EDUARDO RIVERA et al, plaintiffs-appellants, vs. THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, defendant-appellee.

Setting: FACTS: THE entity RCAM is the registered owner of a parcel of land known as hacienda de santa clara w/c decreed by the court on 1915 as the absolute owner. Plaintiffs prior to 1915 constructed a fishponds and other improvements and at the same time are the oppositors of the said registration proceedings. Despite the decision of the registration courts, plaintiffs continue to possessed the land and still w/out any contract of lease. Plaintiff insisted that they are builders in good faith and should be entitled for the retention of the fish pond unless and until the defendant indemnify them for the necessary and useful expenses or to compel the defendants to sell the land in favor of the plaintiff with the value of 0.04 per square meter. ISSUES: 1. WON PLAINTIFSS ARE BUILDERS INB GOOD FAITH dampalit MALABON RIZAL

2. WON THE FISH POND SHALL BE CONSIDERED AS NECESSARY? USEFULL?OR purely for ostentation or mere pleasure.. 3. WON DEFENDANT IS ALSO IN BADFAITH. HELD: 1. Plaintiffs are in badfaith; plaintiffs have never been in possession of these lands in good faith in order that they can claim the right of indemnity for the expenditures incurred in the construction of these fish ponds. Plaintiff knew that there is a flaw and defect to title when they constructed a fishpond.In fact, the defendant entity herein was the petitioner in said registration proceeding and the plaintiffs herein were the oppositors then. , according to article 445 of the Civil Code, "possession de facto cannot be recognized in favor of two different person." Hence, if this Court recognized the defendant's possession and not plaintiffs' possession, it was because the latter, if it really existed, was illegal, i.e., was a possession in bad faith. 2. USEFUL EXPENDITURES. Should have good faith to be indemnified. necessary expenditures, inasmuch as they redounded to the preservation of the realty, render said realty capable of continually producing the natural, industrial and civil fruits it ordinarily produces fruits which the owner would not be able to gather if the land would be rendered unproductive . Useful expenditures also give rise to all these kinds of fruits, but the law considers them rather inferior than necessary expenditures for the reason that the latter preserve the realty and are therefore the source of the producing agency and its fruits, while the former (useful expenditures are the only source of the fruits. Expenditures purely for ostentation and mere pleasure are considered by the Civil Code of little importance for the reason that they do not have nor will have to do with the production of all the three kinds of fruits we have been speaking about, but only of the civil fruits the great commentator Manresa has truly said that "expenditures purely for ostentation and mere pleasure either cannot influence the production of natural and industrial fruits or do diminish them; they can, however, influence the production of the civil fruits." 3. DEFENDANT IN GOOD FAITH. , bad faith on the part of the owners is deemed to exist not in permitting or tolerating the existence of a construction on his land this is merely an act of kindness for which the possessor should be thankful but in permitting the possessor to commence or begin and to carry out said construction. If the latter is what the appellants mean, then they do not have any support upon evidence; because it has not been shown that at the moment the construction of the fish ponds were commenced, the defendant had knowledge thereof and, knowing it, did not oppose said construction. This fact cannot be deduced from the circumstances surrounding the case, inasmuch as the construction of said fish ponds could have been commenced and finished during the time the defendant entity could not have notice thereof, and it has not been shown that there are facts pointing out to the contrary. The plaintiffs did not even try to prove the year and month when said fish ponds were built or indicate some circumstances which might have accompanied in the construction thereof, suggestive of the idea that the defendant entity knew or must have known that the fish ponds were being built. AFFIRMED;

BARTOLOME ORTIZ, petitioner, vs. HON. UNION C. KAYANAN, in his capacity as Judge of the Court of First Instance of Quezon, Branch IV; ELEUTERIO ZAMORA, QUIRINO COMINTAN, VICENTE FERRO, AND GREGORIO PAMISARAN, respondents.
SETTING: CALAUAG QUEZON

