions of the Rules of Court are applicable to land registration cases in a suppletory character (Rule 132). Thus, if the writ of possession issued in a land registration proceeding implies the delivery of possession of the land to the successful litigant therein (Demorar vs. Ibaez, 51 OG 2872, Pasay Estate Company vs. Del Rosario, et al., 11 Phil. 391; Manlapas vs. Llorente, 48 Phil. 298), a writ of demolition must, likewise, issue, especially considering that the latter writ is but a complement of the former which without said writ of demolition would be ineffective. To require a successful litigant in a land registration case to institute another action for the purpose of obtaining possession of the land adjudged to him, or for the purpose of securing fruits of his victory, would be a cumbersome process. It would foster unnecessary and expensive litigations and result in multiplicity of suits, which the judicial system abhors. 5. Power of a judge to issue all auxiliary writs to carry into effect the jurisdiction conferred upon the court by law Section 6, Rule 124, of the Rules of Court provides that when by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer; and if the procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by these rules, any suitable process or mode of proceeding may be adopted which appears most conformable to the spirit of said rules. In the present case, the Judge has the power to issue all auxiliary writs, including the writ of demolition, processes and other means necessary to carry into effect the jurisdiction conferred upon it by law in land registration cases to issue a writ of possession to the successful litigant. 6. Every court has inherent power to do necessary thing s for the administration of justice In Shioji vs. Harvey, 43 Phil 333, it was pointed out that independent of any statutory provision, every court has inherent power to do all things reasonably necessary for the administration of justice within the scope of its jurisdiction. In line with this doctrine, the Judge has the inherent power to issue the writ of demolition. Its issuance is reasonably necessary to do justice to petitioner who is being deprived of the possession of the lots in question, by reason of the continued refusal of the respondent to remove his house thereon and restore possession of the premises to petitioner. 7. Builders in bad faith; Rights of registered owner cannot be defeated by an unsuccessful opponent through the subterfuge of replacing his old house with a new one from time to time The Caridads cannot be regarded as builders in good faith because they are bound by the 1941 decree of registration that obligated their parents and predecessors-in-interest. Good faith must rest on a colorable right in the builder, beyond a mere stubborn belief in ones title despite judicial adjudication. The fact that in 1959 the Caridads demolished and replaced their old house with new and bigger ones cannot enervate the rights of the registered owners. Otherwise, the rights of the latter to enjoy full possession of their registered property could be indefinitely defeated by an unsuccessful opponent through the simple subterfuge of replacing his old house with a new one from time to timeGeminiano v. CA [G.R. No. 120303. July 24, 1996.] Facts: Lot 3765-B-1 (314 sq. m.) was originally owned by Paulina Amado vda. de Geminiano, the mother of Federico, Maria, Ernesto, Asuncion, Larry and Marlyn Geminiano. On a 12-sq. m. portion of that lot stood the Geminianos unfinished bungalow, which the Geminianos sold in November 1978 to Dominador and Mary Nicolas for the sum of P6,000.00, with an alleged promise to sell to the latter that portion of the lot occupied by the house. Subsequently, Paulina Amado-Geminiano executed a contract of lease over a 126 sq. m. portion of the lot, including that portion on which the house stood, in favor of the Nicolas spouse for P40 per month for a period of 7 years commencing on 15 November 1978. The Nicolas spouses then introduced additional improvements and registered the house in their names. After the expiration of the lease contract in November 1985, however, the Paulina refused to accept the monthly rentals. It turned out that the lot in question was the subject of a suit, which resulted in its acquisition by one Maria Lee in 1972. In 1982, Lee sold the lot to Lily Salcedo, who in turn sold it in 1984 to the spouses Agustin and Ester Dionisio. On 14 February 1992, the Dionisio spouses executed a Deed of Quitclaim over the said property in favor of the Geminianos. As such, the lot was registered in the latters names. On 9 February 1993, the Geminianos sent, via registered mail, a letter addressed to Mary Nicolas demanding that she vacate the premises and pay the rentals in arrears within 20 days from notice. Upon failure of the Nicolas spouses to heed the demand, the Geminianos filed with the MTCC of Dagupan City a complaint for unlawful detainer and damages. The trial court held that there was no lease to speak of to be renewed as the lot was acquired by Maria Lee in 1972, and that if indeed there is a legal lease existing, its renewal can only be made on a month-to-month