SECOND DIVISION

SPOUSES ELEGIO* CAEZO and G.R. No. 170189

DOLIA CAEZO,
Petitioners, Present:

CARPIO, J., Chairperson,

NACHURA,
BERSAMIN,**
- versus - ABAD, and
MENDOZA, JJ.

SPOUSES APOLINARIO and Promulgated:

CONSORCIA L. BAUTISTA,
Respondents. September 1, 2010
x-------------------------------------------------
-x

DECISION

CARPIO, J.:

G.R. No. 170189 is a petition for review[1] assailing the

Decision[2] promulgated on 17 October 2005 by the Court of Appeals
(appellate court) in CA-G.R. CV No. 75685. The appellate court granted
the appeal filed by the Spouses Apolinario and Consorcia L. Bautista
(spouses Bautista) and dismissed the complaint for the issuance of a writ
of demolition with damages filed by the Spouses Elegio and Dolia Caezo
(spouses Caezo) without prejudice to the filing of the appropriate action
with the proper forum. In its Decision[3] on Civil Case No. MC-00-1069
dated 25 March 2002, Branch 213 of the Regional Trial Court of
Mandaluyong City (trial court) rendered judgment in favor of the spouses
Caezo. The trial court also ordered the issuance of a writ of demolition
directing the removal of the structures built by the spouses Bautista on
the portion of the land belonging to the spouses Caezo.
 The Facts

The appellate court narrated the facts as follows:

Spouses Elegio and Dolia Caezo (hereafter appellees) are the
registered owner[s] of a parcel of land with an area of One Hundred
Eighty Six (186) square meters, covered by Transfer Certificate of Title
(TCT) No. 32911.

Spouses Apolinario and Consorcia Bautista (hereafter appellants) are

the registered owners of a parcel of land, containing an area of One
Hundred Eighty One (181) square meters, covered by Transfer
Certificate of Title (TCT) No. 31727. Both parcels of land are located
at Coronado Heights, Barangka Ibaba, Mandaluyong City and
registered with the Registry of Deeds of Mandaluyong City. Appellants
lot is adjacent to that of appellees [sic].

Sometime in 1995, appellees started the construction of a building on

their lot. During the construction, appellees discovered that their lot
was encroached upon by the structures built by appellants without
appellees knowledge and consent.

The three (3) surveys conducted confirmed the fact of

encroachment. However, despite oral and written demands, appellants
failed and refused to remove the structures encroaching appellees lot.

Attempts were made to settle their dispute with the barangay lupon, but
to no avail. Appellees initiated a complaint with the RTC for the
issuance of a writ of demolition.

For failure to file an Answer within the extended period granted by the
court, appellants were declared in default. Appellees were allowed to
present their evidence ex parte before an appointed commissioner.
Thereafter the RTC rendered the assailed decision in the terms earlier
set forth.[4]
The spouses Caezo filed their complaint for the issuance of a writ of
demolition with damages on 13 April 2000. In an Order dated 15 August
2000, the trial court declared the spouses Bautista in default for failure to
answer within the reglementary period. The Public Attorneys Office,
which represented the spouses Bautista at the time, filed a Motion to
Admit Answer dated 15 June 2000. The trial court denied the motion in
its Decision.

The Trial Courts Ruling

On 25 March 2002, the trial court promulgated its Decision in favor of

the spouses Caezo. The trial court found that the spouses Bautista built
structures encroaching on the land owned by the spouses Caezo. The
spouses Bautista also refused to remove the structures and respect the
boundaries as established by the various surveyors. A referral to the
Barangay Lupon failed to settle the controversy amicably. The trial court
thus ruled that the spouses Bautista are builders in bad faith, such that the
spouses Caezo are entitled to an issuance of a writ of demolition with
damages.

The dispositive portion of the Decision reads as follows:

IN VIEW WHEREOF, judgment is hereby rendered in favor of the
plaintiffs and against the defendants. Let a writ of demolition be
accordingly issued directing the removal/demolition of the structures
built by the defendants upon the portion of land belonging [to] the
plaintiffs at the formers expense.

Further,

1. the defendant is ordered to pay P50,000.00 (Philippine

Currency) as and by way of moral damages[; and]
2. [t]he defendant is hereby ordered to pay P30,000.00 as and
by way of attorneys fees.

SO ORDERED.[5]

The spouses Bautista filed a notice of appeal dated 29 April 2002

before the appellate court.

The Appellate Courts Ruling

On 17 October 2005, the appellate court rendered its Decision

which reversed the 25 March 2002 Decision of the trial court. The
appellate court ruled that since the last demand was made on 27 March
2000, or more than a year before the filing of the complaint, the spouses
Caezo should have filed a suit for recovery of possession and not for the
issuance of a writ of demolition. A writ of demolition can be granted only
as an effect of a final judgment or order, hence the spouses Caezos
complaint should be dismissed. Thespouses Caezo failed to specify the
assessed value of the encroached portion of their property. Because of this
failure, the complaint lacked sufficient basis to constitute a cause of
action. Finally, the appellate court ruled that should there be a finding of
encroachment in the action for recovery of possession and that the
encroachment was built in good faith, the market value of the encroached
portion should be proved to determine the appropriate indemnity.
 The dispositive portion of the appellate courts Decision reads as
follows:

WHEREFORE, premises considered, the instant appeal is

GRANTED. The complaint filed by plaintiffs-appellees is hereby
DISMISSED without prejudice to the filing of the appropriate action
with the proper forum.

SO ORDERED.[6]

Issues

The spouses Caezo enumerated the following grounds to support

their Petition:

I. Whether the Honorable Court of Appeals gravely erred in granting

the petition of the [spouses Bautista] and reversing the Decision
of the Court a quo; [and]

II. Whether the Honorable Court of Appeals gravely erred in stating

that the petitioners should have filed recovery of possession and
not writ of demolition.[7]

The Courts Ruling

The petition has merit.

