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G.R. No.

L-11977

April 29, 1959

LEONARDO AZARCON, MANUEL AZARCON and ESTEBAN ABOBO, petitioner, vs. VICTOR EUSEBIO, respondent. Leonardo N. Azarcon in his Melion Pajarillaga for respondent. LABRADOR, J.: Appeal from an order of the Court of Appeals, Fourth Division, in CA-G.R. No. 15444-R, promulgated September 5, 1956, finding Leonardo Azarcon, Manuel Azarcon and Esteban Abobo guilty of contempt of court, ordering each of them to pay a fine of P100, to remove certain improvements that they have constructed on the land, etc. The record discloses that respondent Victor Eusebio and petitioners herein had a dispute over the possession of a certain parcel of public land in the year 1954. Victor Eusebio had filed a lease application, No. V-79, for a parcel of land known as lot No. 3807, containing an area of about 349 hectares. A portion thereof was occupied by petitioners herein, Leonardo L. Azarcon and his companions, under a homestead application. The conflict between the lessee and the homesteaders was ordered to be investigated on May 25, 1955 by the Director of Lands and again on August 3, 1955 by the Secretary of Agriculture and natural Resources. Before the dispute could be settled and on April 28, 1954, Victor Eusebio filed a complaint in the Court of First Instance of Nueva Ecija, alleging that he had acquired a big parcel of land, 349 hectares in area, by lease from the Bureau of Lands (lease application No. V-79); that while he was in possession thereof defendants occupied a portion, known as lot No. 2807, containing an area of six hectares more or less. He, therefore, prayed that defendants be ordered to vacate the six hectares occupied by them and pay damages. Defendant Leonardo Azarcon answered the complaint alleging that he is in actual possession of a portion of 24 hectares since 1941 by virtue of a homestead application, No. V-42995; that the lease application of plaintiff is subsequent to said homestead application of Leonardo Azarcon; that Azarcon had occupied the land since 1941 with interruption during the war and again in 1950 up to the time of the filing of the action. He, therefore, prayed that the action be dismissed. The answer was filed on June 2, 1954 and on motion of plaintiffs dated March 15, 1955, the defendants were declared in default. A motion to set aside the default was denied, and a judgment by default was entered by the court on April 26, 1955. It ordered defendants to restore possession of the land to plaintiff. Having failed to obtain a reconsideration of the above decision, defendants appealed to the Court of Appeals. While the case was pending in the Court of Appeals, a writ for the execution of the judgment of the lower court was issued on October 3, 1955. On October 8, 1955, defendants moved and the court on October 21 ordered that the said writ of execution own behalf and for his co-petitioners.

be stayed upon defendants' depositing of a supersedeas bond of P1,000. The writ of execution was actually served on the defendants on October 7, 1955. Various petitions were submitted by the parties, and among them was that of defendants-appellants asking for the lifting of the writ of execution. This petition, dated October 14, 1955, was granted on November 1, 1955, and the court again fixed the supersedeas bond to stay execution in the amount of P1,000 to be filed with and approved by the Court of First Instance of Nueva Ecija as to its sufficiency. In the same order of November 7, the Court of Appeals denied a petition of the plaintiff-appellee to file a counter-supersedeas bond as well as plaintiff appellee's motion for injunction. In the meanwhile the defendants-appellants had presented on November 21, 1955 the supersedeas bond required for the approval of the Court of First Instance of Nueva Ecija and the said bond was filed and approved on November 21, 1955. This fact was certified to by the clerk of the Court of First Instance of Nueva Ecija on November 14, 1955. On December 2, 1955 the Court of Appeals on motion of plaintiff, reconsidered its order or resolution of November 7, 1955 authorizing the stay of execution upon the filing of the bond by the defendants-appellants, on the ground that the defendants-appellants have not filed any supersedeas bond as required. On January 19, 1956, the Court of Appeals denied a petition of defendants-appellants to reconsider said order of December 2, 1955 on the ground that the writ of execution issued on October 3, 1955 had already been executed. The following appear to be clear: (a) the writ of execution dated October 3, 1955 was furnished the defendants on October 7, 1955; (b) said order of execution was set aside in an order of October 21, 1955, which order authorized the defendants-appellants to file a supersedeas bond in the amount of P1,000, the same to be approved by the Court of First Instance of Nueva Ecija; (c) said supersedeas bond was filed with Court of First Instance on November 21, 1955, but the certificate showing such filing of the bond was issued by the clerk of the Court of First Instance of Nueva Ecija only on December 14, 1955; and the Court of Appeals, not having been notified of the fact that the defendants have already secured the approval of their supersedeas bond, set aside the order to stay execution on December 2, 1955. The evidence shows that in spite of the receipt by the defendants of the notice of the writ of execution of October 3, 1955, which writ of execution commanded defendants "to forthwith remove from said premises and that plaintiff have restitution of the same," defendants-appellants nevertheless entered the land to gather palay which was then pending harvest. We gather further from the record that the rice found on the disputed land at the time of the service of the order of execution had been planted by defendants-appellants, who appear to have been in possession of the land from 1951. While the court order of October 3, 1955 ordered the defendant-appellant to move out from the premises, it did not prohibit them from gathering the crop then existing thereon. Under the law a person who is in possession and who is being ordered to leave a parcel of land while products thereon are pending harvest, has the right to a part of the net harvest, as expressly provided by Article 545 of the Civil Code.

ART. 545. If at the time the good faith ceases, there should be any natural or industrial fruits, the possessor shall have a right to a part of the expenses of cultivation, and to a part of the net harvest, both in proportion to the time of the possession. xxx xxx xxx

As the order of execution did not expressly prohibit the defendants-appellants from gathering the pending fruits, which fruits were the result of their possession and cultivation of the land, it cannot be said that the defendants-appellants committed an act which is clear violation of the courts' order. Besides, the defendants-appellants had presented, after receipt of the order of execution, a motion to set aside the said order of execution, and this motion to stay execution was granted. Defendants furthermore presented a bond in accordance with the order of the court and had it approved by the Court of First Instance. It was perhaps in expectation of this resolution of the court setting aside the order of execution that defendants-appellants may have felt justified in entering the land and harvesting the fruits existing thereon. Again the order of the court setting aside its order to stay execution was issued in the belief that the defendants-appellants had not presented before the Court of First Instance of Nueva Ecija and which said court actually approved). Under the circumstances above stated, we are not ready to conclude that the defendantsappellants can be held to have committed a clear defiance of the order of the court. Their act in harvesting the pending fruits was not only justified by law but was not expressly prohibited by the court's order, and was even ratified when the court ordered the suspension of the execution. There was, therefore, no open, clear and contumacious refusal to obey a definite order of the court such as would constitute contempt. Furthermore, a person who has been ordered to leave certain premises is ordinarily not prohibited from taking with him his own effects and possession, unless there is an express prohibition to this effect. No such, prohibition was contained in the order for the defendants to leave the land. There may have been a technical violation of an order not to enter the premises, but not of one prohibiting them from removing anything therefrom. Such technical violation of the order cannot be considered as one amounting to a defiance of the court's authority, punishable as contempt. For the foregoing considerations, the order appealed from should be, as it is hereby, set aside, and the defendants-appellants acquitted of the charge against them. Without costs.

G.R. No. L-36789 July 25, 1983

FELIPA CORDERO (Deceased) MAURO OCAMPO, CASIMIRO OCAMPO and ELISEA OCAMPO, petitioners, vs. VICTORIA P. CABRAL, ALEJANDRO BERBOSO, DALMACIO MONTAOS and HONORABLE COURT OF APPEALS, respondents.

