G.R. No.

79688

February 1, 1996

PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED JARDINICO,respondents. DECISION PANGANIBAN, J.: Is a lot buyer who constructs improvements on the wrong property erroneously delivered by the owner's agent, a builder in good faith? This is the main issue resolved in this petition for review on certiorari to reverse the Decision1 of the Court of Appeals2 in CA-G.R. No. 11040, promulgated on August 20, 1987. By resolution dated November 13, 1995, the First Division of this Court resolved to transfer this case (along with several others) to the Third Division. After due deliberation and consultation, the Court assigned the writing of this Decision to the undersigned ponente. The Facts The facts, as found by respondent Court, are as follows: Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II and located at Taculing Road, Pleasantville Subdivision, Bacolod City. In 1975, respondent Eldred Jardinico bought the rights to the lot from Robillo. At that time, Lot 9 was vacant. Upon completing all payments, Jardinico secured from the Register of Deeds of Bacolod City on December 19, 1978 Transfer Certificate of Title No. 106367 in his name. It was then that he discovered that improvements had been introduced on Lot 9 by respondent Wilson Kee, who had taken possession thereof. It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real estate agent of petitioner. Under the Contract to Sell on Installment, Kee could possess the lot even before the completion of all installment payments. On January 20, 1975, Kee paid CTTEI the relocation fee of P50.00 and another P50.00 on January 27, 1975, for the preparation of the lot plan. These amounts were paid prior to Kee's taking actual possession of Lot 8. After the preparation of the lot plan and a copy thereof given to Kee, CTTEI through its employee, Zenaida Octaviano, accompanied Kee's 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. After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried to reach an amicable settlement, but failed. On January 30, 1981, Jardinico's lawyer wrote Kee, demanding that the latter remove all improvements and vacate Lot 9. When Kee refused to vacate Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch 3, Bacolod City (MTCC), a complaint for ejectment with damages against Kee. Kee, in turn, filed a third-party complaint against petitioner and CTTEI. The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI. It further ruled that petitioner and CTTEI could not successfully invoke as a defense the failure of Kee to give notice of his intention to begin construction required under paragraph 22 of the Contract to Sell on Installment and his having built a sari-sari store without the prior approval of petitioner required under paragraph 26 of said contract, saying that the purpose of these requirements was merely to regulate the type of improvements to be constructed on the Lot.3 However, the MTCC found that petitioner had already rescinded its contract with Kee over Lot 8 for the latter's 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 petitioner. 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 disposed: IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows: 1. Defendant Wilson Kee is ordered to vacate the premises of Lot 9, covered by TCT No. 106367 and to remove all structures and improvements he introduced thereon; 2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P15.00 a day computed from the time this suit was filed on March 12, 1981 until he actually vacates the premises. This amount shall bear interests (sic) at the rate of 12 per cent (sic) per annum. 3. Third-Party Defendant C.T. Torres Enterprises, Inc. and Pleasantville Subdivision are ordered to pay the plaintiff jointly and severally the sum of P3,000.00 as attorney's fees and P700.00 as cost and litigation expenses.4 On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that petitioner and CTTEI were not at fault or were not negligent, there being no preponderant evidence to show that they directly participated in the delivery of Lot 9 to Kee5. It found Kee a builder in bad faith. It further ruled that even assuming arguendo that Kee was acting in good faith, he was, nonetheless, guilty of unlawfully usurping the possessory right of Jardinico over Lot 9 from the time he was served with notice to vacate said lot, and thus was liable for rental. The RTC thus disposed: WHEREFORE, the decision appealed from is affirmed with respect to the order against the defendant to vacate the premises of Lot No. 9 covered by Transfer Certificate of Title No. T-106367 of the land records of Bacolod City; the removal of all structures and improvements introduced thereon at his expense and the payment to plaintiff (sic) the sum of Fifteen (P15.00) Pesos a day as reasonable rental to be computed from January 30, 1981, the date of the demand, and not from the date of the filing of the complaint, until he had vacated (sic) the premises, with interest thereon at 12% per annum. This Court further renders judgment against the defendant to pay the plaintiff the sum of Three Thousand (P3,000.00) Pesos as attorney's fees, plus costs of litigation. The third-party complaint against Third-Party Defendants Pleasantville Development Corporation and C.T. Torres Enterprises, Inc. is dismissed. The order against Third-Party Defendants to pay attorney's fees to plaintiff and costs of litigation is reversed.6 Following the denial of his motion for reconsideration on October 20, 1986, Kee appealed directly to the Supreme Court, which referred the matter to the Court of Appeals. The appellate court ruled that Kee was a builder in good faith, 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, petitioner herein. The appellate court also ruled that the award of rentals was without basis. Thus, the Court of Appeals disposed: WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and judgment is rendered as follows: 1. Wilson Kee is declared a builder in good faith with respect to the improvements he introduced on Lot 9, and is entitled to the rights granted him under Articles 448, 546 and 548 of the New Civil Code.