The present case, while inaccurately captioned as an action for a Writ of
Demolition with Damages is in reality an action to recover a parcel of
land or an accion reivindicatoriaunder Article 434 of the Civil
Code. Article 434 of the Civil Code reads: In an action to recover, the
property must be identified, and the plaintiff must rely on the strength of
his title and not on the weakness of the defendants claim. Accion
reivindicatoria seeks the recovery of ownership and includes the jus
utendi and the jus fruendi brought in the proper regional trial
court. Accion reivindicatoria is an action whereby plaintiff alleges
ownership over a parcel of land and seeks recovery of its full possession.
[8]
In order that an action for the recovery of title may prosper, it is
indispensable, in accordance with the precedents established by the
courts, that the party who prosecutes it must fully prove, not only his
ownership of the thing claimed, but also the identity of the same.
[9] However, although the identity of the thing that a party desires to
recover must be established, if the plaintiff has already proved his right of
ownership over a tract of land, and the defendant is occupying without
right any part of such tract, it is not necessary for plaintiff to establish the
precise location and extent of the portions occupied by the defendant
within the plaintiffs property.[10]

The spouses Caezo were able to establish their ownership of the

encroached property. Aside from testimonial evidence, the spouses Caezo
were also able to present documentary and object evidence which
consisted of photographs,[11] transfer certificates of title,[12] and a
relocation survey plan.[13]

The relocation survey plan also corroborated Elegio Caezos testimony on

the reason for the spouses Bautistas attitude regarding the encroached
property. The relocation survey plan showed that the spouses Bautistas
property encroached upon that of the spouses Caezo by 0.97 centimeters,
while the spouses Bautistas property was encroached upon by 1.01
centimeters by another landowner. Elegio Caezo testified thus:

Q I am showing you a survey plan of lot 13. Can you please tell
us what is this survey plan?
A That is the survey plan of the surveyor whom we hired sir.

Q Can you please point to us where in this plan is your

property indicated?
A This is our property, sir.

Q The witness, your Honor, is pointing to Lot 13 indicated in

the survey plan. How about the property of the defendants?
A The defendants property is this, sir.

Q The witness, your Honor, is pointing to Lot 14 indicated in

the survey plan. Now, Mr. Witness, you said that the
defendants wanted you to recover that portion of your property
encroached onfrom the property adjacent to theirs. Please illustrate to
us by referring to this survey plan what the defendants meant?
A The defendants want us to get the portion they had encroached
on from Lot 15 because, according to them, Lot 15 also encroached on
their lot, sir.

Q The witness, your Honor, is pointing to Lot 15 indicated in

the plan. What happened next?
A We told them that this is not possible because Lot 15 is not adjacent
to our property, sir.

Q What did the defendants do?

A The defendants still refused to remove their structure, sir.

Q So, what happened?

 A We filed a complaint against the defendants before the Office of the
Barangay Captain of Barangay Barangka, Ibaba, sir.

Q What happened in the Barangay?

A The Barangay council tried to settle the matter amicably
between us. However, no settlement was reached, sir.

Q While in the barangay, did you offer anything to the defendants

in order to settle the case?
A Yes, sir.

Q What was it?

A We offered that if the defendants will remove the structures, we
are willing to shoulder half of the expenses for the removal.

Q What did the defendants say to this?

A They refused our offer and insisted on their previous position
that we get our portion from Lot 15, sir.

Q What did the Barangay do after failing to settle the case?

A The Barangay issued a Certification to File Action, sir.[14]

Given the efforts made by the spouses Caezo to settle the present issue
prior to the filing of a Complaint, the trial court was justified in ruling
that the spouses Bautista were in default and in not admitting their
Answer. The Complaint was not the spouses Bautistas first encounter
with the present issue. Moreover, the spouses Bautista failed to file their
Answer even after the expiry of the motion of extension granted to them.
[15]

The testimony and the relocation survey plan both show that the spouses
Bautista were aware of the encroachment upon their lot by the owner of
Lot 15 and thus they made a corresponding encroachment upon the lot of
the spouses Caezo. This awareness of the two encroachments made the
spouses Bautista builders in bad faith. The spouses Caezo are entitled to
the issuance of a writ of demolition in their favor and against the spouses
Bautista, in accordance with Article 450 of the Civil Code.[16]

We affirm the awards made by the trial court in its Decision:

x x x Considering the length of time when [the spouses Caezo] were

deprived of beneficial use on the subject portion of land owned by
them, the [spouses Bautista] are likewise liable to payP30,000.00
(Philippine Currency) in accordance with Article 451 of the Civil
Code.
 With respect to the prayer for the award of P50,000.00 (Philippine
Currency) as moral damages, the court decides to give due course to it
in view of the fact that the [spouses Caezo] satisfactorily proved the
existence of the factual basis of the damages and its causal relation to
[the spouses Bautistas] acts. There was bad faith on the part of the
[spouses Bautista] when they built the structures upon the land not
belonging to them. This wrongful act is the proximate cause which
made the [spouses Caezo] suffer mental anguish, sleepless nights and
serious anxiety.The [spouses Caezo] positively testified about these
matters.