ABAD SANTOS, J.: Petition to review a decision of the defunct Court of Appeals. In Civil Case No. 2323 of the defunct Court of First Instance of Bulacan, Felipa Cordero and her children Mauro, Casimiro and Elisea all surnamed Ocampo sued Victoria Cabral, Alejandro Berboso and Dalmacio Montaos in aComplaint which reads as follows: 1. That the plaintiffs are all of legal age, all residing and with postal address at Meycauayan, Bulacan; Felipa Cordero is a widow while Elisea Ocampo is single; and the defendants are all of legal age, Victoria P. Cabral is married but she is living apart and separate from her husband so the latter is not included herein as party defendant, and all of them are residing and with postal address at Meycauayan, Bulacan, where they may be served with summons; 2. That Mr. Gregorio Z. Ocampo of Meycauayan, Bulacan, husband of the plaintiff Felipa Cordero and father of the other plaintiffs surnamed Ocampo, died on May 17, 1958, and that said deceased left several properties, which were inherited by the plaintiffs, one of which is a parcel of land described as follows: A parcel of land (Lot No. 5, plan Psu-43302), with the improvements thereon, situated in the barrio of Saluysoy, Municipality of Meycauayan. Bounded on the N. by Sapa and properties of Pedro Dazo and Catalino Exaltacion; on the NE. by property of Trinidad Rodriguez & Mateo Mistica; on the SE. by properties of Vicente Mistica, Antonio Rodriguez, Hermogenes Blanco, Lucio Sulbera and Pablo Francia; on the SW. by properties of Concepcion Rodriguez and Alejandro de la Cruz; and on NW. by a Sapa ... ; containing an area of Seventy-eight thousand one hundred and eighty-one square meters (78,181), more or less. With TRANSFER CERTIFICATE OF TITLE NO. 14513 in the name of Gregorio Z. Ocampo and has Tax Declaration No. 2819 and is assessed at P4,290.00.

which parcel of land was originally registered in accordance with the Land Registration Act on December 14, 1933, and was registered and/or transferred in the name of Mr. Gregorio Z. Ocampo on July 31, 1934; 3. That after the death of the said Mr. Gregorio Z. Ocampo the plaintiffs herein took possession of the properties left by him, among others is the afore-described parcel of land which is a riceland, but they found out that the southern portion of the same with an area 4,303 square meters, more or less, upon verification, was possessed by the defendants herein, Victoria P. Cabral, Alejandro Berboso and Dalmacio Montaos and that the defendant Victoria P. Cabral claimed to be the owner of said portion while her co-defendants co-possessed the same as her tenants; 4. That the plaintiffs demanded of the defendants to surrender to the former possession of the afore-mentioned portion of land and/or vacate it but they refused and failed to do so, and the defendant Victoria P. Cabral continued claiming to be the owner of the same while her co-defendants continued recognizing her as the owner thereof instead of the plaintiffs; that the plaintiffs had the afore-described parcel of land (with T.C.T. No. 14513) relocated in the presence of the defendants' representatives and it was found and/or determined that the afore-said portion of land with the area of 4,303 square meters, more or less, was a part of the plaintiffs' land with T.C.T. No. 14513; that even after the said relocation the defendant Victoria P. Cabral persisted and still persist in her claim of ownership over the said portion and her co-defendants persisted and still persist in recognizing her as the owner thereof instead of the plaintiffs; that the defendants continue in possession of the same; and that the defendants still refuse and fail to surrender and/or vacate said portion of land inspite of demands made on them by the plaintiffs; 5. That because of the defendants' occupancy of the aforementioned plaintiffs' portion of land with the area of 4,303 square meters, more or less, to the exclusion of the latter, the said plaintiffs failed to realize a yearly harvest of at least ten (10) cavanes of palay at the rate of P10.00 per cavan, from the harvest-time of 1958 up to the present; 6. That because of the defendants' refusal to recognize plaintiffs' ownership over the afore-mentioned portion of land and also because of their refusal and failure to surrender and/or vacate the same the plaintiffs were forced to employ the services of the undersigned counsel to institute this action at an agreed fees of P500.00. WHEREFORE, premises considered, the plaintiffs herein respectfully pray of this Hon. Court to render judgment in favor of the plaintiffs and against the defendants thus ordering them:

a) To recognize the ownership of the plaintiffs over the aforementioned portion of land with an area of 4,303 square meters, more or less, and to surrender it to the plaintiffs or vacate the same; b) To deliver, jointly and severally, to the plaintiffs palay in the amount of ten (10) cavanes or pay their market price at the rate of P10.00 per cavan per harvest-time beginning the year 1958 up to the time of their delivery or payment. c) To pay, jointly and severally, the plaintiffs' lawyer's fees in the amount of P500.00; and d) To pay the costs of this suit. And to grant any remedy and relief just and equitable in the premises." (Record on Appeal, pp. 2-6.) The Answer of the defendants contains the following allegations: I. That defendants have no knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 2 of the complaint; II. That defendants admit being in possession of the portion of land alleged in paragraph 3 of the complaint, as said portion of land belongs to defendant Victoria P. Cabral; III. That defendants deny the allegation in paragraph 4 of the complaint to the effect that the said portion of 4,303 square meters, more or less, is a part of the plaintiffs' land; IV. That defendants have no knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 5 of the complaint; V. That defendants likewise have no knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 6 of the complaint; And by way of SPECIAL DEFENSE, defendants allege: VI. That defendant Victoria P. Cabral and her predecessors in interest before her are the real owners, and have been in actual, adverse, peaceful and continuous possession, of that portion of land claimed by the plaintiffs in their complaint, which portion is more particularly described as Lot 5-B of plan Psd-11496, duly approved by the Director of Lands on December 21, 1935;

VII. That the deceased Gregorio Z. Ocampo and/or his heirs, the herein plaintiffs, have admitted, acknowledged and recognized the defendant Cabral and her predecessors in said portion of land, as the real owners thereof; VIII. That the deceased Gregorio Z. Ocampo and his predecessors in interest, as well as the defendant Cabral and her predecessors in interest, have always recognized as the boundary between their respective properties, a barrio road which has existed since the Spanish regime and has continued to exist up to the present time; and all the residents of the rural areas using said barrio road know for a fact that, with respect to the respective properties of the parties hereto, said road is the boundary between said properties; IX. That the inclusion of that portion claimed by the plaintiffs in their complaint in the original registration of their property was obtained thru error or fraud by the original applicant, but was never possessed by him nor by his successors in interest, as they have always openly recognized the ownership of said portion as belonging to defendant Cabral and her predecessors in interest before her; And by way of COUNTER CLAIM, defendants allege: X. That all the foregoing paragraphs are pleaded herein and made parts hereof; XI. That the defendant Victoria P. Cabral is the real owner of Lot No. 5- B, plan Psd-11496, with an area of 4,303 square meters, more or less, erroneously or fraudulently included in the property described in Transfer Certificate of Title No. 14513 of the Register of Deeds of the Province of Bulacan, registered in the name of the deceased Gregorio Z. Ocampo and now claimed by the herein plaintiffs; XII. That defendant Cabral and her predecessors in interest have been in possession of said portion of land for more than fifty years, their possession being actual, adverse, peaceful and continuous, as owners thereof; XIII. That said deceased Gregorio Z. Ocampo and/or his heirs, and their predecessors in interest have openly admitted, acknowledged and recognized the defendant Victoria P. Cabral and her predecessors in interest as the real owners of said portion of land, Lot 5-B plan Psd-11496, and said Gregorio Z. Ocampo and/or his heirs and their predecessors in interest have never been in possession of said portion of land;

XIV. That the plaintiffs, claiming to be the heirs of the deceased Gregorio Z. Ocampo, are therefore under obligation to execute a deed of transfer of said portion of land in favor of the true owner thereof, the herein defendant Victoria P. Cabral, in accordance with law; XV. That because of the present action filed by the plaintiffs, the defendants have suffered damages in the amount of Pl,000.00; WHEREFORE, defendants pray that judgment be rendered: (a) dismissing the complaint, with costs against the plaintiffs; (b) declaring the defendant Victoria P. Cabral as the owner of Lot 5-B, plan Psd- 11496, which has been erroneously included in the property of the deceased Gregorio Z. Ocampo covered by Transfer Certificate of Title No. 14513, Bulacan, and ordering the herein plaintiffs to execute a deed of transfer of said Lot No. 5-B, plan Psd-11 496 in favor of the defendant Victoria P. Cabral; and (c) ordering the plaintiffs to pay to the defendants the sum of P l,000.00. Defendants further pray for such other reliefs and remedies which may be proper and just under the premises. (R.A., pp. 8-13.) The plaintiffs filed a Reply and Answer to Counterclaim as follows: 1. That the plaintiffs deny the allegation in paragraph II of the Answer that the portion of land now under litigation belongs to the defendant Victoria P. Cabral, and likewise deny the allegations in paragraphs VI and XI of the same that the defendant Victoria P. Cabral and her predecessors in interest are the real owners of this portion (under litigation) with an area of 4,303 square meters, Lot 5-B of plan Psd-11496 with Transfer Certificate of Title No. 14513 in the name of Mr. Gregorio Z. Ocampo, because the truth is that the said Mr. Ocampo and his successors in interest, the plaintiffs herein, are the real owners thereof; and that said portion is a part and is included in the plaintiffs' big parcel of land known as Lot 5, Psu43302, and covered by the afore-mentioned Certificate; That the defendant Victoria P. Cabral and her predecessors in interest were never the owners of the said portion of land and in fact none of them, much less Victoria P. Cabral, has been in possession or in possession of any title or any document. either public or private, showing his or her ownership, and not even a Tax Declaration for taxation purposes; the truth is that when the late Mr. Antonio Rodriguez, original owner of the land with plan Psu-100536, adjacent to that of the plaintiffs, sold said land to his successor Segunda Prodon he did not include in the said sale this portion,