2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are solidarily liable under the following circumstances: A. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these structures, the third-party defendants shall answer for all demolition expenses and the value of the improvements thus destroyed or rendered useless; b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount representing the value of Lot 9 that Kee should pay to Jardinico. 3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are ordered to pay in solidum the amount of P3,000.00 to Jardinico as attorney's fees, as well as litigation expenses. 4. The award of rentals to Jardinico is dispensed with. Furthermore, the case is REMANDED to the court of origin for the 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.7 Petitioner then filed the instant petition against Kee, Jardinico and CTTEI. The Issues The petition submitted the following grounds to justify a review of the respondent Court's Decision, as follows: 1. The Court of Appeals has decided the case in a way probably not in accord with law or the the ( sic) applicable decisions of the Supreme Court on third-party complaints, by ordering third-party defendants to pay the demolition expenses and/or price of the land; 2. The Court of Appeals has so far departed from the accepted course of judicial proceedings, by granting to private respondent-Kee the rights of a builder in good faith in excess of what the law provides, thus enriching private respondent Kee at the expense of the petitioner; 3. In the light of the subsequent events or circumstances which changed the rights of the parties, it becomes imperative to set aside or at least modify the judgment of the Court of Appeals to harmonize with justice and the facts; 4. Private respondent-Kee in accordance with the findings of facts of the lower court is clearly a builder in bad faith, having violated several provisions of the contract to sell on installments; 5. The decision of the Court of Appeals, holding the principal, Pleasantville Development Corporation (liable) for the acts made by the agent in excess of its authority is clearly in violation of the provision of the law; 6. The award of attorney's fees is clearly without basis and is equivalent to putting a premium in (sic) court litigation. From these grounds, the issues could be re-stated as follows: (1) Was Kee a builder in good faith? (2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises, Inc.? and (3) Is the award of attorney's fees proper?

The First Issue: Good Faith Petitioner contends that the Court of Appeals erred in reversing the RTC's ruling that Kee was a builder in bad faith. Petitioner fails to persuade this Court to abandon the findings and conclusions of the Court of Appeals that Kee was a builder in good faith. We agree with the following observation of the Court of Appeals: The roots of the controversy can be traced directly to the errors committed by CTTEI, when it pointed the wrong property to Wilson Kee and his wife. It is 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. Under the circumstances, Kee had acted in the manner of a prudent man in ascertaining the identity of his property. Lot 8 is covered by Transfer Certificate of Title No. T-69561, while Lot 9 is identified in Transfer Certificate of Title No. T-106367. Hence, 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. . . . xxx xxx xxx

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 No. 69561 matched Lot 8. Thus, he went to the subdivision developer's agent and applied and paid for the relocation of the lot, as well as for the production of a lot plan by CTTEI's geodetic engineer. Upon Kee's receipt of the map, his wife went to the subdivision site accompanied by CTTEI's 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 company's 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 engineer's 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 CTTEI's blunder, what Kee had hoped to forestall did in fact transpire. Kee's efforts all went to naught. 8 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 9. And as good faith is presumed, petitioner has the burden of proving bad faith on the part of Kee 10. At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from petitioner. He was not aware that the lot delivered to him was not Lot 8. Thus, Kee's good faith. Petitioner failed to prove otherwise. To demonstrate Kee's bad faith, petitioner points to Kee's violation of paragraphs 22 and 26 of the Contract of Sale on Installment. We disagree. Such violations have no bearing whatsoever on whether Kee was a builder in good faith, that is, on his state of mind at the time he built the improvements on Lot 9. These alleged violations may give rise to petitioner's 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. Petitioner also points out that, as found by the trial court, the Contract of Sale on Installment covering Lot 8 between it and Kee was rescinded long before the present action was instituted. This has no relevance on the liability of petitioner, 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. Petitioner next contends that Kee cannot "claim that another lot was erroneously pointed out to him" because the latter agreed to the following provision in the Contract of Sale on installment, to wit: 13. The Vendee hereby declares that prior to the execution of his contract he/she has personally examined or inspected the property made subject-matter hereof, as to its location, contours, as well as the natural