As regards the prayer for exemplary x x x damages, no sufficient

evidence were adduced which would warrant and justify this court to
award the same. The prayer for attorneys fees however, is found
meritorious hence, the same is hereby granted.[17]

WHEREFORE, we GRANT the petition. The Decision of the Court of

Appeals in CA-G.R. CV No. 75685 promulgated on 17 October 2005
is SET ASIDE and the dispositive portion of the Decision of Branch 213,
Regional Trial Court of Mandaluyong City promulgated on 25 March
2002 is AFFIRMED with MODIFICATION. A writ of demolition of
the encroaching structures should be issued against and at the expense of
Spouses Apolinario and Consorcia L. Bautista upon the finality of this
judgment. Spouses Apolinario and Consorcia L. Bautista are further
ordered to pay Spouses Elegio and Dolia Caezo P30,000 as actual
damages; P50,000 as moral damages; and P30,000 as attorneys fees. The
interest rate of 12% per annum shall apply from the finality of judgment
until the total amount awarded is fully paid.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice

LUCAS P. BERSAMIN ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE C. MENDOZA
Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of
the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the
Division Chairpersons Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

*
Eligio in some parts of the Records.
**
Designated additional member per Special Order No. 882 dated 31 August 2010.
[1]
Under Rule 45 of the 1997 Rules of Civil Procedure.
[2]
Rollo, pp. 50-54. Penned by Associate Justice Juan Q. Enriquez, Jr., with Associate Justices Conrado
M. Vasquez, Jr. and Vicente Q. Roxas, concurring.
[3]
Id. at 39-41. Penned by Judge Amalia F. Dy.
[4]
Id. at 51-52.
[5]
Id. at 41.
 [6]
Id. at 54.
[7]
Id. at 11.
[8]
See Javier v. Veridiano II, G.R. No. 48050, 10 October 1994, 237 SCRA 565.
[9]
Salacup v. Rambac, 17 Phil. 22, 23 (1910).
[10]
ARTURO M. TOLENTINO, 2 COMMENTARIES AND JURISPRUDENCE ON THE CIVIL
CODE OF THE PHILIPPINES 72 (1998). Citations omitted.
[11]
Records, pp. 14-18.
[12]
Id. at 9-10.
[13]
Id. at 11.
[14]
Id. at 68-71.
[15]
Id. at 47.
[16]
Article 450. The owner of the land on which anything has been built, planted or sown in bad
faith may demand the demolition of the work, or that the planting or sowing be removed, in order
to replace things in their former condition at the expense of the person who built, planted or
sowed; or he may compel the builder or planter to pay the price of the land, and the sower the
proper rent.
[17]
Rollo, p. 40.
Today is Monday, December 11, 2017

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-25450 January 31, 1969

LEONARDO SANTOS, petitioner,

vs.
HON. ANGEL H. MOJICA, Judge, Court of First Instance of Rizal, Pasay City Branch,
THE PROVINCIAL SHERIFF of Rizal, Pasay City Branch, TEODORICO, CARMEN, ANTERO, VIDAL, CATALINA, MELANIO, MANUEL, FFLICIDAD, AURELIO, PACITA, and ELEUTERIA,
all surnamed ALLANIGUE,respondents.

Lupino A. Lazaro for petitioner.

D. A. Rodriguez for respondents.

CAPISTRANO, J.:

On March 19, 1959, in the Court of First Instance of Rizal, eleven brothers and sisters, all surnamed Allanigue, brought an action (Civil Case No. 217-R) against their sister, Lorenza Allanigue,
her husband, Simeon Santos, Maria San Agustin and Felicidad San Agustin, for partition of a 360-square-meter lot situated at San Dionisio, Parañaque, Rizal, and for the annulment of certain
conveyances involving the same. Defendants having been declared in default, the trial court, after hearing the plaintiffs' evidence, rendered judgment ordering the partition of the lot among the
eleven plaintiffs and the defendant Lorenza Allanigue. In a subsequent order the court set off Lorenza Allanigue's share against the amount that she had failed to pay as rents to the plaintiffs as
directed in the decision.

A writ of execution was issued on the judgment ordering the defendants to vacate the lot and deliver its possession to the plaintiffs. Leonardo Santos, not a party defendant but a son of
defendants Simeon Santos and Lorenza Allanigue, owned a house standing on the lot. He filed with the sheriff a third-party claim, and with the court, a motion to recall the writ of execution
nsofar as his house was concerned. The motion was denied. On March 15, 1962, the defendants and movant Leonardo Santos having failed to remove their houses from the lot within the period
given them, the court ordered the sheriff to demolish said houses.

On April 2, 1962, Leonardo Santos and the defendants in the case as petitioners, filed in the Supreme Court a petition for certiorari and prohibition, G.R. No. L-19618, against Judge Angel H.
Mojica, the Provincial Sheriff of Rizal and the plaintiffs in the case, as respondents. Among the issues raised therein was whether or not the lower court had jurisdiction to order the demolition of
petitioners' houses in that special civil action. In its decision of February 28, 1964, the Supreme Court denied the petition after finding that Leonardo Santos, who claimed to be the owner of a
house and the portion of land on which it stood by purchase from his parents, did not follow the procedure sanctioned by law in vindicating his alleged ownership, i.e., he should have filed an
ordinary civil action to vindicate his alleged ownership of the house and the portion of land on which it was built.1awphil.ñêt

After the said decision of the Supreme Court had become final, the respondent Judge, Angel H. Mojica, on motion of the plaintiffs in the same Civil Case No. 217-R, ordered the demolition of
he defendants' houses. The defendants having voluntarily removed their houses, the only house that remained standing on the lot was that belonging to Leonardo Santos. Subsequently, the
respondent Judge, on motion of the plaintiffs, issued an order dated December 9, 1965, directing the sheriff to demolish the house of Leonardo Santos. Hence, the present petition for certiorari
and prohibition in this Court where Leonardo Santos, petitioner, questions the jurisdiction of the respondent Judge in issuing the order of demolition of his house.

The instant petition for certiorari and prohibition should be denied in view of the following considerations:

1. Petitioner Leonardo Santos is bound by the judgment in Civil Case No. 217-R because he is a successor-in-interest of his parents, Simeon Santos and Lorenza Allanigue, defendants in Civil
Case No. 217-R, and his right, if any, is claimed under them. Hence, the judgment in said civil case binds not only Simeon Santos and Lorenzo Allanigue but also their son, Leonardo Santos,
who is their successor-in-interest and who claims under them. The fact that the sale to Leonardo Santos from his parents was registered, is of no moment because, as pointed out, he is bound
by the judgment against them.