under litigation, Lot 5-B, of plan Psd-11496 with an area of 4,303 square meters, more or less, knowing that it did not belong to him; and because of Segunda Prodon has not acquired this portion of land with an area of 4,303 square meters, more or less, it is clear, therefore, that she could not have transmitted it to her successors including the herein defendant, Victoria P. Cabral; 2. That the plaintiffs deny the defendants' allegations in paragraphs VI and XII of their Answer that the defendant Victoria P. Cabral and her predecessors in interest have been in actual, adverse, peaceful and continuous possession of this portion of land for a period of more than 50 years because the truth is that, if they were ever in possession of the same, their possession was 'not adverse' and 'not continuous'. When Mr. Gregorio Z. Ocampo bought the parcel of land known as Lot 5, Psu-43302 with an area of 78,181 square meters, more or less, in 1934, (wherein this portion under litigation is included) the said Mr. Ocampo took possession of this whole land. In the year 1935 the adjoining owner of the said property, the late Mr. Antonio Rodriguez and predecessor of the defendant Victoria P. Cabral, requested Mr. Ocampo to sell to him a portion of said land with an area of 4,303 square meters, more or less, to which Mr. Ocampo agreed. As there was already a meeting of the mind Mr. Rodriguez requested Mr. Ocampo that he be allowed to possess the said portion as they were going to make the formal deed of sale, to which proposition Mr. Ocampo likewise agreed. This proposed sale never materialized so if Mr. Rodriguez ever possessed the said portion of land, now under litigation, he did not possess it as owner but only as a 'prospective owner'. His possession cannot, therefore, be termed 'adverse'. Such possession cannot also be termed 'continuous' for 50 years because Mr. Ocampo was in possession of the same in 1934 before Mr. Rodriguez came in possession of the same, first, with the consent and later by toleration of Mr. Ocampo. Granting but without admitting, that the defendant Cabral and her predecessors in interest have been in possession of this portion of land with an area of 4,303 square meters, more or less for more than 50 years, does she mean to imply now that she acquires ownership over the same by virtue of 'prescription' She must remember that this property is titled under Act 496 and, therefore, 'imprescriptible', 3. That the plaintiffs deny the defendants' allegations in paragraphs VI and IX of their Answer that the plaintiffs have admitted, acknowledged and recognized the defendant Cabral and her predecessors in said land as the real owners thereof, because the truth is that the plaintiffs are the real owners of the same, and that they have never admitted, acknowledged nor recognized the defendant Cabral nor any of her predecessors in interest as the owners of said portion of land;

4. That the plaintiffs admit he allegation in paragraph VIII of the Answer that the defendant Victoria P. Cabral owns an adjoining property which is described in her plan Psu-100536 but they deny there is a 'barrio road' between her land and that of the plaintiffs which serves as the boundary and that there has never been any road much less a barrio road between their properties. That, if the defendants are referring to Lot 5-B, plan Psd- 11496, and the rest of the land of the plaintiffs Lot No. 5, Psu-43302, which said Lot 5-B is a part, the plaintiffs deny the existence of such road much less a barrio road, and that there has never been a road therein. With the permission of the Hon. Court the existence or non-existence of a road can be verified by an ocular inspection and if need be with the aid of a licensed surveyor; 5. That the plaintiffs deny the allegations in paragraphs IX and XIII of the Answer that Mr. Gregorio Z. Ocampo and his successors in interest have never been in possession of this portion of land now under litigation. Mr. Gregorio Z. Ocampo took possession of said property after he bought it in 1934 and if the predecessors in interest of the defendant Cabral happened to be in its possession it was, first, with the consent of Mr. Ocampo and later by his toleration as we have already explained in paragraph 2 of this Reply; 6. That the plaintiffs deny the allegation in paragraph IX of the Answer that the inclusion of this portion of property under litigation was 'obtained thru error or fraud' by the original applicant, and they likewise deny the allegation in paragraph XI of the Answer that this portion with an area of 4,303 square meters, more or less, was erroneously and fraudulently included in the property described in Transfer Certificate of Title No. 14513 of the Register of Deeds of the Province of Bulacan, because in truth and in fact there was no such error or fraud. The title of this property was granted and obtained in a regular proceeding. If there was any error or fraud the predecessor in interest of the defendant Victoria P. Cabral would have filed a petition for review or would have sued for damages. Or the said defendant or any of her predecessors in interest would have resorted to some legal remedy. The fact is that the defendant Victoria P. Cabral or any of her predecessors in interest did not sincerely and honestly believe that they were the owners of this portion of property. In fact they did not have and do not have any kind of title or any kind of document, either public or private, over this property and they did not even have this property declared in their names for taxation purposes. Granting, but without admitting, that the title to this property was obtained either by error or fraud yet the defendant Victoria P. Cabral can have no

valid claim against the plaintiffs because she has never been the owner of said property and also because the plaintiffs' predecessor, Mr. Gregorio Z. Ocampo, acquired this property as 'an innocent purchaser, in good faith and for value. 7. That the plaintiffs deny the allegation in paragraph XIV of the Answer that the plaintiffs are under obligation to execute a deed of transfer of the portion of land in favor of the defendant Victoria P. Cabral because, first, the title to this land was obtained in a regular proceeding where there was neither error nor fraud; second, said defendant or her predecessors in interest are not the owners of said land much less said defendant Cabral who has nothing at all in her possession to show any kind of right over said portion of land, and third, Mr. Gregorio Z. Ocampo, the predecessor in interest of the plaintiffs, acquire this property as an 'innocent purchaser, in good faith and for value', and 8. That the plaintiffs have no knowledge or information sufficient to form a belief as to the truth of the allegation in paragraph XV of the defendants, Answer (Counterclaim). WHEREFORE, it is respectfully prayed of this Hon. Court to grant the plaintiffs Petition in their Complaint." (R.A., pp. 14-21.) It can be seen that the thrust of the Complaint is that a piece of land covered by T.C.T. No. 14513 in the name of Gregorio Z. Ocampo was illegally possessed by the defendants. Upon the other hand, the thrust of the Answer is that "the defendant Victoria P. Cabral is the real owner of Lot No. 5-B, plan Psd-11496, with an area of 4,303 square meters, more or less, erroneously or fraudulently included in the property described in Transfer Certificate of Title No. 14513 of the Register of Deeds of the Province of Bulacan, registered in the name of the deceased Gregorio Z. Ocampo and now claimed by the herein plaintiffs." (Answer, par. XI.) The decision of the trial court is not clear as to whether or not the disputed lot is included in T.C.T. No. 14513. However, the decision contains the following statement: "if it is included in their title, such title is void insofar as the portion of the Pandayan road is concerned." (R.A., p. 30.) The trial court gave the following judgment: WHEREFORE, plaintiffs' complaint is hereby DISMISSED, without costs. For lack of proof that plaintiffs were in bad faith in the filing of the present action, defendants' counter-claim is likewise dismissed. (R.A., p. 30.) The plaintiffs appealed to the Court of Appeals and made the following assignment of errors:

I. THE LOWER COURT ERRED IN HOLDING THAT THE PANDAYAN ROAD IS LOCATED INSIDE THE PROPERTY DESCRIBED IN T.C.T. NO. 14513 AND INCONSEQUENTLY HOLDING THAT THE SAME CONSTITUTES THE BOUNDARY LINE BETWEEN THE PROPERTIES OF PLAINTIFFS-APPELLANTS AND DEFENDANT-APPELLEE VICTORIA CABRAL. II. THE LOWER COURT ERRED IN HOLDING THAT T.C.T. NO. 14513 IS 'VOID INSOFAR AS THE PORTION FROM THE PANDAYAN ROAD IS CONCERNED', AND IN NOT HOLDING THAT SAID T.C.T. IS INCONTROVERTIBLE. III. THE LOWER COURT ERRED IN GIVING IMPORTANCE TO DEFENDANTS-APPELLEES' ALLEGED 'OPEN, CONTINUOUS AND ADVERSE POSSESSION' AND IN DISMISSING PLAINTIFFSAPPELLANTS' COMPLAINT." (Brief, pp. a-b). The Court of Appeals found as a fact: "That disputed portion Lot 5-a is admittedly part of the land originally registered in the name of plaintiff's predecessor in interest, there should be no question that that title had become imprescriptible and original registrant as well as his successors had the right to vindicate their ownership against any body else. " (Rollo, p. 54.) But the Court of Appeals went further. Seizing a statement in the Reply and Answer to Counterclaim filed by the plaintiffs, it held that Gregorio Z. Ocampo had by an oral contract sold the disputed land to Antonio Rodriguez the defendant's predecessor in interest. The Court of Appeals further said "that agreement oral albeit, became binding upon Ocampo, it was even executed in part by the actual delivery of possession, it amounted to a supervening fact, posterior to the title, and the fact that Ocampo's title was not afterwards cancelled can not at all mean that the title could be used as a weapon to annul that posterior agreement by Ocampo voluntarily entered into and by reason of which he had delivered possession unto defendant's predecessor; of course, no deed of sale was formalized for a reason not clear in the evidence; but whether or not formalized, it was a binding personal agreement upon Ocampo . " (Rollo, pp. 56-57.) The statement upon which the Court of Appeals built its decision is as follows: When Mr. Gregorio Z. Ocampo bought the parcel of land known as Lot 5, Psu-43302 with an area of 78,181 square meters, more or less, in 1934, (wherein this portion under litigation is included), the said Mr. Ocampo took possession of this whole land. In the year 1935 the adjoining owner of the said property, the late Mr. Antonio Rodriguez and predecessor of the defendant Victoria P. Cabral, requested Mr. Ocampo to sell to him a portion of said land with an area of 4,303 square meters, more or less, to which Mr. Ocampo agreed. As there was already a meeting of the mind Mr. Rodriguez requested Mr. Ocampo that he be allowed to possess the

said portion as they were going to make the formal deed of sale, to which proposition Mr. Ocampo likewise agreed. This proposed sale never materialized so if Mr. Rodriguez ever possessed the said portion of land, now under litigation, he did not possess it as owner but only as a 'prospective owner'. His possession cannot, therefore, be termed 'adverse'. Such possession cannot also be termed 'continuous' for 50 years because Mr. Ocampo was in possession of the same in 1934 before Mr. Rodriguez came to possession of the same, first, with the consent and later by toleration of Mr. Ocampo. (R.A. pp. 15-16.) It passes understanding why the plaintiffs mentioned a non-consummated transaction between Gregorio Z. Ocampo and Antonio Rodriguez when the defendants made no claim of such transaction nor was the name of Antonio Rodriguez even mentioned in their Answer. Even as the Court of Appeals found that the disputed piece of land is registered in the name of the plaintiffs but because of the supposed oral sale of the same to the predecessors of the defendants, it affirmed the judgment of the trial court dismissing the complaint for the recovery of the land. The instant petition assails the Court of Appeals for rendering a decision based on a ground which was never raised nor discuss whether in the trial court or before it by any of the parties. The ground to be sure, is the supposed oral contract of sale made to the predecessors of the defendants covering the disputed piece of land. The petition is highly impressed with merit. It is a well-settled rule that, except questions on jurisdiction, no question will be entertained on appeal unless it has been raised in the court below and it is within the issues made by the parties in their pleadings. (See cases cited in II Moran, Rules of Court, pp. 504-505 [1970].) In this case, the Court of Appeals erred when it rendered a decision based on a ground which was not litigated in the trial court and which could not have been raised on appeal. That the supposed oral contract of sale was never an issue is demonstrated by the following. 1. The pleadings of the parties have been purposely reproduced in full above. It can be seen therefrom that no issue in respect of the supposed oral sale actually emerged. 2. The decision of the trial court is absolutely silent on the supposed oral contract of sale.

3. The plaintiffs who appealed the decision of the trial court to the Court of Appeals did not make an assignment of error in respect of the supposed oral sale. The Court of Appeals found as a fact that the disputed piece of land is registered in the name of the plaintiffs' predecessor. The defendants claimed in their answer that they and their predecessors are the owners of the land in dispute but that the plaintiffs' predecessor was able to register the same in his name through error or fraud. However, the trial court made no categorical finding on this claim of the defendants otherwise it would have granted the affirmative relief which they asked, namely: "(b) declaring the defendant Victoria P. Cabral as the owner of Lot 5-B, plan Psd-11496, which has been erroneously included in the property of the deceased Gregorio Z. Ocampo covered by Transfer Certificate of Title No. 14513, Bulacan, and ordering the herein plaintiffs to execute a deed of transfer of said Lot No. 5-B, plan Psd- 11496 in favor of the defendant Victoria P. Cabral." The Court of Appeals did not deal with this issue because there was no appeal made by the defendants. The following conclusions have to be made. 1. The disputed land is included in T.C.T. No. 14513 issued to Gregorio Z. Ocampo, the predecessor of the plaintiffs. 2. The original registration which includes the disputed land was not vitiated by error or fraud. 3. The Court of Appeals erred when it held that Gregorio Z. Ocampo had orally sold the disputed land to the predecessors of the defendants. 4. The defendants, by their own admission, are in possession of the disputed land. There is no evidence that they were possessors in bad faith. However, their good faith ceased when they were served with summons to answer the complaint. (Art. 528, Civil Code; Tacas vs. Tobon, 53 Phil. 356 [1929].) As possessors in bad faith from the service of the summons they "shall reimburse the fruits received and those which the legitimate possessor could have received, ... (Art. 549, Civil Code.) WHEREFORE, the judgment of the Court of Appeals is hereby reversed and another one rendered in that the defendants shall vacate and surrender the land in question to the plaintiffs; and the defendants shall also account for the fruits thereof pursuant to Article 549 of the Civil Code from the service of the summons. Costs against the defendants. SO ORDERED.

G.R. No. L-28721

October 5, 1928 NATALIO ENRIQUEZ, plaintiffs-appellees, GUZMAN, defendant-appellant.

MARTIN MENDOZA and vs. MANUEL DE MAX B. SOLIS, intervenor-appellant. Juan S. Godofredo Reyes for appellees.

Rustia

for

appellants.

MALCOLM, J.: This case calls for the application of articles 361, 435, and 454 of the Civil Code to the proven facts. On November 6, 1916, Leandra Solis and her husband Bernardo Solis brought an action in the Court of First Instance of Tayabas against Martin Mendoza for the recovery of a certain piece of land. Judgment was rendered in that case absolving Mendoza from the complaint, and this judgment was subsequently affirmed by the Supreme Court. 1 When the case was remanded to the court of origin, the trial judge issued an order requiring the provincial sheriff immediately to dissolve the preliminary writ of injunction and to put Mendoza in the possession of the land. By virtue of this order, Mendoza was in fact put in possession of the property. In the cadastral proceedings of the municipality of Sariaya, Tayabas, the piece of land above-mentioned was identified as lot No. 687. In the decision rendered in the cadastral case, this lot was adjudicated in favor of Martin Mendoza and Natalio Enriquez in equal parts pro indiviso subject to the right of retention on the part of Manuel de Guzman until he shall have been indemnified for the improvements existing on the land. By virtue of this judgment, De Guzman presented a motion requesting the issuance of a writ of possession for lot No. 687 in his favor which was granted on June 25, 1924. From the time Leandra Solis and Bernardo Solis, as well as Manuel de Guzman who was working on the land, were ejected therefrom, Martin Mendoza possessed it until June 25, 1924, when de Guzman obtained the writ of possession above- mentioned. Since then De Guzman has had dominion over the land. Being unable to come to an agreement as to the amount which should be allowed for the improvements made on the land, Martin Mendoza and Natalio Enriquez began an action requesting the court to (a) fix the value of the necessary and useful expenses incurred by Manuel de Guzman in introducing the improvements; (b) require the defendant to render an accounting of the fruits received by him and order that the value of the fruits be applied to the payment of the necessary and useful expenses; and (c)