pursuant to Article 1687 of the Civil Code; that the lessees were not builders in good faith and the reimbursement as such are governed by Article 1678; and that the value of the house and improvements was P180,000 as there was controverting evidence presented. The Court thus ordered the Nicolas spouses to vacate the premises, to pay the Geminianos P40 a month as reasonable compensation for their stay thereon from the filing of the complaint on 14 April 1993 until they vacated, and to pay the sum of P1,000 as attorneys fees, plus costs. On appeal by the Nicolas spouses, the RTC Dagupan City reversed the trial courts decision and rendered a Property, 2003 ( 69 ) Haystacks (Berne Guerrero) new judgment: (1) ordering the Geminianos to reimburse the Nicolas spouses for the value of the house and improvements in the amount of P180,000.00 and to pay the latter P10,000.00 as attorneys fees and P2,000.00 as litigation expenses; and (2) allowing the Nicolas spouses to remain in possession of the premises until they were fully reimbursed for the value of the house. It ruled that since the Nicolas spouses were assured by the Geminianos that the lot they leased would eventually be sold to them, they could be considered builders in good faith, and as such, were entitled to reimbursement of the value of the house and improvements with the right of retention until reimbursement had been made. On appeal, this time by Geminianos, the Court of Appeals affirmed the decision of the RTC and denied the Geminianos motion for reconsideration. Hence, the petition for review on certiorari. The Supreme Court granted the petition; reversing and setting aside the decision of the Court of Appeals of 27 January 1995 in CA-GR SP 34337; and reinstating the decision of Branch 3 of the Municipal Trial Court in Cities of Dagupan City in Civil Case 9214; with costs against the Nicolas spouses. 1. Non-owner of the premises may lease property While the right to lease property is an incident of title and possession, a person may be a lessor and occupy the position of a landlord to the tenant although he is not the owner of the premises leased. After all, ownership of the property is not being transferred, only the temporary use and enjoyment thereof. 2. Nicolas spouses estopped; Estoppel applies even if lessor has no title, may be asserted not only by original lessor but also those who succeed to his title The Nicolas spouses came into possession of a 126 sq. m. portion of the said lot by virtue of a contract of lease executed by the Geminianos mother in their favor. The juridical relation between the Geminianos mother as lessor, and the Nicolas spouses as lessees, is therefore well-established, and carries with it a recognition of the lessors title. The lessees who had undisturbed possession for the entire term under the lease, are then estopped to deny their landlords title, or to assert a better title not only in themselves, but also in some third person while they remain in possession of the leased premises and until they surrender possession to the landlord. This estoppel applies even though the lessor had no title at the time the relation of lessor and lessee was created, and may be asserted not only by the original lessor, but also by those who succeed to his title. 3. Lessees not possessors not builders in good faith Being mere lessees, the Nicolas spouses knew that their occupation of the premises would continue only for the life of the lease. Plainly, they cannot be considered as possessors nor builders in good faith. 4. Article 448 in relation to Article 546 applies only to a possessor in good faith; does not apply to lessee Article 448 of the Civil Code, in relation to Article 546 of the same Code, which allows full reimbursement of useful improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. It does not apply where ones only interest is that of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to improve his landlord out of his property. 5. Alleged option to buy not supported by evidence; Promise unenforceable unless option is in writing Neither the deed of sale over the house nor the contract of lease contained an option in favor of the Nicolas spouses to purchase the said lot. The first thing that the spouses should have done was to reduce the alleged promise into writing, because under Article 1403 of the Civil Code, an agreement for the sale of real property or an interest therein is unenforceable, unless some note or memorandum thereof be produced. Not having taken any steps in order that the alleged promise to sell may be enforced, the private respondents cannot bank Property, 2003 ( 70 ) Haystacks (Berne Guerrero) on that promise and profess any claim nor color of title over the lot in question. 6. Option does not render the Nicolas spouses builders in good faith Even if the Germinianos indeed promised to sell, it would not make the spouses possessors or builders in good faith so as to be covered by the provisions of Article 448 of the Civil Code. The latter cannot raise the mere expectancy of ownership of the lot because the alleged promise to sell was not fulfilled nor its existence even proven. 