condition of the lots and from the date hereof whatever consequential change therein made due to erosion, the said Vendee shall bear the expenses of the necessary fillings, when the same is so desired by him/her.11 The subject matter of this provision of the contract is the change of the location, contour and condition of the lot due to erosion. It merely provides that the vendee, having examined the property prior to the execution of the contract, agrees to shoulder the expenses resulting from such change. We do not agree with the interpretation of petitioner that Kee contracted away his right to recover damages resulting from petitioner's 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." 12 The Second Issue: Petitioner's Liability Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed by the RTC after ruling that there was no evidence from which fault or negligence on the part of petitioner and CTTEI can be inferred. The Court of Appeals disagreed and found CTTEI negligent for the erroneous delivery of the lot by Octaviano, its employee. Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the erroneous delivery of Lot 9 to Kee was an act which was clearly outside the scope of its authority, and consequently, CTTEI I alone should be liable. It asserts that "while [CTTEI] was authorized to sell the lot belonging to the herein petitioner, it was never authorized to deliver the wrong lot to Kee" 13. Petitioner's contention is without merit. The rule is that 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 14. On the other hand, the agent who exceeds his authority is personally liable for the damage 15 CTTEI was acting within its authority as the sole real estate representative of petitioner 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 petitioner's liability, as principal of CTTEI, per Articles 1909 and 1910 of the Civil Code. Pending resolution of the case before the Court of Appeals, Jardinico and Kee on July 24, 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 deed of sale contained the following provision: 1. That Civil Case No. 3815 entitled "Jardinico vs. Kee" which is now pending appeal with the Court of Appeals, regardless of the outcome of the decision shall be mutually disregarded and shall not be pursued by the parties herein and shall be considered dismissed and without effect whatso-ever; 16 Kee asserts though that the "terms and conditions in said deed of sale are strictly for the parties thereto" and that "(t)here is no waiver made by either of the parties in said deed of whatever favorable judgment or award the honorable respondent Court of Appeals may make in their favor against herein petitioner Pleasantville Development Corporation and/or private respondent C.T. Torres Enterprises; Inc." 17 Obviously, the deed of sale can have no effect on the liability of petitioner. As we have earlier stated, petitioner's liability is grounded on the negligence of its agent. On the other hand, what the deed of sale regulates are the reciprocal rights of Kee and Jardinico; it stressed that they had reached an agreement independent of the outcome of the case. Petitioner further assails the following holding of the Court of Appeals: 2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are solidarily liable under the following circumstances:

a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these structures, the third-party defendants shall answer for all demolition expenses and the value of the improvements thus destroyed or rendered useless; b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount representing the value of Lot 9 that Kee should pay to Jardinico. 18

Petitioner contends that if the above holding would be carried out, Kee would be unjustly enriched at its expense. In other words, Kee would be able to own the lot, as buyer, without having to pay anything on it, because the aforequoted portion of respondent Court's Decision would require petitioner and CTTEI jointly and solidarily to "answer" or reimburse Kee therefor. We agree with petitioner. Petitioner' s liability lies in the negligence of its agent CTTEI. For such negligence, the petitioner should be held liable for damages. Now, 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 actually presented in the trial court; hence no damages could flow be awarded. 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, as it stands now, Kee and Jardinico have amicably settled through their deed of sale their rights and obligations with regards to Lot 9. Thus, we delete items 2 (a) and (b) of the dispositive portion of the Court of Appeals' Decision [as reproduced above] holding petitioner and CTTEI solidarily liable. The Third Issue: Attorney's Fees The MTCC awarded Jardinico attorney's fees and costs in the amount of P3,000.00 and P700.00, respectively, as prayed for in his complaint. The RTC deleted the award, consistent with its ruling that petitioner was without fault or negligence. The Court of Appeals, however, reinstated the award of attorney's fees after ruling that petitioner was liable for its agent's negligence.