decree the restitution of the possession to the plaintiffs. To the complaint, the defendant filed an answer in the form of a general denial with special defenses and appended a counter-claim and crosscomplaint, in which a total of P6,000 was asked. During the pendency of the case, Bernardo Solis, or Max. B. Solis, one of the persons who was ejected from the land, asked leave to intervene, alleging, among other things, that De Guzman, in consideration of the sum of P5,000, had transferred all his rights in the improvements and in the lot to him with the exception of two hundred coconut trees. This petition was granted by the trial court. When the case was called for trial, the parties entered into the follwing stipulation: 1. That the plaintiffs are the owners and proprietors of the land described in the second paragraph of the complaint. 2. That a decree of registration has been issued on said land in the terms set forth in paragraph 3 of the complaint. 3. That the defendant Manuel de Guzman is the one who has been in possession and enjoyment of the land from June 25, 1924, up to the present time by virtue of a writ of possession obtained by him from the Court of Land Registration. 4. That the defendant has made improvements on said land be planting coconut trees thereon. 5. That the plaintiff Martin Mendoza is the one who has been in possession and enjoyment of said property and its improvements since December 16, 1916, by virtue of a writ of possession in civil case No. 356 until said pssession was transferred to the defendant Manuel de Guzman. 6. That from March 20, 1920, the plaintiff Natalio Enriquez has been in possession and enjoyment of a portion of the land, the subject matter of the complaint herein, by virtue of a deed of sale executed in his favor by Attorney Agustin Alvarez, who, in turn, acquired it from the other plaintiff Martin Mendoza, until June 25, 1924. The parties desire to submit, as they do submit, under this stipulation of facts the following questions: (a) The amount of the indemnity to be paid to the defendant for the improvements made by him on said lot and the basis upon which said amount shall be fixed. (b) Whether or not the defendant is obliged to render an account of the fruits received by him from June 25, 1924, until the improvements are delivered after same have been paid for.
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(c) Whether the value of said fruits and products received by the defendant shall be applied to the indemnity to which he is entitled, or whether said defendant is obliged to deliver to the plaintiffs the remainder in case of excess. (d) Whether or not the defendant has the right to be paid by the plaintiffs in whole or in part for the value of the fruits received by Martin Mendoza and Natalio Enriquez from the respective dates that they were in possession and enjoyment of the land until June 25, 1924. The parties at the same time that they submit to the court for decision the questions presented in the above stipulation reserve to themselves, whatever said decision may be, the right to present later their evidence in support of their respective views with respect to the amount of the indemnity. After the preliminary questions have been decided, the parties request that commissioners be appointed to receive said evidence with respect to the amount of the indemnity in accordance with the views of both parties. The trial court resolved the questions presented by holding (1) that in accordance with the provisions of articles 435 and 454 in relation with article 361 of the Civil Code, the value of the "indemnization" to be paid to the defendant should be fixed according to the necessary and useful expenses incurred by him in introducing "las plantaciones en cuestion"; (2) that the plaintiffs as the owner of the property have the right to make their own "las plantaciones hechas por el demandado" upon payment in the form indicated in No. 1, the defendant having the right to retain the land until the expenditures have been refunded; (3) that the defendant is obliged to render a detail and just account of the fruits and other profits received by him from the property for their due application; and (4) that the value of the fruits received by the defendant should first be applied to the payment of the "indemnizacion," and in that it exceeds the value of the "indemnizacion," the excess shall be returned to the plaintiffs. With respect to the last question as to whether or not the plaintiffs are obliged to return to the defendant the value of the fruits received by them before the defendant took possession of the land, the trial court abstained from making any pronouncement for the reason that the circumstances under which the plaintiffs acquired possession and the defendant again acquired it were not before him, the parties needing to submit their evidence with respect to this point. At the trial which followed and at the instance of the parties, two commissioners were appinted with instructions to inspect the land and to count the number of coconut trees planted thereon, determining the number of fruit-bearing trees and those that are not fruit-bearing as well as the condition of the same. After trial, Judge of First Instance Gloria rendered judgment declaring (a) that the defendant Manuel de Guzman and the intervenor Bernardo Solis have the right to collect from the plaintiffs Martin Mendoza and Natalio Enriquez the sum of P2,046 as compensation for the necessary and useful expenditures in the proportion of 20 per cent for Manuel de Guzman and 80 per cent for Bernardo Solis; and (b) that Manuel de Guzman and Bernardo Solis are obliged to pay

to the plaintiffs the sum of P666.93 per annum from June 25, 1924, one-fifth of this amount to be paid by Manuel de Guzman and the other four-fifths by Bernardo Solis. As on the date when this judgment was rendered, that is on September 23, 1927, the amount that the plaintiffs were required to pay to the defendant and intervenor exceeded the amount that the latter were to pay the former, the defendant and intervenor were ordered to deliver the land and its improvement as soon as the plaintiffs have paid the difference, without special pronouncement as to costs. The appeal of the defendant and intervenor is based on fourteen assigned errors relating to both questions of fact and of law. The question of fact mainly concerns the amount to be paid as "indemnizacion" in the form of necessary and useful expenditures incurred by the defendant. The question of law mainly concerns the interpretation of articles 361, 453, and 454 of the Civil Code. Counsel for the appellants has presented a learned brief divided into three chapters. Counsel for the appellees has countered with an equally helpful brief in which the fourteen assigned errors are reduced for purposes of arguments to four fundamental questions. It would not be profitable and it is not necessary to follow opposing counsel into all of their refinements of fact and law. As to the facts, the findings of the trial judge should be given effect. An examination of the evidence shows that these findings are fully substantiated. Our only doubt has been as to the just value for each coconut tree now found on the land. However, everything considered, we have at last determined that we would not be justified in changing the value per tree of P2 as fixed in the trial court. With respect to the fruits received by the defendant while the land was in his possession, the finding in the trial court is correct. With the facts as above indicated, little time need be taken to discuss the points of law. Article 361 of the Civil Code in the original Spanish text uses the word "indemnizacion." However one may speculate as to the true meaning of the term "indemnizacion" whether correctly translated as "compensation" or "indemnity," the amount of the "indemnizacion" is the amount of the expenditures mentioned in articles 453 and 454 of the Civil Code, which in the present case is the amount of the necessary and useful expenditures incurred by the defendant. Necessary expenses have been variously described by the Spanish commentators as those made for the preservation of the thing (4 Manresa's Comentarios al Codigo Civil, p. 258); as those without which the thing would deteriorate or be lost (Scaevola's Comentarios al Codigo Civil, p.408); as those that augment the income of the things upon which they are expanded (4 Manresa's Comentarios al Codigo Civil, p. 261; 8 Scaevola's Comentarios al Codigo Civil, p. 416). Among the necessary expenditures are those incurred for cultivation, production, upkeep, etc. (4 Manresa'sComentarios al Codigo Civil, p. 257). Here the plaintiffs have chosen to take the improvements introduced on the land and are disposed to pay the amount of the necessary and useful expenses incurred by the defendant. Inasmuch as the retentionist, who is not exactly a posessor in good faith with in the meaning of the law, seeks to be reimbursed for the necessary and useful expenditures, it is only just that he should account to the owners of the estate for any rents, fruits, or crops he has gathered from it.

In brief, therefore, and with special reference to the decision appealed from, the errors assigned on appeal, and the argument of counsel as addressed to the decision in the lower court and the assignment of errors, we may say that we are content to make the findings of fact and law of Judge Gloria in the lower court the findings of fact and law in the appellate court. Based on the foregoing considerations, the judgment appealed from will be affirmed, with the costs of this instance against the appellants.

G.R. No. L-16736 December 22, 1921 EVARISTA ROBLES and her husband ENRIQUE MARTIN, plaintiffs-appellees, vs. LIZARRAGA HERMANOS, defendants-appellant. -------------------------------------G.R. No. L-16661 December 22, 1921 SOCIEDAD LIZARRAGA HERMANOS, plaintiff-appellee, vs. EVARISTA ROBLES DE MARTIN and ENRIQUE MARTIN, defendants-appellants. -------------------------------------G.R. No. L-16662 December 22, 1921 EVARISTA ROBLES and her husband ENRIQUE MARTIN, plaintiff-appellants, vs. LIZARRAGA HERMANOS and THE REGISTER OF DEEDS OF ILOILO, defendantsappellees. Fisher & DeWitt and Francisco Lavides for appellants. (Case No. 16736.) A. P. Seva for appellees. A. P. Seva for appellants. (Case No. 16661.) Fisher and DeWitt and Francisco Lavides for appellee. A. P. Seva for appellants. (Case No. 16662.) Fisher and DeWitt and Francisco Lavides for appellees.