7. Pecson v. CA does not apply; No forced co-ownership There is no need to apply by analogy the provisions of Article 448 on indemnity as was done in Pecson vs. Court of Appeals, because the situation sought to be avoided and which would justify the application of that provision, is not present in the present case. A state of forced co-ownership would not be created between the Germinianos and the Nicolas spouses. 8. Lessees governed by Article 1678 The rights of the lessees are governed by Article 1678 of the Civil Code which allows reimbursement to the extent of one-half of the value of the useful improvements. The right to indemnity under Article 1678 of the Civil Code, however, arises only if the lessor opts to appropriate the improvements. Since the Germinianos refused to exercise that option, the Nicolas spouses cannot compel them to reimburse the one-half value of the house and improvements. Neither can they retain the premises until reimbursement is made. The spouses sole right then is to remove the improvements without causing any more impairment upon the property leased than is necessary. [[G.R. No. 142131. December 11, 2002]

Lacap vs LeeD E C I S I O NCORONA, J.:

Before us is a petition for review of the decision[1] dated February 28, 2000 of the Court of Appeals[2] affirming the decision[3] of the Regional Trial Court (RTC, for brevity) of Davao City, Branch 11. The said courts affirmed on appeal the decision dated April 30, 1997 of the Municipal Trial Court in Cities (MTCC, for brevity) of Davao City in a case[4] for unlawful detainer filed by respondent Jouvet Ong Lee against the petitioner spouses Dario and Matilde Lacap.The facts, as found by the Court of Appeals and the Regional Trial Court, are as follows:Before 1981, a certain Victor Facundo mortgaged two parcels of land and the improvements thereon to Monte de Piedad Savings Bank (the bank, for brevity). In 1981, herein petitioner spouses Dario and Matilde Lacap assumed to pay Facundos mortgage obligation to the bank. Due to their failure to pay their obligation to the bank, however, the latter foreclosed on the mortgage. During the auction sale, the bank emerged as the highest bidder and title passed on to it.The bank allowed the petitioner spouses to stay in the premises as lessees paying a monthly rental of P800. The petitioner spouses introduced improvements thereon allegedly amounting to some P500,000 after relying on the banks assurance that the property would be sold back to them. On May 1, 1996[5], the petitioner spouses representative went to the bank to pay the monthly rental. However, the bank refused to accept the rentals inasmuch as, according to the bank, the property had already been sold to another person. When the petitioner spouses called the banks head office, the Vice-President of the Assets Division of the bank advised them to submit a written offer to the bank for P1,100,000. The petitioner spouses complied that same day. But, on May 22, 1996, the bank turned down the petitioner spouses offer. On June 20, 1996, the petitioner spouses received a letter demanding that they vacate the premises because it was already owned by herein respondent, Jouvet Ong Lee.

The petitioner spouses instituted a civil case against the respondent for cancellation of sale and damages with an application for preliminary injunction. This case is now pending before Branch 13 of the Regional Trial Court (RTC, for brevity) of Davao City.[6]Meanwhile, on October 30, 1996, the respondent filed a complaint for unlawful detainer against the petitioners. After trial, the Municipal Trial Court of Davao City, Branch 4, rendered judgment as follows:WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering the latter to:a) vacate the subject premises;b) pay P1,500.00 as reasonable compensation for the use of the said premises commencing the date of this decision until defendants vacate the same;c) pay P10,000.00 as and by way of attorneys fees; andd) cost of suit.On appeal, the RTC of Davao City, Branch 11, affirmed the assailed decision of the municipal trial court, with the modification that respondent should reimburse the petitioner spouses for the improvements the latter introduced to the premises. The dispositive portion of the decision reads:WHEREFORE, premises considered, judgment is hereby rendered affirming the decision of the court a quo with the modification that plaintiff should reimburse the defendant for the improvements the latter introduced on the premises.[8]The respondent filed a motion for reconsideration praying for the deletion of the order to reimburse petitioner spouses for the improvements introduced on the subject premises. On August 25, 1998, the RTC issued an order granting respondents motion, to wit:WHEREFORE, the Motion for Reconsideration of Plaintiff-Appellee is hereby granted to leave the premises therein even if the property may suffer damage. But they shall not cause more damage than what is necessary. They shall likewise remove the ornamental improvements introduced therein.On August 23, 1999, the said court denied the petitioner spouses motion for reconsideration.Petitioner spouses appealed the decision of the RTC to the Court of Appeals. According to them, the courts a quo committed serious errors of fact and law in entertaining the complaint for unlawful detainer despite the lack of jurisdiction considering that the issue recovery of the right to possess was the subject matter of an accion publiciana which was properly cognizable by the Regional Trial Courts.