The award of attorney's fees lies within the discretion of the court and depends upon the circumstances of each case 19. We 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 petitioner's agent 20. In sum, we rule that Kee is a builder in good faith. The disposition of the Court of Appeals that Kee "is entitled to the rights granted him under Articles 448, 546 and 548 of the New Civil Code" is deleted, in view of the deed of sale entered into by Kee and Jardinico, which deed now governs the rights of Jardinico and Kee as to each other. There is also no further need, as ruled by the appellate Court, 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." WHEREFORE , the petition is partially GRANTED. The Decision of the Court of Appeals is hereby MODIFIED as follows: (1) Wilson Kee is declared a builder in good faith; (2) Petitioner Pleasantville Development Corporation and respondent C.T. Torres Enterprises, Inc. are declared solidarily liable for damages due to negligence; however, since the amount and/or extent of such damages was not proven during the trial, the same cannot now be quantified and awarded;

(3) Petitioner Pleasantville Development Corporation and respondent C.T. Torres Enterprises, Inc. are ordered to pay in solidum the amount of P3,000.00 to Jardinico as attorney's fees, as well as litigation expenses; and (4) The award of rentals to Jardinico is dispensed with. SO ORDERED.
G.R. No. 117642 April 24, 1998 EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners, vs. HONORABLE COURT OF APPEALS, FORENCIA BULING Vda de TINAGAN, DEMOSTHENES TINAGAN, JESUS TINAGAN, ZENAIDA T., JOSEP and JOSEPHINE TINAGAN, respondents. MARTINEZ, J.: 1 In this petition for review on certiorari, petitioners assail the decision of the Court of Appeals dated April 8, 1994 which affirmed the decision of the lower court ordering petitioners to peacefully vacate and surrender the possession of the disputed properties to the private respondents. Culled from the record are the following antecedent facts of this case to wit: On April 1, 1950, Victoria Sonjaconda Tinagan purchased from Mauro Tinagan two (2) parcels of land situated at Barangay Bongbong, Valencia, 2 3 Negros Oriental. One parcel of land contains an area of 5,704 square meters, more or less; while the other contains 10,860 square meters. 4 Thereafter, Victoria and her son Agustin Tinagan, took possession of said parcels of land. Sometime in 1960, petitioners occupied portions thereof whereat they built a copra dryer and put up a store wherein they engaged in the business of buying and selling copra. On June 23, 1975, Victoria died. On October 26, 1975, Agustin died, survived by herein private respondents, namely his wife, Florencia Buling Vda. de Tinagan and their children Demosthenes, Jesus, Zenaida and Josephine, all surnamed Tinagan. On December 24, 1976, petitioner Editha assisted by her husband filed a complaint for partition and damages before the then Court of First Instance of Negros Oriental, Branch 1, Dumaguete City, docketed as Civil Case No. 6634, claiming to be an acknowledged natural child of deceased Agustin Tinagan and demanding the delivery of her shares in the properties left by the deceased. 5 On October 4, 1979, the aforesaid case was dismissed by the trial court on the ground that recognition of natural children may be brought only during the lifetime of the presumed parent and petitioner Editha did not fall in any of the exceptions enumerated in Article 285 of the Civil Code. 6 Petitioners assailed the order of dismissal by filing a petition for certiorari and mandamus before this Court. 7 On August 9, 1982, this Court dismissed the petition for lack of merit. 8 Petitioners filed a motion for reconsideration but the same was denied on October 19, 1982. 9 On March 29, 1988, private respondents filed a complaint for recovery of possession against Editha and her husband Porferio Alviola before the Regional Trial Court of Negros Oriental, Branch 35, Dumaguete City, docketed as Civil Case No. 9148, praying, among others, that they be declared absolute owners of the said parcels of land, and that petitioners be ordered to vacate the same, to remove their copra dryer and store, to pay actual damages (in the form of rentals), moral and punitive damages, litigation expenses and attorney's fees. 10 In their answer, petitioners contend that they own the improvements in the disputed properties which are still public land; that they are qualified to be beneficiaries of the comprehensive agrarian reform program and that they are rightful possessors by occupation of the said properties for more than twenty years. 