ROMUALDEZ, J.:

Owing to the character of the facts in the three above entitled cases and the intimate connection existing between them, they were, by agreement of the parties, tried together in the court below, and on appeal this court was requested to try them at the same time, which was done, and these three cases are jointly adjudged in the present decision. The following facts are undisputed: Anastasia de la Rama died on the 17th of October, 1916, leaving six children, to wit, Magdalena, Jose, Evarista, Zacarias, Felix, and Purificacion, surnamed Robles, and some properties, among which is house No. 4 on Iznart Street in the city of Iloilo, concerning which a controversy arose which developed into the three cases now under consideration. The children and heirs of Anastasia de la Rama entered into partnership with Lizarraga Hermanos in liquidation and settlement of their accounts, by virtue of which the competent court awarded to said partnership the properties left by the deceased, including the aforesaid house No. 4 on Iznart Street. Evarista Robles, one of the aforesaid heirs, since before the death of her mother Anastasia de la Rama, has been with her husband occupying the aforesaid house No. 4 on Iznart Street, at the beginning, by permission of her mother, later on by the consent of her coheirs, and lastly by agreement with the partnership, Lizarraga Hermanos, to whom it had been awarded, having made some improvements on the house, the value of which is fixed at four thousand five hundred pesos (P4,500), and paying to said partnership forty pesos (P40) monthly as rent of the upper story. On March 18, 1918, Lizarraga Hermanos notified Evarista Robles (Exhibit J) that beginning April next the rent of the upper story of the house would be raised to sixty pesos (P60) a month, and that, if she did not agree to the new rate of rent, she might vacate the house. Evarista Robles refused to pay such a new rate of rent and to vacate the house, and Lizarraga Hermanos brought suit against her for ejectment. Evarista Robles sued Lizarraga Hermanos afterwards to recover the value of the improvements, and demanded, in another action, that said value be noted on the certificate of title as an encumbrance.
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Evarista Robles contends that the understanding with Lizarraga Hermanos by virtue of which she continued to occupy the house and made the improvements, was a contract whereby it was agreed to sell her the said building on Iznart Street, the deed of sale to be executed as soon as the title deeds of the property were transferred to the name of said partnership; that by virtue of this contract she remained in the occupation of the building and made the improvements; that, as one of the stipulations in the contract of sale of the estate, Evarista Robles assumed the liability of an encumbrance of fourteen thousand pesos (P14,000)on the estate and another one in favor of the Agricultural Bank and its successor, the National Bank, paying the interest thereon as well as the land tax and the premiums of the five insurance, all of which payments were made

through the same firm of Lizarraga Hermanos who, as a result of the liquidation of accounts, held funds in their possession belonging to Exhibit A, B, C, F, H, and I. It should here be noted that Evarista Robles does not seek the execution of the proper instrument of evidence this contract of sale, nor the performance thereof. She only claims the cost of the improvements made at her expense and that this be recorded in the corresponding certificate of title. While the firm of Lizarraga Hermanos does not question that fact that said improvements have been made and that their value amounts to four thousand five hundred pesos (P4,500), it denies, however, having entered into any agreement with Evarista Robles for the sale of the building in question. In deciding the case No. 16736 of this court, the court a quo found such a verbal contract of sale to have been proven not only by Exhibit A, which leads to such a conclusion, but by the oral evidence, which, in its opinion, had a preponderance in favor thereof, and by the corroborative evidence consisting in the fact of Lizarraga Hermanos having executed the deed of sale of the warehouse mentioned in the said Exhibit A. This firm questions the right of Evarista Robles to the improvements under consideration. The fundamental questions upon which hinges the controversy in these three cases are: First, whether Evarista Robles is the owner of the aforesaid improvements and has the right to demand payment of their value (case No. 16736); second, whether she has any right to retain the building until the said value is paid to her (case No. 16661); and third, whether a note for the four thousand five hundred pesos (P4,500), the value of the above-mentioned improvements, as an encumbrance on this estate (case No. 16662), should be made on the title deeds thereof. Regarding the controversy in the case No. 16736, attention is called to article 453 of the Civil Code which reads: Necessary expenditures shall be refunded to every possessor, but only the possessor in good faith may retain the thing until they are repaid to him. Useful expenditures shall be paid the possessor in good faith with the same right to retention, the person who has defeated him in his possession having the opinion of refunding the amount of such expenditures or paying him the increase in value which the thing has acquired by reason thereof. This provision of law is in force and applies to personal as well as real property. The expenditures incurred in these improvements were not necessary inasmuch as without them the house would have continued to stand just as before, but were useful, inasmuch as with them the house better serves the purpose for which it was intended, being used as a residence, and the improvements consisting of the addition of a dining room, kitchen, closet, and bathroom in the lower and upper stories of the house, and a stable, suitable as a coach house and dwelling, it is beyond doubt that such improvements are useful to the building. One of the chiefs of the firm of Lizarraga

Hermanos, on the occasion of a luncheon in the house, on noting the improvements, could not refrain from expressing that such improvements added much to the value of the building (folio 25, stenographic notes). Now then, was Evarista Robles a possessor in good faith when she made those improvements? Article 434 provides that "good faith is always presumed and the burden of proving bad faith on the part of the possessor rests upon the person alleging it." Lizarraga Hermanos did not allege, nor prove in the first instance the bad faith characterizing Evarista Robles' possession, who, as shown in the records and heretofore stated, began to occupy the house by permission of the former owner, her mother Anastasia de la Rama, and continued later in the occupation by the consent of her coheirs, and afterwards by considering herself the future owner of the building by virtue of the contract with the present owner, Lizarraga Hermanos. The evidence shows that said improvements were begun about the end of December, 1916, after the agreement with Lizarraga Hermanos for the sale thereof to Evarista Robles. (Folios 23, 24, 25, stenographic notes.) We find that in the court below the presumption of good faith in favor of Evarista Robles' possession at the time she made the improvements on the property was neither disputed nor discussed, but on the contrary, there is positive evidence sufficient to support the conclusion that when she made the improvements on the aforesaid building she was possessing it in good faith. If the improvements are useful and Evarista Robles' possession was in good faith, the conclusion set out in article 453 of the Civil Code, supra, is inevitable; Evarista Robles is the owner of such improvements, and entitled to reimbursement therefor, and to retain the building until the same is made. One of the proofs establishing the fact that Evarista Robles' possession was in good faith is found in Exhibit A, which textually is as follows: Value of house For Value }Evarista of P16,500.00 Warehouse

Evarista pays them in this way Balance in h/f owning from L. P1,424.35 Hnos Legacy to Evarista 500.00 Legacy to J. Robles 500.00 Legacy to Ambrosio 100.00 Credit Agricultural Bank 14,000.00 Paid by Zacarias 16,524.35 Cash balance carried forward 24.35 Liquidation

16,500.00 Severiano Lizarraga acknowledged having drawn this document and admitted it to be in his own hand-writing (folios 6-8, transcript of stenographic notes taken in case No. 16661 at the trial held December 6, 1919). Taking into consideration the explanation he gives of the contents of this exhibit, there is the inevitable conclusion which is obviously inferred from the phrases "Value of house of warehouse For Evarista P16,500 Evarista pays them in this way," that Evarista Robles was to become the owner of the house (which is the one question) and the warehouse for sixteen thousand five hundred pesos (P16,500), which sum she was to pay by assuming the liability of all the amounts enumerated in the said memorandum all the way through. But the admissibility of this document as evidence is disputed by reference to section 335, case No. 5, of the Code of Civil Procedure, which in the English text, which is clearer on this point, reads: SEC. 335. Agreements invalid unless made in writing. In the following cases an agreement hereafter made shall be unenforceable (Emphasis ours) by action unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or secondary evidence of its contents: No. 5. An agreement for . . . the sale of real property, etc. It should be noted, first of all, that this rule of evidence does not go to the extent of rendering invalid any verbal contract for the sale of real property (Conlu vs. Araneta and Guanko, 15 Phil., 387), but declares inadmissible any evidence of such a contract other than the document itself of the sale or some memorandum signed by the party charged, in so far as the object of the action instituted is to enforce performance of said contract of sale. But we are not dealing with that phase in any of the cases now before us. This document was introduced only to reinforce the proofs relative to the good faith characterizing the possession of Evarista Robles when she made the improvements in question, to the effect that if she made then, it was because she entertained the wellfounded, may certain belief that she was making them on a building that was to become her property by virtue of the verbal contract of sale. In the action wherein Evarista Robles and her husband ask that they be adjudged owners of these improvements and that their value be paid to them, Lizarraga Hermanos filed a general denied and a counterclaim and cross-complaint for nineteen thousand pesos (P19,000) as compensation for damages alleged to have been sustained by them on account of their inability to sell the house and the warehouse, due to the fact that the buyer imposed the condition that the house should be vacated, which the plaintiffs refused to do.