[10] On February 28, 2000, the appellate court rendered a decision, the dispositive portion of which reads:WHEREFORE, for lack of merit, the instant petition is DISMISSED and the assailed Decision dated February 20, 1998 and Order dated August 25, 1998 are AFFIRMED.The appellate court held that the municipal trial court had jurisdiction over the case inasmuch as the complaint itself sufficiently alleged that possession was unlawfully withheld from the respondent who was the registered owner thereof, and that the petitioner spouses refused to vacate the subject premises despite demands to vacate the same. In brushing aside the petitioner spouses argument that respondents ownership was assailable due to the banks violation of its promise to first offer the subject property to them, the appellate court ruled that it could not touch upon said issue as it was the subject matter of a separate case filed by the spouses before the RTC of Davao City, Branch 13. Reiterating the rulings of the courts a quo, the appellate court held that the petitioner spouses could not be builders in good faith inasmuch as their payment of rentals to the bank was an indication that they were lessees. Thus, in the indemnification for improvements made, Article 1678, not Article 448, of the Civil Code should govern.

Hence, this petition seeking a resolution on the following assigned issues:IWHETHER OR NOT THE COURT OF APPEALS CORRECTLY RULED ON THE JURISDICTIONAL QUESTION, THAT IS THE JURISDICTION OF THE DAVAO CITY MUNICIPAL COURT OVER THE UNLAWFUL DETAINER CASE FILED BY THE RESPONDENT; AND AS AN ALTERNATIVE TO, BUT ASSOCIATED WITH, THE ABOVE ISSUE, AND ASSUMING THAT THE DAVAO CITY MUNICIPAL COURT HAD JURISDICTION,IIWHETHER OR NOT THE COURT OF APPEALS CORRECTLY APPLIED ARTICLE 1678 INSTEAD OF ARTICLE 448 OF THE CIVIL CODE WITH REGARD TO INDEMNITY FOR THE IMPROVEMENTS INTRODUCED BY THE PETITIONERS ON THE SUBJECT PROPERTY.[12]Abandoning their previous position of lack of jurisdiction on the part of MTC, the petitioner spouses now claim that the courts a quo erred in oversimplifying the issue in the case at bar. Since they were questioning the title of the respondent over the subject property, the case for unlawful detainer was no longer limited to the question of possession but also involved the question of ownership. Thus, the courts a quo should not have evaded ruling on the issue of ownership as a pre-requisite to the determination and resolution of the issue of physical possession.Section 16 of the 1997 Rules of Civil Procedure provides that:Sec. 16. Resolving defense of ownership.- When the defendant raises the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession.The petitioner spouses are questioning the respondents ownership by raising as an issue the alleged failure of the bank to first offer to them the subject property, thereby making respondents title defective. This, according to the petitioner spouses, is a defense of ownership that should have been resolved by the courts a quo.This Court takes exception to this argument. The defense of ownership contemplated by the said rule refers to a situation where the defendants either claim ownership of the subject property or attributes said ownership to another person other than the plaintiff. It does not apply where the defendants merely question the validity of the title of the plaintiff. Thus, the petitioner spouses must anchor the legality of their material possession of the property on a claim of title in order for the court to be able to touch, at least provisionally and only for purposes of determining possession, on the legality of the issue of ownership.In their Reply[13], they do not claim ownership over the subject premises to support their right to possess the property. They do not claim having a better right to the said property by way of transfer of title through one of the modes of transferring ownership. The alleged violation of their right of priority or first option to buy the premises is not the defense of ownership contemplated in Sec. 16 because said violation, even if true, would only give a cause of action for damages on the ground of breach of contract but not an action for recovery of title.The cases cited by petitioners cannot support their position as said cases refer to different factual situations. In Oronce v. Court of Appeals,[14] the defendants maintained ownership over the property by claiming that the contract of sale with assumption of mortgage was actually an equitable mortgage. We ruled therein that the defendant as mortgagor, and not as vendor, of the property can raise as a defense his claim of ownership over the subject property. In Refugia v. Court of Appeals,[15] the defendants claimed title over the subject property by contending that they, and not the plaintiffs, paid for the purchase of the said property.