Leonardo Santos' house having been built and reconstructed (after March, 1962) into a bigger one after his predecessors-in-interest, his parents, had been summoned in 1959 in Civil Case No.
217-R, he must be deemed a builder in bad faith. As builder in bad faith he lost the improvement made by him consisting of the reconstructed house to the owners of the land without right to
ndemnity, pursuant to Article 449 of the Civil Code, which provides:

ART. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity.

The Allanigue brothers and sisters therefore become owners of the improvement consisting of the house built in bad faith by Leonardo Santos if they chose to appropriate the accession.
(Articles 445 and 449, Civil Code.) However, said owners could choose instead the demolition of the improvement or building at the expense of the builder, pursuant to Article 450 of the Civil
Code, which, in part, provides:

ART. 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in
order to replace things in their former condition at the expense of the person who built, planted or sowed....

It is of record in Civil Case No. 217-R that the owners of the land chose to have the house or improvement demolished pursuant to their motion for demolition which was granted by respondent
Judge Mojica on December 9, 1965.

2. The present petition is barred by the prior judgment of this Court in G.R. No. L-19618. Herein petitioner, Leonardo Santos, was one of the petitioners in that case against the same official and
private respondents in the instant petition. In the two cases there is identity of subject matter, namely, the portion of the lot and the house standing on said portion alleged by petitioner to belong
o him. There is also identity of cause of action, to wit: the order of the respondent Judge for the removal or demolition of the houses standing on the lot. In the previous case this Court had
urisdiction, and its decision, which was on the merits, had become final. It is evident that the judgment of this Court in G.R. No. L-19618 is res adjudicata in the instant case on the question of
he validity of the order of demolition of December 9, 1965.

PREMISES CONSIDERED, the petition is denied, with treble costs against the petitioner. The writ of preliminary injunction issued by this Court is hereby dissolved.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Sanchez, Castro, Fernando, Teehankee and Barredo, JJ., concur.
Zaldivar, J., took no part.

The Lawphil Project - Arellano Law Foundation

G.R. No. 182754 June 29, 2015

SPOUSES CRISPIN AQUINO and TERESA V. AQUINO, herein represented by their Attorney-in-Fact, AMADOR D.
LEDESMA, Petitioners,
vs.
SPOUSES EUSEBIO AGUILAR and JOSEFINA V. AGUILAR, Respondents.

DECISION

SERENO, CJ:

In this Petition for Review on Certiorari filed under Rule 45 of the Rules of Court, Petitioner spouses Crispin and Teresa Aquino
1

(petitioners) assail the Court of Appeals (CA) Decision dated 25 April 2008 in CA-GR SP No. 92778. The CA modified the Decisions
2

of both the Metropolitan Trial Court (MeTC) and the Regional Trial Court (RTC). The CA ruled that although respondent spouses
Eusebio and Josefina Aguilar (respondents) cannot be considered builders in good faith, they should still be reimbursed for the
improvements they have introduced on petitioners' property. 3

THE FACTS

Teresa Vela Aquino (Teresa) and her husband, Crispin Aquino, are the owners of a house and lot located at No. 6948, Rosal Street,
Guadalupe

Since 1981, this property has been occupied by Teresa's sister, Josefina Vela Aguilar; Josefina's spouse Eusebio; and their family. It 5

appears from the record that respondents stayed on the property with the consent and approval of petitioners, who were then residing
in the United States. 6

While respondents were in possession of the property, the house previously constructed therein was demolished, and a three-storey
building built in its place. Respondents occupied half of the third floor of this new building)for the next 20 years without payment of
7

rental.8
On 22 September 2003, petitioners sent a letter to respondents informing them that an immediate family member needed to use the
premises and demanding the surrender of the property within 10 days from notice. Respondents failed to heed this demand,
9

prompting petitioners to file a Complaint for ejectment against them before the office of the barangay captain of Guadalupe Viejo. The
10

parties attempted to reach an amicable settlement in accordance with Section 412 of the Local Government Code, but these efforts
proved unsuccessful. 11

On 19 November 2003, petitioner spouses Aquino filed a Complaint with the MeTC of Makati City praying that respondents be
12

ordered to (a) vacate the portion of the building they were then occupying; and (b) pay petitioner a reasonable amount for the use and
enjoyment of the premises from the time the formal demand to vacate was made. 13

In their Answer with Counterclaim, respondents claimed that they had contributed to the improvement of the property and the
14

construction of the building, both in terms of money and management/supervision services. Petitioners purportedly agreed to let them
contribute to the costs of construction in exchange for the exclusive use of a portion of the building. Respondents averred:

2.3 That the construction of the three (3) storey building was also at the uncompensated supervision of defendant Eusebio
Aguilar, of which only r 2 Million was spent by plaintiffs while defendants spent around r 1 Million as contribution to the
construction cost. It was defendants who introduced improvements on subject lot because at the time plaintiffs bought the
property it was marshy which was filled up by defendants (sic) truck load with builders, adobe and scumbro that elevated
the ground;

2.4 The original agreement was for my client to contribute his share so that they will have the portion of the subject
building for their own exclusive use. It turned out later that the agreement they had was disowned by plaintiffs when they
saw the totality of the building constructed thereon coupled by the fact, that the value of the lot has tremendously
appreciated due to the commercialization of the vicinity which will command higher price and windfall profits should
plaintiffs sell the property which they are now contemplating on (sic);

2.5 The portion which plaintiffs want defendants to vacate is a portion which the latter built with their own money upon your
clients agreement and consent whom they built in good faith knowing and hoping that later on the same will be theirs
exclusively. It was never an act of generosity, liberality and tolerance. Conversely, it was one of the implied co-ownership
or partnership, because aside from the fact that defendants, who were then peacefully residing in Laguna, made
unquantifiable contributions in terms of money and services arising from his uncompensated management and supervision
over the entire subject property while plaintiffs are abroad. By legal implications he is an industrial partner responsible for
the development and improvements of the subject property. His contribution was never without the consent of plaintiffs.
Whatever contribution defendants introduced over the said property was made and built in good faith; 15