It is a fact that the value of the improvements in question has not as yet been paid by Lizarraga Hermanos. Wherefore, if Evarista Robles and her husband are entitled to retain the building until the value of such improvements is paid them, Lizarraga Hermanos have not yet any right to oust them from the building, nor, therefore, to be indemnified for any damages caused by the refusal of the plaintiffs found on their legitimate rights. In regard to the ejectment sought in the case No. 16661, the suit was brought by Lizarraga Hermanos in the justice of the peace court of Iloilo on May 6, 1918, based on the failure of Evarista Robles and her husband to pay the rent of the upper story of the house in question for the month of April of that year, amounting to sixty pesos (P60), and on the refusal of said spouses to quit the building. These spouses in their answer alleged as special defense that they had never been the tenants of Lizarraga Hermanos until November, 1917, when they became so "under the special circumstances" under which the plaintiff partnership sold the building, whereon they later made, with the latter's consent, improvements amounting to four thousand five hundred pesos (P4,500), setting out the other stipulations and conditions hereinabove stated, which were incorporated into the contract of sale, and prayed, under their counterclaim, that Lizarraga Hermanos be sentenced to pay the sum of four thousand five hundred pesos (P4,500), the value of the improvements referred to, and under their cross-complaint, that said partnership be ordered to pay then thousand pesos (P10,000) as compensation for damages alleged to have been sustained by the aforesaid spouses due to the aforesaid partnership's act, praying lastly, in view of the questions raised, that the case be regarded not as one of unlawful detainer, but for the recovery of title to real property, and that the court of the justice of the peace abstain from taking cognizance thereof for want of jurisdiction. The case having been appealed to the Court of First Instance, these allegations were reproduced. In the Court of First Instance Lizarraga Hermanos demurred to this counterclaim and cross-complaint, and the demurrer was sustained by the court in its decision on the merits of the case, whereby the defendants are sentenced to return to Lizarraga Hermanos the possession of the building, to pay the rents thereof due from April, 1918, until they vacate the house, at the rate of sixty pesos (P60) per month, and the costs. From this judgment Evarista Robles and her husband have appealed, assigning as errors of the court a quo in finding the Lizarraga Hermanos were entitled to bring action for unlawful detainer, and ordering them to return the possession of the building. If Evarista Robles and her husband were mere lessees of this building, the plaintiff's action for unlawful detainer is obvious and must prosper. But, were Evarista Robles and her husband mere lessees? As above stated, we hold that there existed a contract of sale of this building executed by Lizarraga Hermanos in favor of Evarista Robles about November, 1916, the

performance of which is not, however, sought to be enforced, nor would it be enforceable if the evidence offered in the action instituted for the purpose be not the document itself of the sale, or a memorandum thereof, signed by the party bound by the contract and required in the action to fulfill it, and objection be made to said evidence, as was done here. The possession of these spouses was in no way begun by virtue of any lease whatever, since it is not disputed, and is a proven fact, that they came to occupy the building by permission of the mother of Evarista Robles. Upon said mother's death, the continued to occupy the property by the consent of the coheirs. After the assignment of the property of Lizarraga Hermanos was concluded, but before the title deeds were transferred to the name of this partnership, an agreement was made for the sale of the building to Evarista Robles and her husband, the latter agreeing in the meantime to pay to Lizarraga Hermanos a certain sum per month forty pesos (P40) by way of compensation for the occupation of the building until the execution of the deed of sale in favor of the occupants. Considering abstractly the naked fact that these spouses occupied the house by paying a certain sum for its occupation, it would seem that this is indeed a case of lease. But such was not the contract. It was simply the sense of justice of the parties that led them to make the stipulation that, while the conveyance of the building was being carried into effect in due form, the future owners should pay a certain sum for its possession. This peculiar situation continued for all the time in which the said spouses made and completed the improvements in question until Lizarraga Hermanos changed their resolution to sell the building to Evarista Robles and her husband. But then all the improvements in question had already been made, and when these spouses were requested to vacate the building, they answered and gave it to understand, that they would do so as soon as the value of the improvements was paid to them. Up to that time they were not lessees strictly speaking. Did they become so afterwards? Neither; for since that moment they have been as are at present, in possession of the building by virtue of the right that they had, and do have, to retain it until the value of the improvements is paid to them. And it was after these spouses had manifested their intention not to leave the building until they were reimbursed for the improvements made thereon that this action for unlawful detainer was instituted. Before these improvements were made, or before these spouses demanded payment of their value, that is, while the possession was partly based on the stipulation with color of lease, an action for unlawful detainer might have, in a sense, been justifiable, though not entirely maintainable, owing to the fact that such possession was based primarily on the well-founded belief of the occupants that they were to become the owners of the house in their possession, that the monthly payment being a provisional arrangement, an incidental and peremptory stipulation, while the solemn formalities of the conveyance were being complied with. But after the improvements had been made and Lizarraga Hermanos had manifested their resolution to rescind the contract of sale and not to pay for them, then the

possession of the aforesaid spouses lost all color of lease, and turns out to be possession based only upon the latter's right to retain the building. And these were all the attending circumstances of said possession when the action for unlawful detainer was commenced. We are, therefore, of opinion, and so hold, that Lizarraga Hermanos were not, and are not, entitled to maintain any action for unlawful detainer so long as they do not pay the value of the improvements in question. We will now take up the case No. 16662 wherein Evarista Robles and her husband ask that these improvements be noted on the proper certificate of title as an encumbrance. These spouses pray in their complaint for the cancellation of the said certificate of title, which is the transfer certificate No. 526, a substitute of the original No. 32 of the office of the register of deeds of Iloilo. If the object of these spouses is, as it cannot be otherwise, to have such an encumbrance noted, the cancellation is not necessary, and, of course, not justifiable. At any rate, the fraud alleged in this last action to have been committed precisely to secure such a transfer certificate cannot be held proven. But it having been decided that these spouses are entitled to demand payment of the value of the improvements and to retain the building until such value is paid them, it only remains for us to determine whether this right of retention has the character of a real right to be regarded as one of the encumbrances referred to in section 70 and the following sections of the Land Registration Act. It being a burden on the building to the extent of being inseparably attached to the possession thereof, this right of retention must necessarily be a real one. If so, as we regard, and find, it to be, it is but just that such an encumbrance should be noted on the transfer certificate No. 526 issued by the register of deeds of Iloilo in favor of Lizarraga Hermanos, or on any substitute thereof. As a consequence of all the foregoing, we affirm the judgments appealed from in the three cases in so far as they are in harmony with the conclusions herein set out, and reverse them in so far as they are in conflict therewith, and it is hereby adjudged and decreed: First. That Lizarraga Hermanos pay to the spouses Evarista Robles and Enrique Martin the sum of four thousand five hundred pesos (P4,500), the value of the improvements referred to in these cases, with right on the part of said spouses to retain the building in question until the payment hereby ordered is made. Second. That said spouses Evarista Robles and Enrique Martin vacate the aforesaid building immediately after the receipt, or the legal tender, of the payment hereby decreed.