In the instant case, however, the petitioners admit that they do not own the subject parcels of land. As third persons to the contract of sale between the bank and the respondent, they are only questioning the validity of the transfer of title to respondent. The same cannot qualify as a defense of ownership as they will not derive title as a consequence but will, at best, only be given their disputed priority option to buy the subject premises.

Another reason why the supposed issue of ownership cannot be ruled upon by the courts a quo is due to the fact that the same issue is also the subject of a separate pending case for cancellation of sale filed by the petitioners themselves against the respondent before the Regional Trial Court Davao City. In effect, by questioning the ownership of respondent, the petitioners are raising a defense that serves as the main cause of action in the complaint for the cancellation of sale pending before another court. This legal strategy is prohibited by the rule on the alleged litis pendencia. To ask the courts a quo to rule on the alleged defense of ownership is to pre-empt the ruling of the RTC, Branch 13, hearing the case for cancellation of sale. A party is prohibited from splitting his cause of action for the reason that it will unnecessarily clog the court dockets, waste the time and money of the parties, and perpetrate an abuse of the legal system by filing cases of the same nature in the hope of insuring a favorable judgment.Thus, the ruling of the MTCC that petitioner spouses defense does not qualify as a defense of ownership is correct.

In the event that their first assigned error is not resolved in their favor, the petitioner spouses assert that their right to be indemnified for the improvements they introduced should be based on Article 448 of the Civil Code which provides that: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 disagreements the courts shall fix the terms thereof.Article 546 of the Civil Code provides that builders in good faith are entitled to reimbursement for necessary and useful expenses, with right of retention in both cases. The petitioners insist that they should be treated as builders in good faith inasmuch as they stepped into the shoes of Victor Facundo, the former owner-mortgagor, when the latter assigned to them the obligation to pay the bank the balance due on the mortgage. Since then, they occupied the subject property and introduced improvements thereon. They contend that they were not lessees and paid no rentals thereon.We do not think so.Article 528 of the Civil Code provides that possession in good faith continues to subsist until facts exist which show that the possessor is already aware that he wrongfully possesses the thing. Although, in the beginning, the petitioners were made to believe that they had a claim of title over the said property by assuming the mortgage and possessing the subject property, all this changed when they started paying monthly rentals to the mortgagee bank after the foreclosure of the said property. We find this finding of the courts a quo conclusive on us in this petition for review.[16]A conclusive presumption arises from the fact that, during the tenancy relationship, the petitioner spouses admitted the validity of the title of their landlord. This negated their previous claim of title.[17] If, indeed, they believed in good faith they had at least an imperfect title of dominion over the subject premises, they should have tried to prevent the foreclosure and objected to the acquisition of title by the bank. In other words, their supposed belief in good faith of their right of dominion ended when the bank foreclosed and acquired title over the subject premises.Hence, the applicable provision in the instant case is Article 1678 of the Civil Code which provides that:Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary.With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is cause to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.The petitioner spouses are therefore entitled to be paid only one-half of the value of the useful improvements at the time of the termination of the lease or to have the said improvements removed if the respondent refuses to reimburse them.WHEREFORE, the petition for review is hereby DENIED. The decision dated February 28, 2000 of the Court of Appeals is hereby AFFIRMED. Costs against the petitioners.