Since they were allegedly co-owners of the building and builders in good faith, respondents claimed that they had the right to be
compensated for the current value of their contribution. Accordingly, they prayed for the dismissal of the Complaint and the award of
16

₱5 million as compensation for their contributions to the construction of the building, as well as moral damages, attorney's fees and
costs of litigation.
17

THE RULING OF THE METC

In a Decision dated 12 November 2004, the MeTC ruled in favor of petitioners, stating that they had the right to enjoy possession of
18

the property as the registered owners thereof. Since the case was merely one for ejectment, the court held that it was no longer
19

proper to resolve respondents' claim of co-ownership over the building. 20

The MeTC also declared that respondents were builders in bad faith who were not entitled to recover their purported expenses for the
construction of the building. It emphasized that their occupation of the property was by mere tolerance of petitioners and, as such,
21

could be terminated at any time. The court further noted that in a letter dated 15 July 1983, petitioners had already asked
22

respondents to refrain from constructing improvements on the property because it was intended to be sold. 23

The dispositive portion of the MeTC Decision, which ordered respondents to vacate the property, reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants Eusebio & Josefina Aguilar and all persons
claiming rights under them to immediately vacate the subject property, and deliver peaceful possession thereof to the plaintiffs.
Defendants are likewise ordered to pay plaintiffs ₱7,000.00 monthly rental commencing 22 October 2003 until such time that
defendant finally vacate the premises, ₱10,000.00 as and by way of attorney's fees, and the cost of suit. 24

On 14 September 2005, respondents appealed the MeTC's Decision to the RTC. 25

THE RULING OF THE RTC

In their Memorandum on Appeal before the R TC, respondents assailed the MeTC's finding that petitioners, as the registered owners
26

of the land, were also the owners of the improvement constructed thereon. Respondents asserted that they were co-owners of the
27

building since they built a portion thereof using their own funds, as evidenced by various receipts they presented before the MeTC. 28

Respondents also maintained that they were builders in good faith. They pointed out
that petitioners never objected to the construction of the improvement on their
property.29 According to respondents, petitioners' letter dated 15 July 1983 was
written at a time when an old dilapidated house was still standing on the
property.30 Subsequently however, the house was demolished and the new building
was constructed thereon by respondents, with petitioners' knowledge and consent.31
In a Decision dated 3 January 2006, the RTC denied the appeal and affirmed the MeTC's Decision. According to the court,
32

respondents did not become co-owners of the property although they may have contributed to the construction of the building
thereon. Hence, their stay in the premises remained to be by mere tolerance of the petitioners.
33 34

The RTC also ruled that respondents cannot be considered builders in good faith. The court found that as early as 1983, petitioners
35

had informed respondents of the intention to eventually dispose of the property. The RTC concluded that petitioners never consented
36

to the construction of any form of structure on the property. Since respondents participated in the construction of the building even
37

after they had been notified that their occupation may be terminated anytime, the R TC ruled that they did not build the structures in
good faith. The RTC likewise noted that "the improvements in question as well as other personal belongings of the appellants were
38

removed from the premises through a writ of demolition, and these properties are now in their possession." 39

THE RULING OF THE CA

Aggrieved by the RTC Decision, respondents elevated the matter to the CA. They reiterated that they owned one-half of the third floor
of the building on the property, having spent their own funds for the construction thereof. Respondents also asserted that because
they built that portion in good faith, with no objection from petitioners, they were entitled to reimbursement of all necessary and useful
expenses incurred in the construction.

On 25 April 2008, the CA affirmed the conclusion of the lower courts that respondents could not be considered co-owners of the
property or builders in good faith. According to the appellate court, respondents were aware that their right to possess the property
40

had a limitation, because they were not the owners thereof. They knew that their occupation of the building was by mere tolerance or
permission of petitioners, who were the registered owners of the property. The CA likewise noted that respondents failed to prove the
alleged agreement between the parties with respect to the ownership of one-half of the third floor of the improvement. There being no
contract between them, respondents are necessarily bound to vacate the property upon demand. The CA ruled: 41

The Supreme Court has consistently held that those who occupy the land of another at the latter's tolerance or permission, without
any contract between them, are necessarily bound by an implied promise that the occupants will vacate the property upon demand.
Based on the principles enunciated in Calubayan v. Pascual, the status of petitioners is analogous to that of a lessee or a tenant
whose term of lease has expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful deprivation
or withholding of possession is to be reckoned from the date of the demand to vacate. (Citations omitted)
42

Nevertheless, the CA declared that respondents should be reimbursed for the necessary and useful expenses they had introduced on
petitioners' property, pursuant to Articles 1678 and 548 of the Civil Code. The dispositive portion of the CA Decision dated 25 April
43

2008 reads:
44

WHEREFORE, the assailed Decision is AFFIRMED with the following MODIFICATIONS:

1. The case is REMANDED to the court of origin for further proceedings to determine the facts essential to the application
of Article 1678 and Article 546 of the Civil Code, specifically on the following matters:

a) To determine the cost of necessary expenses incurred by petitioners during their period of possession.

b) To determine the cost of useful improvements introduced by petitioners in the construction of the building.

2. After said amounts shall have been determined by competent evidence:

a) Respondents Aquino are ordered to pay petitioners the costs of necessary improvements incurred during
the period of their occupation.

b) Petitioners Aguilar are to be reimbursed one half (1/2) of the amount they expended on the construction of
the building should respondents decided to appropriate the same. Should respondents refuse to reimburse the
costs of the improvements, petitioners may remove the improvements even though the principal thing may
suffer damage thereby.

c) In both instances, petitioners shall have no right of retention over the subject premises.

d) In any event, petitioners shall pay respondents the amount of Php7,000.00 as monthly rental commencing
22 October 2003 until such time that petitioners finally vacate the premises. No pronouncement as to costs.