11 After trial, the lower court rendered judgment in favor of the private respondents, the dispositive portion of which reads: WHEREFORE, premises considered, in Civil Case No. 9148, for Recovery of Property, the court hereby renders judgment: a) Declaring plaintiffs as the absolute owners of the land in question including the portion claimed and occupied by defendants; b) Ordering defendants Editha Alviola and her husband Porfirio Alviola to peacefully vacate and to surrender the possession of the premises in question to plaintiffs; Defendants may remove their store and dryer on the premises without injury and prejudice to the plaintiffs; c) Ordering defendants to pay the following amounts to the plaintiffs: 1. P150.00 monthly rentals from April 1988 up to the time the improvements in the questioned portions are removed; 2. P5,000.00 for attorney's fees; 3. P3,000.00 for litigation expenses and to pay the costs. SO ORDERED. 12 Petitioners appealed to the Court of Appeals. On April 8, 1994, the respondent court rendered its decision, 13 affirming the judgment of the lower court. Petitioners filed a motion for reconsideration 14 but the same was denied by the respondent court in an order dated October 6, 1994. 15 Hence, this petition. Petitioners aver that respondent court erred in declaring private respondents the owners of the disputed properties. They contend that ownership of a public land cannot be declared by the courts but by the Executive Department of the Government, citing the case of Busante vs. Hon. Court of Appeals, Oct. 20, 1992, 214 SCRA 774; and that the respondent court erred in not considering that private respondents' predecessor-in-interest, Victoria Sonjaco Tinagan, during her lifetime, ceded her right to the disputed properties in favor of petitioners. Moreover, petitioners maintain that the respondent court erred in holding that they were in bad faith in possessing the disputed properties and in ruling that the improvements thereon are transferable. They claim that the copra dryer and the store are permanent structures, the walls thereof being made of hollow-blocks and the floors made of cement. Private respondents counter that the question of whether or not the disputed properties are public land has been resolved by overwhelming evidence showing ownership and possession by the Tinagans and their predecessors-in-interest prior to 1949. They further aver that they merely tolerated petitioners' possession of the disputed properties for a period which was less than that required for extraordinary prescription. The petition must fail. Petitioners claim that the disputed properties are public lands. This is a factual issue. The private respondents adduced overwhelming evidence to prove their ownership and possession of the two (2) parcels of land on portions of which petitioners built the copra dryer and a store. Private respondents' tax declarations and receipts of payment of real estate taxes, as well as other related documents, prove their ownership of the disputed properties. As stated previously in the narration of facts, these two (2) parcels of land were originally owned by Mauro Tinagan, who sold the same to Victoria S. Tinagan on April 1, 1950, as evidenced by a Deed of Sale, 16 wherein the two (2) lots, Parcels 1 and 2, are described. 17 Anent Parcel 1, tax declarations indicate that the property has always been declared in the name of the Tinagans. The first, Tax Declaration No. 3335 18 is in the name of Mauro Tinagan. It was thereafter cancelled by Tax Declaration No. 19534 effective 1968, 19 still in the name of Mauro. This declaration was cancelled by Tax Declaration No. 016740 now in the name of Agustin Tinagan, 20effective 1974, followed by Tax Declaration No. 08-421 in the name of Jesus Tinagan, effective 1980; 21 and finally by Tax Declaration No. 08-816 in the name of Jesus Tinagan, effective 1985. 22 With regard to Parcel 2, private respondents presented Tax Declaration No. 20973 in the name of Mauro Tinagan, effective 1959, 23 Tax Declaration No. 016757, effective 1974; 24 Tax Declaration No. 08-405-C in the name of Agustin Tinagan, effective 1980 25 and Tax Declaration No. 08-794 in the