Del Campo v. Fernandez-Abesia [G.R. No. L-49219. April 15, 1988.]Facts: Spouses Estanislao and Concepcion del Campo and Bernarda Abesia are co-owners pro indiviso of a lot (Lot 1161 of the Cadastral Survey of Cebu, 45 sq.m. at the corner of F. Flores and Cavan Streets, Cebu City; TCT 61850) in the proportion of 2/3 and 1/3 share each, respectively. The spouses filed an action for partition with the CFI Cebu. The trial court appointed a commissioner in accordance with the agreement of the parties. The said commissioner conducted a survey, prepared a sketch plan and submitted a report to the trial court on 29 May 1976, recommending that the property be divided into two lots: Lot 1161-A (30 sq.m.) and Lot No. 1161-B (15 sq. m.). The houses of the spouses and Abesia were surveyed and shown on the sketch plan. Abesias house occupied the portion with an area of 5 sq.m. of the spouses Lot 1161-A. The parties manifested their conformity to the report and asked the trial court to finally settle and adjudicate who among the parties should take possession of the 5 sq. m. of the land in question. The lower court held that Article 448 of the New Civil Code does not apply in the case, and ordered Abesia to demolish at her own expense part of her house which has encroached Lot 1161-A and deliver said area to the spouses, with 60 days upon notice. The parties were ordered to pay the commissioners fee (P400 in proportional share), and the cost of suit (also in proportional share). Abesia appealed to the Court of Appeals, which certified the case to the Supreme Court on account of the question of law involved, the sole issue is the applicability of the provisions of Article 448 of the Civil Code relating to a builder in good faith when the property involved is owned in common. The Supreme Court modified the decision appealed from by ordering the spouses to indemnify Abesia for the Property, 2003 ( 52 ) Haystacks (Berne Guerrero) value of the said portion of the Abesias house in accordance with Article 546 of the Civil Code, if the spouses elect to appropriate the same. Otherwise, Abesia shall pay the value of the 5 sq. m. of land occupied by their house at such price as may be agreed upon with the spouses and if its value exceeds the portion of the house that Abesia built thereon, Abesia may choose not to buy the land but Abesia must pay a reasonable rental for the use of the portion of the spouses land as may be agreed upon between the parties. In case of disagreement, the rate of rental shall be determined by the trial court. Otherwise, defendants may remove or demolish at their own expense the said portion of their house; Without costs. 1. Article 448 of the Civil Code does not apply when co-owner built, sown, or planted in good faith, as he is not a third party; Situation governed by co-ownership Article 448 of the Civil Code provides that 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 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in common for then he did not build, plant or sow upon land that exclusively belongs to another but of which he is a co-owner. The co-owner is not a third person under the circumstances, and the situation is governed by the rules of co-ownership. 2. Article 448 of the Civil Code applies if co-ownership is terminated by the partition The provisions of Article 448 of the new Civil Code should apply when the co-ownership is terminated by the partition, as in the present case, and when it appears that the house of Abesia overlaps or occupies a portion of 5 sq. m. of the land pertaining to the spouses which Abesia obviously built in good faith. Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply even when there was co-ownership if good faith has been established. 3. Options available to the parties Applying Article 448 of the Civil Code, the spouses have the right to appropriate said portion of the house of Abesia upon payment of indemnity to the latter as provided for in Article 546 of the Civil Code. Otherwise, the spouses may oblige Abesia to pay the price of the land occupied by their house. However, if the price asked for is considerably much more than the value of the portion of the Abesias house built thereon, then the latter cannot be obliged to buy the land. Abesia shall then pay the reasonable rent to the spouses upon such terms and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course, Abesia may demolish or remove the said portion of their house, at their own expense, if they so decide.

Ignao v. IAC [G.R. No. 72876. January 18, 1991.] Third Division, Fernan (J): 3 concur Facts: A lot situated in Barrio Tabon, Municipality of Kawit, Cavite, with an area of 534 sq. m. was originally owned by Baltazar Ignao who married twice. In his first marriage, he had 4 children, namely Justo (the father of Florencio), Leon, Juan and Isidro. In his second marriage, Baltazar had also 4 children but the latter waived their rights over the controverted land in favor of Justo. Thus, Justo owned 4/8 of the land which was waived by his half-brothers and sisters plus his 1/8 share or a total of 5/8. Thereafter, Justo acquired the 1/8 share of Leon for P500.00 which he later sold to his son Florencio for the same amount. When Justo died, Florencio inherited the 5/8 share of his father Justo plus his 1/8 share of the land which he bought or a total of 6/8 (representing 400.5 sq. m.) Juan and Isidro, on the other hand, had 1/8 