SO ORDERED. 45

Respondents no longer appealed the Decision of the CA. This time, petitioners elevated the matter to this Court through the instant
Petition for Review under Rule 45 of the Rules of Court.
46

PROCEEDINGS BEFORE THIS COURT

In their Petition, petitioners allege that the CA seriously erred in remanding the case to the court of origin for the purpose of
ascertaining the right of respondents to be reimbursed for the improvements introduced on the property. They emphasize that
47

respondents were builders in bad faith, and, as such, are not entitled to reimbursement under Articles 449, 450 and 451 of the Civil
Code.
In their Comment, respondents assert that the CA correctly ruled that their status is akin to that of a lessee or tenant whose term of
48

lease has expired, but whose occupancy continues by virtue of the tolerance of the owner. They aver that the CA properly upheld their
entitlement to reimbursement pursuant to Articles 1678 and 546 of the Civil Code.
49 50 51

In their Reply, petitioners argue against supposed improvements constructed by respondents from 1999 to 2003 amounting to
52

₱995,995.94. Petitioners say this claim is highly ridiculous and unbelievable. 53

OUR RULING

Since respondents no longer appealed the Decision of the CA, they are considered bound by its findings and conclusions. These
54

include its affirmation of the earlier findings of the MeTC and the RTC that respondents cannot be considered builders in good faith:

Both the MeTC and the RTC have rejected the idea that petitioners are builders in good faith. We agree. The resolution of the issues
at bar calls for the application of the rules on accession under the Civil Code. The term "builder in good faith" as used in reference to
Article 448 of the Civil Code, refers to one who, not being the owner of the land, builds on that land believing himself to be its owner
and unaware of the land, builds on that land, believing himself to be its owner and unaware of the defect in h is title or mode of
acquisition. The essence of good faith lies in an honest belief in the validity of one's right, ignorance of a superior claim, and absence
of intention to overreach another.

In the instant case, the Spouses Aguilar cannot be considered as builders in good faith on account of their admission that the subject
. At the onset, petitioners were
lot belonged to the Spouses Aquino when they constructed the building
aware of a flaw in their title and a limit to their right to possess the property. By
law, one is considered in good faith if he is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it. 55
Respondents are deemed to have acquiesced to the foregoing findings when they failed to appeal the CA Decision. A party who does
not appeal from a judgment can no longer seek the modification or reversal thereof. Accordingly, the only issue left for this Court to
56

determine is that which is now raised by petitioners - whether the CA erred in remanding this case to the court of origin for the
determination of the necessary and useful expenses to be reimbursed to respondents pursuant to Articles 1678 and 546 of the Civil
Code.

We resolve to PARTLY GRANT the Petition and modify the ruling of the CA.

Article 1678 is not applicable to this case.

In its Decision, the CA found that respondents were occupants of the property by mere tolerance or generosity of petitioners and were
bound by an implied promise to vacate the premises upon demand. 57

Based on this finding, the CA held that "the status of petitioners is analogous to that of a lessee or a tenant whose term of lease has
expired but whose occupancy continued by tolerance of owner" pursuant to this Court's ruling in Calubayan v. Pascual, As a result,
58 59

the CA concluded that Articles 1678 and 546 of the Civil Code must be applied to allow respondents to be reimbursed for their
necessary and useful expenses.

We disagree. By its express provision, Article 1678 of the Civil Code applies only to lessees who build useful improvements on the
leased property. It does not apply to those who possess property by mere tolerance of the owners, without a contractual right.

A careful reading of the statement made by this Court in Calubayan would show that it did not, as it could not, modify the express
provision in Article 1678, but only noted an "analogous" situation. According to the Court, the analogy between a tenant whose term of
lease has expired and a person who occupies the land of another at the latter's tolerance lies in their implied obligation to vacate the
premises upon demand of the owner. The Court stated:

To begin with, it would appear that although the defendant is regarded by the
plaintiffs as a "squatter" his occupancy of the questioned premises had been
permitted or tolerated even before the Philippine Realty Corporation sold the lots to
the plaintiffs. Otherwise, the latter would not have found him on the premises . It may be
true that upon their acquisition of the parcels of land in 1957, plaintiffs notified and .requested defendant to see them, but despite
defendant's failure to heed these requests, plaintiffs did not choose to bring an action in court but suffered the defendant instead to
remain in the premises for almost six years. Only on February 2, 1963, did the plaintiffs for the first time notify the defendant that "they
In allowing several years to
now need the two parcels of land in question" and requested him to vacate the same.
pass without requiring the occupant to vacate the premises nor filing an action to
eject him, plaintiffs have acquiesced to defendant's possession and use of the
premises. It has been held that a person who occupies the land of another at the
latter's tolerance or permission, without any contract between them, is necessarily
bound by an implied promise that he will vacate upon demand, failing which a
summary action for ejectment is the proper remedy against them. The status of
defendant is analogous to that of a lessee or tenant whose term of lease has expired
but whose occupancy continued by tolerance of the owner. In such a case, the
unlawful deprivation or withholding of possession is to be counted from the date of
the demand to vacate.60(Emphasis in the original)

It is clear from the above that Calubayan is not sufficient basis to confer the status and rights of a lessee on those who occupy
property by mere tolerance of the owner.

In this case, there is absolutely no evidence of any lease contract between the parties. In fact, respondents themselves never alleged
that they were lessees of the lot or the building in question. Quite the opposite, they insisted that they were co-owners of the building
and builders in good faith under Article 448 of the Civil Code. For that reason, respondents argue that it was erroneous for the CA to
consider them as lessees and to determine their rights in accordance with Article 1678.

As builders in bad faith, respondents are

not entitled to reimbursement of useful expenses.