name of Agustin Tinagan, effective 1985. Moreover, the realty taxes on the two lots have always been paid by the private respondents. There can be no doubt, therefore, that the two parcels of land are owned by the private respondents. The record further discloses that Victoria S. Tinagan and her son, Agustin Tinagan, took possession of the said properties in 1950, introduced improvements thereon, and for more than 40 years, have been in open, continuous, exclusive and notorious occupation thereof in the concept of owners. 28 Petitioners' own evidence recognized the ownership of the land in favor of Victoria Tinagan. In their tax declarations, petitioners stated that the house and copra dryer are located on the land of Victoria S. Tinagan/Agustin Tinagan. By acknowledging that the disputed portions belong to Victoria/Agustin Tinagan in their tax declarations, petitioners' claim as owners thereof must fail. The assailed decision of the respondent court states that "Appellants do not dispute that the two parcels of land subject matter of the present complaint for recovery of possession belonged to Victoria S. Tinagan, the grandmother of herein plaintiffs-appellees; that Agustin Tinagan inherited the parcels of 29 land from his mother Victoria; and that plaintiffs-appellees, in turn, inherited the same from Agustin." Taking exception to the aforequoted finding, petitioners contend that while the 2 parcels of land are owned by private respondents, the portions wherein the copra dryers and store stand were ceded to them by Victoria S. Tinagan in exchange for an alleged indebtedness of Agustin Tinagan in the sum of P7,602.04. 30 This claim of the petitioners was brushed aside by the respondent court as merely an afterthought, thus Appellants' claim that they have acquired ownership over the floor areas of the store and dryer "in consideration of the account of Agustin Tinagan in the sum of P7,602.04" is not plausible. It is more of an "after-thought" defense which was not alleged in their answer. Although the evidence presented by them in support of this particular claim was not duly objected to by counsel for appellees at the proper time and therefore deemed admissible in evidence, an examination of the oral and documentary evidence submitted in support thereof, reveals the weakness of their claim. Appellant testified that the areas on which their store and dryer were located were exchanged for the amount of P7,602.04 owed to them by Agustin in 1967 (TSN, Hearing of April 14, 1989, p. 9); that he did not bother to execute a document reflecting such agreement "because they were our parents and we had used the land for quite sometime already they had also sold their copra to us for a long time." (id.) Yet, as earlier discussed, the tax declarations in appellants' answer show that even after 1967, they expressly declared that the parcels of land on which their store and dryer were constructed, belonged to Victoria and Agustin (Exhs. 2-A, 2-B, 2-C, 3-A, 3-B). If appellants really believed that they were in possession of the said particular areas in the concept of owners, they could have easily declared it in said tax declarations. 31 Concededly, petitioners have been on the disputed portions since 1961. However, their stay thereon was merely by tolerance on the part of the private respondents and their predecessor-in-interest. The evidence shows that the petitioners were permitted by Victoria Sanjoco Tinagan to build a copra dryer on the land when they got married. Subsequently, petitioner Editha Alviola, claiming to be the illegitimate daughter of Agustin Tinagan, filed a petition for partition demanding her share in the estate of the deceased Agustin Tinagan on December 6, 1976. However, the petition was dismissed since it was brought only after the death of Agustin Tinagan. This Court dismissed the petition for certiorari and mandamus filed by petitioner Editha Alviola on August 9, 1982. It was on March 29, 1988, when private respondents filed this complaint for recovery of possession against petitioners. Considering that the petitioners' occupation of the properties in dispute was merely tolerated by private respondents, their posture that they have acquired the property by "occupation" for 20 years does not have any factual or legal foundation. As correctly ruled by the respondent court, there was bad faith on the part of the petitioners when they constructed the copra dryer and store on the disputed portions since they were fully aware that the parcels of land belonged to Victoria Tinagan. And, there was likewise bad faith on the part of the private respondents, having knowledge of the arrangement between petitioners and Victoria Tinagan relative to the construction of the copra dryer and store. Thus, for purposes of indemnity, Article 448 of the New Civil Code should be applied. 32 However, the copra dryer and the store, as determined by the trial court and respondent court, are transferable in nature. Thus, it would not fall within the coverage of Article 448. As the noted civil law authority, Senator Arturo Tolentino, aptly explains: "To fall within the provision of this Article, the construction must be of permanent character, attached to the soil with an idea of perpetuity; but if it is of a transitory character or is transferable, there is no accession, and the builder must remove the construction. The proper remedy of the landowner is an action to eject the builder from the land." 33 The private respondents' action for recovery of possession was the suitable solution to eject petitioners from the premises. WHEREFORE, this petition should be, as it is hereby, DISMISSED. The assailed decision is hereby AFFIRMED. SO ORDERED.

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