share (66.75 sq. m.) each of the land or a total of 133.5 sq. m. Thus, Florencio and his uncles Juan and Isidro were co-owners of a parcel of land. Pursuant to an action for partition filed by Florencio Ignao (Civil Case N-1681), the then CFI Cavite in a decision dated 6 February 1975 directed the partition of the aforesaid land, alloting 133.5 sq. m. or 2/8 thereof to Juan and Isidro, and giving the remaining portion with a total area of 266.5 sq. m. to petitioner Florencio. However, no actual partition was ever effected. Property, 2003 ( 98 ) Haystacks (Berne Guerrero) On 17 July 1978, Florencio instituted a complaint for recovery of possession of real property against Juan and Isidro before the CFI Cavite (Civil Case 2662). In his complaint, Florencio alleged that the area occupied by the 2 houses built by Juan and Isidro exceeded the 133.5 sq. m. previously alloted to them by the trial court in Civil Case N-1681. An ocular inspection was conducted by the lower court; which found that the houses of Juan and Isidro actually encroached upon a portion of the land belonging to Florencio. Upon agreement of the parties, the trial court ordered a licensed geodetic engineer to conduct a survey to determine the exact area occupied by the houses of Juan and Isidro. The survey subsequently disclosed that the house of Juan occupied 42 sq. m. while that of Isidro occupied 59 sq. m. of Florencios land or a total of 101 sq. m. In its decision, the trial court (thru Judge Luis L. Victor) ruled that although Juan and Isidro occupied a portion of Florencios property, they should be considered builders in good faith. The trial court observed that based on the facts of the case, it would be useless and unsuitable for Florencio to exercise the first option (of appropriating part of the house standing on his lot) since this would render the entire houses of Juan and Isidro worthless. The trial court then applied the ruling in the similar case of Grana vs. Court of Appeals, where the Supreme Court had advanced a more workable solution. Thus, it ordered Florencio to sell to Juan and Isidro those portions of his land respectively occupied by the latter at P40.00 per sq. m., and to execute the necessary deed of conveyance to the Juan and Isidro; without pronouncement as to costs. Florencio appealed to the IAC. On 27 August 1985, the Appellate Court (Second Civil Cases Division), promulgated a decision, affirming the decision of the trial court. Hence the petition for review by certiorari. The Supreme Court modified the decision appealed from. The Court directed Florencio to exercise his option to either appropriate as his own the portions of the houses of Juan and Isidro Ignao occupying his land upon payment of indemnity in accordance with Articles 546 and 548 of the Civil Code, or sell to private respondents the 101 sq. m. occupied by them at such price as may be agreed upon; within 30 days from entry of judgment. Should the value of the land exceed the value of the portions of the houses that Juan and Isidro have erected thereon, the latter may choose not to buy the land but they must pay reasonable rent for the use of the portion of Florencios land as may be agreed upon by the parties. In case of disagreement, the rate of rental and other terms of the lease shall be determined by the trial court. Otherwise, Juan and Isidro may remove or demolish at their own expense the said portions of their houses encroaching upon Florencios land; Without costs. 1. Co-owners hold property in common dominion, with each an owner of share (abstract and undetermined until partition is effected Prior to partition, all the co-owners hold the property in common dominion but at the same time each is an owner of a share which is abstract and undetermined until partition is effected. As cited in Eusebio vs. Intermediate Appellate Court, an undivided estate is co-ownership by the heirs. As co-owners, the parties may have unequal shares in the common property, quantitatively speaking. But in a qualitative sense, each coowner has the same right as any one of the other co-owners. Every co-owner is therefore the owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract, because until division is effected such portion is not concretely determined. 2. Article 448 Article 448 provides that 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. Property, 2003 ( 99 ) Haystacks (Berne Guerrero) 3. Article 448 does not apply to a co-owner; except co-ownership is terminated In the case of Spouses del Campo vs. Abesia, it was held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in common for then he did not build, plant or sow upon land that exclusively belongs to another but of which he is a co-owner. The co-owner is not a third person under the circumstances, and the situation is governed by the rules of co-ownership. However, when the co-ownership is terminated by a partition and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner which was however made in good faith, then the provisions of Article 448 should apply to determine the respective rights of the parties. 