FACTS: lot in controversy was formerly the subject of Homestead Application No. 122417 of Martin Dolorico II, plaintiff's ward who died on August 20, 1931; that since then it was plaintiff who continued the cultivation and possession of the property, without however filing any application to acquire title thereon; that in the Homestead Application No. 122417, Martin Dolorico II named his uncle, Martin Dolorico I as his heir and successor in interest, so that in 1951 Martin Dolorico I executed an affidavit relinquishing his rights over the property in favor of defendants Quirino Comintan and Eleuterio Zamora, his grandson and son-inlaw, respectively, and requested the Director of Lands to cancel the homestead application; that on the strength of the affidavit, Homestead Application No. 122417 was cancelled and thereafter, defendants Comintan and Zamora filed their respective sales applications Nos. 8433 and 9258; that plaintiff filed his protest on November 26, 1951 alleging that he should be given preference to purchase the lot inasmuch as he is the actual occupant and has been in continuous possession of the same since 1931. Payments of tolls for the passage of vehicle in a detour located at the said property involves in the issue for whom this proceeds should belong to. ISSUE: WON Ortiz is a builder and possessor in good faith. WON Ortiz should also entitled to the proceeds of the toll fees even after the declaration of ownership in favor of the respondents as included in his right of retention. HELD: 1. ORTIZ is in good faith since he did not know any defect or flaw in the title which from the start he was cultivating the said land with dolorico as the owner and his ward. Ortiz should be entitled to the reimbursement of improvements. 2. There is no question that a possessor in good faith is entitled to the fruits received before the possession is legally

interrupted. 11 Possession in good faith ceases or is legally interrupted from the moment defects in the title are made known to the possessor, by extraneous evidence or by the filing of an action in court by the true owner for the recovery of the property. 12 Hence, all the fruits that the possessor may receive from the time he is summoned in court, or when he answers the complaint, must be delivered and paid by him to the owner or lawful possessor.13 However, even after his good faith ceases, the possessor in fact can still retain the property, pursuant to Article 546 of the New Civil Code, until he has been fully reimbursed for all the necessary and useful expenses made by him on the property. This right of retention has been considered as one of the conglomerate of measures devised by the law for the protection of the possessor in good faith. Its object is to guarantee the reimbursement of the expenses, such as those for the preservation of the property, 14 or for the enhancement of its utility or productivity. 15 It permits the actual possessor to remain in possession while he has not been reimbursed by the person who defeated him in the possession for those necessary expenses and useful improvements made by him on the thing possessed. The principal characteristic of the right of retention is its accessory character. It is accessory to a principal obligation According to Manresa, the right of retention is, therefore, analogous to that of a pledge, if the property retained is a movable, and to that of antichresis, if the property held is immovable. , petitioner cannot appropriate for his own exclusive benefit the tolls which he collected from the property retained by him. It was his duty under the law, after deducting the necessary expenses for his administration, to apply such amount collected to the payment of the interest, and the balance to the payment of the obligation. We hold, therefore, that the disputed tolls, after deducting petitioner's expenses for administration, belong to Quirino Comintan, owner of the land through which the toll road passed, further considering that the same was on portions of the property on which petitioner had not introduced any improvement.

BALLATAN

IN VIEW WHEREOF, the decision of respondent Court of Appeals is modified as follows: (1) Petitioners are ordered to exercise within thirty (30) days from finality of this decision their option to either buy the portion of respondents Go's improvement on their Lot No. 24, or sell to said respondents the portion of their land on which the improvement stands. If petitioners elect to sell the land or buy the improvement, the purchase price must be at the prevailing market price at the time of payment. If buying the improvement will render respondents Go's house useless, then petitioners should sell the encroached portion of their land to respondents Go. If petitioners choose to sell the land but respondents Go are unwilling or unable to buy, then the latter must vacate the subject portion and pay reasonable rent from the time petitioners made their choice up to the time they actually vacate the premises. But if the value of the land is considerably more than the value of the improvement, then respondents Go may elect to lease the land, in which case the parties shall agree upon the terms, the lease. Should they fail to agree on said terms, the court of origin is directed to fix the terms of the lease. From the moment petitioners shall have exercised their option, respondents Go shall pay reasonable monthly rent up to the time the parties agree on the terms of the lease or until the court fixes such terms. (2) Respondents Go are likewise directed to exercise their rights as owners of Lots Nos. 25 and 26, vis-a-visrespondent Li Ching Yao as builder of the improvement that encroached on thirty seven (37) square meters of respondents Go 's land in accordance with paragraph one abovementioned. (3) The Decision of the Court of Appeals ordering Engineer Quedding, as third-party defendant, to pay attorney's fees of P5,000.00 to respondents Go is affirmed. The additional filing fee on the damages constitutes a lien on this award. (4) The Decision of the Court of Appeals dismissing third-party complaint against Araneta Institute of Agriculture is affirmed. SO ORDERED.