Furthermore, even if we were to subscribe to the CA' s theory that the

situation of respondents is "analogous to that of a lessee or tenant whose
term of lease has expired but whose occupancy continued by tolerance," the
absence of good faith on their part prevents them from invoking the provisions
of Article 1678.
As discussed above, the MeTC, the RTC and the CA all rejected the claims of respondents that they were builders in good faith. This
pronouncement is considered conclusive upon this Court, in view of respondents' failure to appeal from the CA decision. This rule bars
the application of Article 1678 as well as Articles 448 and 576 of the Civil Code and all other provisions requiring good faith on the part
of the builder.

We are aware that in some instances, this Court has allowed the application of Article
448 to a builder who has constructed improvements on the land of another with the
consent of the owner. 61 In those cases, the Court found that the owners knew and
approved of the construction of improvements on the property. Hence, we ruled
therein that the structures were built in good faith, even though the builders knew that
they were constructing the improvement on land owned by another.

Although the factual circumstances in the instant case are somewhat similar, there is one crucial factor that warrants a departure from
the above-described rulings: the presence of evidence that petitioners prohibited respondents from building their own structure on a
portion of the property. Based on the findings of fact of the MeTC and the RTC, petitioners had already warned respondents not to
build a structure on the property as early as 1983. The MeTC explained: Likewise, in a letter dated 15 July 1983 sent by plaintiffs to
the defendants marked as Exhibit "2" of defendants' Position Paper, Teresa Aquino made known to the defendants not to construct on
the premises as she planned to sell the same when the value of the property shall increase (sic). Defendants are undoubtedly builders
in bad faith for despite the prohibition made upon them, they continued their construction activities upon respondents' property. 62

This ruling was affirmed by the R TC in its Decision dated 3 January 2006, which reads:

An examination of appellants' Exhibit "2" which is a letter dated July 15, 1983, sent to appellant Josefina Aguilar, the sister of appellee
Teresa Aquino, abundantly shows that their occupancy of the premises in question is by tolerance of the appellees. Thus, the letter
expressly states that the appellants are advised not to put up a shop, as the appellees had plan (sic) then of disposing the property
(the land) in question for a reasonable profit after a period of three or four years, thereby placing on notice them (appellants) that their
possession of the said property is temporary in nature and by mere generosity of the appellees, they being sisters.

The letter likewise advised them to apply for a housing project so that by the time the property in question is sold, they have a place to
transfer to. All these undisputed antecedents which can be considered as judicially admitted by the appellants being their own
evidence marked as Exhibit "2", coupled with the fact that since the time they occupied the premises in 1983 up to the time when the
complaint was filed, they were not asked to pay any monthly rental for the use, enjoyment and occupancy of the said property,
ineluctably established the fact that their possession of the said property is by mere tolerance of the appellees. 63

xxxx

Their contention that pursuant to Article 453 of the Civil Code, they should be considered builders in good faith even if they have acted
in bad faith, since their act of introducing improvements to one-half of the third floor of the three storey building was with knowledge
and without opposition on the part of the appellants, cannot be sustained, principally on the ground that as stated earlier, their Exhibit
"2" is very limpid on the act that they were already forewarned as early as 1983 not to introduce any improvements thereon as the
property is slated to be sold as it was only bought for investment purposes. The fact that the appellees did not thereafter remind them
of this, is of no moment, as this letter was not likewise withdrawn by a subsequent one or modified by the appellees. 64
We find no reason to depart from the conclusions of the trial courts. Respondents were evidently prohibited by petitioners from
building improvements on the land because the latter had every intention of selling it. That this sale did not materialize is irrelevant.
What is crucial is that petitioners left respondents clear instructions not to build on the land.

We also agree with the RTC's ruling that the lack of constant reminders from petitioners about the "prohibition" expressed in the 1983
letter was immaterial. The prohibition is considered extant and continuing since there is no evidence that this letter was ever
withdrawn or modified. Moreover, no evidence was presented to show that petitioners were aware of what was happening: that
respondents were constructing a portion of the building with their own funds and for their exclusive use and ownership. Neither were
respondents able to present evidence that petitioners had agreed to share the expenses with them, or that the former had given
consent to the latter's contribution, if any.

In view of the foregoing, this Court's previous rulings on Article 448 cannot be applied to this case. Hence, we hold that petitioners, as
the owners of the land, have the right to appropriate what has been built on the property, without any obligation to pay indemnity
therefor; and that respondents have no right to a refund of any improvement built therein, pursuant to Articles 449 and 450 of the
65 66

Civil Code:

Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right of
indemnity.

Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work,
or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built,
planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent.

Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages from the builder, planter or sower.

Respondents may recover the

necessary expenses incurred for the
preservation of the property but
without the right of retention.

Pursuant to Article 452 of the Civil Code, a builder in bad faith is entitled to recoup the necessary expenses incurred for the
preservation of the land. The CA correctly ruled that respondents in this case are similarly entitled to this reimbursement. However,
67

68
being builders in bad faith, they do not have the right of retention over the premises.

While the evidence before this Court does not establish the amount of necessary expenses incurred by respondents during their stay
in the property, we note that even petitioners do not deny that such expenses were incurred. In fact, in a letter dated 15 July 1983,
petitioners acknowledged that respondents had spent personal money for the maintenance of the property. Petitioners even promised
to reimburse them for those expenses. In this light, we find it proper to order the remand of this case to the court a quo for the
69

purpose of determining the amount of necessary expenses to be reimbursed to respondents.

With respect to the award of actual damages to petitioners, we find no reason to reverse or modify the ruling of the CA. This Court
1âwphi1

has consistently held that those who occupy the land of another at the latter's tolerance or permission, even without any contract
between them, are necessarily bound by an implied promise that the occupants would vacate the property upon demand. Failure to 70

comply with this demand renders the possession unlawful and actual damages may be awarded to the owner from the date of the
demand to vacate until the actual surrender of the property.
71

Accordingly, we affirm the CA's award of actual damages to petitioners in the amount of ₱7 ,000 per month from the date of demand
(22 October 2003) until the subject properties are vacated. This amount represents a reasonable compensation for the use and
occupation of respondents' property as determined by the RTC and the MeTC.
72

As to petitioners' prayer for attorney's fees, we find no cogent basis for the award. WHEREFORE, the Petition is PARTLY GRANTED.