4. Right to appropriate works or to oblige builder to pay the price of the land belongs to the landowner As held in Quemuel vs. Olaes, it was categorically ruled that the right to appropriate the works or improvements or to oblige the builder to pay the price of the land belongs to the landowner. Both the trial court and the Appellate Court erred when they peremptorily adopted the workable solution in the case of Grana vs. Court of Appeals, and ordered the owner of the land, Florencio, to sell to Juan and Isidro, the part of the land they intruded upon, thereby depriving Florencio of his right to choose. Such ruling contravened the explicit provisions of Article 448 to the effect that the owner of the land shall have the right to appropriate or to oblige the one who built to pay the price of the land. The law is clear and unambiguous when it confers the right of choice upon the landowner and not upon the builder and the courts. 5. Determination of price to be paid premature The question on the price to be paid on the land need not be discussed as this would be premature inasmuch as Florencio has yet to exercise his option as the owner of the land.244 SCRA 477

121 SCRA 122

TECHNOGAS PHILIPPINES vs. CAG.R. No. 108894 February 10, 1997PANGANIBAN,FACTS:The parties in this case are owners of adjoining lots in Paraaque,Metro Manila. It was discovered in a survey, that a portion of abuilding of Technogas, which was presumably constructed by itspredecessor-in-interest, encroached on a portion of the lot ownedby private respondent Edward Uy.Upon learning of the encroachment or occupation by its buildingsand wall of a portion of private respondents land, the petitioneroffered to buy from defendant that particular portion of Uys landoccupied by portions of its buildings and wall with an area of 770square meters, more or less, but the latter, however, refused theofferThe parties entered into a private agreement before a certain Col.Rosales in Malacaang, wherein petitioner agreed to demolish thewall at the back portion of its land thus giving to the privaterespondent possession of a portion of his land previously enclosedby petitioner's wall.Uy later filed a complaint before the office of Municipal Engineer of Paraaque, Metro Manila as well as before the Office of theProvincial Fiscal of Rizal against Technogas in connection with theencroachment or occupation by plaintiff's buildings and walls of aportion of its land but said complaint did not prosper; so Uy dugor caused to be dug a canal along Technogas wall, a portion of which collapsed in June, 1980, and led to the filing by thepetitioner of the supplemental complaint in the above-entitledcase and a separate criminal complaint for malicious mischief against Uy and his wife which ultimately resulted into theconviction in court Uy's wife for the crime of malicious mischief;ISSUE:WON the petitioner is builder in good faith.HELD: YES.We disagree with Respondent Courts reliance on the cases of Tuason & Co.,Inc .vs.Vda.de LumanlanandTuason & Co v Macalindong, in ruling that the petitioner "cannot beconsidered in good faith" because as a land owner, it is "presumedto know the metes and bounds of his own property, specially if thesame are reflected in a properly issued certificate of title. One whoerroneously builds on the adjoining lot should be considered abuilder in(b)ad (f)aith, there being presumptive knowledge of theTorrens title, the area, and the extent of the boundaries." There isnothing in those cases which would suggest that bad faith isimputable to a registered owner of land when a part of his buildingencroaches upon a neighbor's land, simply because he issupposedly presumed to know the boundaries of his land asdescribed in his certificate of title,Article 527 of the Civil Code presumes good faith, and since noproof exists to show that the encroachment over a narrow,needle-shaped portion of private respondent's land was done inbad faith by the builder of the encroaching structures, the lattershould be presumed to have built them in good faith. It ispresumed that possession continues to be enjoyed in the samecharacter in which it was acquired, until the contrary is proved.Good faith consists in the belief of the builder that the land he isbuilding on is his, and his ignorance of any defect or flaw in histitle. Hence, such good faith, by law, passed on to Pariz'ssuccessor, petitioner in this case. The good faith ceases from themoment defects in the title are made known to the possessor, byextraneous evidence or by suit for recovery of the property by thetrue owner.Consequently, the builder, if sued by the aggrieved landowner forrecovery of possession, could have invoked the provisions of Art.448 of the Civil Code, which reads:The owner of the land on which anything has been built,sown or planted in good faith, shall have the right toappropriate as his own the works, sowing or planting,after payment of the indemnity provided for in articles546 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 beobliged to buy the land if its value is considerably morethan 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 property indemnity. The parties shall agree upon the terms of thelease and in case of disagreement, the court shall fix theterms thereof.The obvious benefit to the builder under this article is that,instead of being outrightly ejected from the land, he can compelthe landowner to make a choice between the two options: (1) toappropriate the building by paying the indemnity required by law,or (2) sell the land to the builder. The landowner cannot refuse toexercise either option and compel instead the owner of thebuilding to remove it from the landIn view of the good faith of bothpetitioner and privaterespondent, their rights and