The Court of Appeals Decision dated 25 April 2008 is REVERSED insofar as it ordered: (a) the reimbursement of the useful expenses
incurred by respondents while in possession of the property; and (b) the determination of the cost of these useful improvements by the
court of origin. The rest of the Decision of the Court of Appeals is hereby AFFIRMED.

Accordingly, this case is REMANDED to the court of origin for the determination of the necessary expenses of preservation of the
land, if any, incurred by respondent spouses Eusebio and Josefina Aguilar while they were in possession of the property, which
expenses shall be reimbursed to them by petitioner spouses Crispin and Teresa Aquino.

On the other hand, respondents and all persons claiming rights under them are ordered, upon finality of this Decision without awaiting
the resolution of the matter of necessary expenses by the trial court, to immediately VACATE the subject property and DELIVER its
peaceful possession to petitioners. Respondents are likewise ordered to PAY petitioners ₱7 ,000 as monthly rental plus interest
thereon at the rate of 6% per annum, to be computed from 22 October 2003 until the finality of this Decision.

No pronouncement as to costs.

SO ORDERED.

MARIA LOURDES P.A. SERENO

Chief Justice, Chairperson
WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

LUCAS P. BERSAMIN JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice

C E RTI F I CATI O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes

1
Rollo, pp. 29-39.

2
Id. at 41-52; penned by Associate Justice Ricardo R. Rosario and concurred in by Associate Justices Arcangelita Romillo-
Lontok and Mariano C. Del Castillo (now a member of this Court).

3
Id. at 51-52.

5
Id. at 42.

6
Id. at 148-149.

7
Id. at 261.

8
Id. at 250.

9
Id. at 78.

10
Id. at 250

11
Id. at 251.

12
Id. at 77-82.

13
Id. at 79-80.

14
Id. at 95-102.

15
Id. at 96-97.

16
Id. at 99.

17
Id. at 100.

18
Id. at 250-253; penned by Judge Perpetua Atal-Pano

19
Id. at 251.

20
Id.

21
Id. at 252.

22
Id.
23
Id. at 252-253.

24
Id. at 253.

25
Id. at 34.

26
Id. at 103-116.

27
Id. at 110-112.

28
Id. at 106.

29
Id. at 112-115.

30
Id. at 112.

31
Id.

32
Id. at 127-131: penned by Judge Cesar D. Santamaria.

33
Id. at 129.

34
Id. at 130.

35
Id.

36
Id.

37
Id.

38
Id.

39
Id. at 131.

40
Id. at 48.

41
Id. at 49.

42
Id.

43
Id. at 50.

Id. at 9-20; CA-GR. SP No. 92778 penned by Associate Justice Ricardo R. Rosario and concurred in by Associate
44

Justices Arcangelita Romillo-Lontok and Mariano C. del Castillo (now a member of this court).

45
Id. at 51-52.

46
Id. at 29-39.

47
Id. at 34.

48
Id. at 211-214.

49
Article 1678 of the Civil Code states:

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 the 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 caused to the principal thing, and the lessor does not
choose. to retain them by paying their value at the time the lease is extinguished.
50
Article 546 of the Civil Code provides:

Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may
retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the expenses or
of paying the increase in value which the thing may have acquired by reason thereof

51
Id. at 212.

52
Id. at 220-223.

53
Id. at 220.

54
Id. at 41-52.

55
Id. at 48.

56
Taganito Mining Corporation v. Commissioner of Internal Revenue, G.R. No. 197591, 18 June 2014; Raquel-Santos, et
al. v. Court of Appeals and Finvest Securities Co., Inc., 60 I Phil. 631, 651 (2009).

57
Rollo, p. 17.

58
Id. at 49.

59
128 Phil. 160-165 (1967).

60
Id.

61
Spouses Ismael and Teresita Macasaet v. Spouses Vicente and Rosario Macasaet, 482 Phil 853-876, (2004); Boyer-
Roxas v. Court of Appeals, G.R. No. 100866, 14 July 1992, 211 SCRA 470; De Guzman v. De la Fuente, 55 Phil. 501-504
(1930); Aringo v. Arena, 14 Phil. 263-270 (1909); Javier v. Javier, 7 Phil. 261-268 (1907).

62
Rollo, p. 252.

63
Id. at 130.

64
Id.

65
Heirs of Durano, Sr. v. Spouses Uy, 398 Phil. 125-127 (2000).

66
Tan Queto v. Court of Appeals, 232 Phil. 57-64 (1983).

67
Article 452 of the Civil Code states:

Art. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of
preservation of the land.

68
Article 546 of the Civil Code states:

ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may
retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the expenses or
of paying the increase in value which the thing may have acquired by reason thereof.

69
Rollo, pp. 148-149.

Spouses Cruz v. Spouses Fernando, 513 Phil 280-293 (2005); Rivera v. Rivera, 453 Phil 404-41 (2003); Spouses
70

Pengson v. Ocampo, Jr. 412 Phil 860-868 (2001); Areal v. Court of Appeals, 348 Phil 813-830 (1998); Spouses Refugia v.
Court of Appeals, 327 Phil 982-1011 (1996).

Lopez v. David, GR No. 152145, 30 March 2004, 426 SCRA 535; Areal v. Court of Appeals, 348 Phil. 813, 823 (1998);
71

Villaluz v. Court of Appeals, 344 Phil. 77, 89 (1997).

72
See Reyes v. Court of Appeals, 148 Phil. 13 5 (1971).