Third. That the said spouses Evarista Robles and Enrique Martin pay to Lizarraga Hermanos a compensation for the occupation of the building at the rate of forty pesos (P40) a month, beginning with the month of April, 1918, until they vacate the aforesaid building as it is ordered herein. Fourth. That upon payment of his lawful fees, the register of deeds note said right of retention on the back of the transfer certificate No. 526 issued in favor of Lizarraga Hermanos, or of any other certificate standing in lieu thereof, concerning the said building, which note will remain in force until the payment of the aforesaid improvements is made as above ordered. Without pronouncement as to the costs in this instance, so ordered. G.R. No. L-54526 August 25, 1986 METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, vs. THE COURT OF APPEALS and THE CITY OF DAGUPAN, respondents. Miguel T. Caguioa, Ireneo B. Orlino and Manuel D. Victorio for respondent City of Dagupan.

FERIA, J.: This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed the decision of the then Court of First Instance of Pangasinan. The lower court had declared respondent City of Dagupan the lawful owner of the Dagupan Waterworks System and held that the National Waterworks and Sewerage Authority, now petitioner Metropolitan Waterworks and Sewerage System, was a possessor in bad faith and hence not entitled to indemnity for the useful improvements it had introduced. Before proceeding further, it may be necessary to invite attention to the common error of joining the court (be it a Regional Trial Court, the Intermediate Appellate Court, or the Sandiganbayan) as a party respondent in an appeal by certiorari to this Court under Rule 45 of the Rules of Court. The only parties in an appeal by certiorari are the appellant as petitioner and the appellee as respondent. (Cf. Elks Club vs. Rovira, 80 Phil. 272) The court which rendered the judgment appealed from is not a party in said appeal. It is in the special civil action of certiorari under Section 5 of Rule 65 of the Rules of Court where the court or judge is required to be joined as party defendant or respondent. The joinder of the Intermediate Appellate Court or the Sandiganbayan as party respondent in an appeal by certiorari is necessary in cases where the petitionerappellant claims that said court acted without or in excess of its jurisdiction or with grave abuse of discretion. An example of this is a case where the petitioner-appellant claims that the Intermediate Appellate Court or the Sandiganbayan acted with grave abuse of discretion in making its findings of fact, thus justifying the review by this court of said

findings of fact. (See the exceptions to the rule of conclusiveness of the findings of fact of the Intermediate Appellate Court or the Sandiganbayan in the case of Sacay vs. Sandiganbayan, G.R. Nos. 66497-98, July 10, 1986.) In such a case, the petition for review on certiorari under Rule 45 of the Rules of Court is at the same time a petition for certiorari under Rule 65, and the joinder of the Intermediate Appellate Court or the Sandiganbayan becomes necessary. (Cf. Lianga Lumber Company vs. Lianga Timber Co., Inc., March 31, 1977, 76 SCRA 197). The City of Dagupan (hereinafter referred to as the CITY) filed a complaint against the former National Waterworks and Sewerage Authority (hereinafter referred to as the NAWASA), now the Metropolitan Waterworks and Sewerage System (hereinafter referred to as MWSS), for recovery of the ownership and possession of the Dagupan Waterworks System. NAWASA interposed as one of its special defenses R.A. 1383 which vested upon it the ownership, possession and control of all waterworks systems throughout the Philippines and as one of its counterclaims the reimbursement of the expenses it had incurred for necessary and useful improvements amounting to P255,000.00. Judgment was rendered by the trial court in favor of the CITY on the basis of a stipulation of facts. The trial court found NAWASA to be a possessor in bad faith and hence not entitled to the reimbursement claimed by it. NAWASA appealed to the then Court of Appeals and argued in its lone assignment of error that the CITY should have been held liable for the amortization of the balance of the loan secured by NAWASA for the improvement of the Dagupan Waterworks System. The appellate court affirmed the judgment of the trial court and ruled as follows: However, as already found above, these useful expenses were made in utter bad faith for they were instituted after the complaint was filed and after numerous Supreme Court decisions were promulgated declaring unconstitutional the taking by NAWASA of the patrimonial waterworks systems of cities, municipalities and provinces without just compensation. Under Article 546 of the New Civil Code cited by the appellant, it is clear that a builder or a possessor in bad faith is not entitled to indemnity for any useful improvement on the premises. (Santos vs. Mojica, L-25450, Jan. 31, 1969). In fact, he is not entitled to any right regarding the useful expenses (II Paras (1971) 387). He shall not have any right whatsoever. Consequently, the owner shall be entitled to all of the useful improvements without any obligation on his part (Jurado, Civil Law Reviewer (1974) 223). Petitioner-Appellant MWSS, successor-in-interest of the NAWASA, appealed to this Court raising the sole issue of whether or not it has the right to remove all the useful improvements introduced by NAWASA to the Dagupan Waterworks System, notwithstanding the fact that NAWASA was found to be a possessor in bad faith. In support of its claim for removal of said useful improvements, MWSS argues that the pertinent laws on the subject, particularly Articles 546, 547 and 549 of the Civil Code of the Philippines, do not definitely settle the question of whether a possessor in bad faith has the right to remove useful improvements. To bolster its claim MWSS further cites

the decisions in the cases of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) and Carbonell vs. Court of Appeals (69 SCRA 99). The CITY in its brief questions the raising of the issue of the removal of useful improvements for the first time in this Court, inasmuch as it was not raised in the trial court, much less assigned as an error before the then Court of Appeals. The CITY further argues that petitioner, as a possessor in bad faith, has absolutely no right to the useful improvements; that the rulings in the cases cited by petitioner are not applicable to the case at bar; that even assuming that petitioner has the right to remove the useful improvements, such improvements were not actually identified, and hence a rehearing would be required which is improper at this stage of the proceedings; and finally, that such improvements, even if they could be identified, could not be separated without causing substantial injury or damage to the Dagupan Waterworks System. The procedural objection of the CITY is technically correct. NAWASA should have alleged its additional counterclaim in the alternative-for the reimbursement of the expenses it had incurred for necessary and useful improvements or for the removal of all the useful improvements it had introduced. Petitioner, however, argues that although such issue of removal was never pleaded as a counterclaim nevertheless it was joined with the implied consent of the CITY, because the latter never filed a counter-manifestation or objection to petitioner's manifestation wherein it stated that the improvements were separable from the system, and quotes the first part of Sec. 5 of Rule 10 of the Rules of Court to support its contention. Said provision reads as follows: SEC. 5. Amendment to conform to or authorize presentation of evidence.When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. ... This argument is untenable because the above-quoted provision is premised on the fact that evidence had been introduced on an issue not raised by the pleadings without any objection thereto being raised by the adverse party. In the case at bar, no evidence whatsoever had been introduced by petitioner on the issue of removability of the improvements and the case was decided on a stipulation of facts. Consequently, the pleadings could not be deemed amended to conform to the evidence. However, We shall overlook this procedural defect and rule on the main issue raised in this appeal, to wit: Does a possessor in bad faith have the right to remove useful improvements? The answer is clearly in the negative. Recognized authorities on the subject are agreed on this point. *

Article 449 of the Civil Code of the Philippines provides that "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." As a builder in bad faith, NAWASA lost whatever useful improvements it had made without right to indemnity (Santos vs. Mojica, Jan. 31, 1969, 26 SCRA 703). Moreover, under Article 546 of said code, only a possessor in good faith shall be refunded for useful expenses with the right of retention until reimbursed; and under Article 547 thereof, only a possessor in good faith may remove useful improvements if this can be done without damage to the principal thing and if the person who recovers the possession does not exercise the option of reimbursing the useful expenses. The right given a possessor in bad faith is to remove improvements applies only to improvements for pure luxury or mere pleasure, provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they have at the time he enters into possession (Article 549, Id.). The decision in the case of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) cited by petitioner does not support its stand. On the contrary, this Court ruled in said case that "if the defendant constructed a new building, as he alleges, he cannot recover its value because the construction was done after the filing of the action for annulment, thus rendering him a builder in bad faith who is denied by law any right of reimbursement." What this Court allowed appellant Yap to remove were the equipment, books, furniture and fixtures brought in by him, because they were outside of the scope of the judgment and may be retained by him. Neither may the decision in the case of Carbonell vs. Court of Appeals (69 SCRA 99), also cited by petitioner, be invoked to modify the clear provisions of the Civil Code of the Philippines that a possessor in bad faith is not entitled to reimbursement of useful expenses or to removal of useful improvements. In said case, both the trial court and the Court of Appeals found that respondents Infantes were possessors in good faith. On appeal, the First Division of this Court reversed the decision of the Court of Appeals and declared petitioner Carbonell to have the superior right to the land in question. On the question of whether or not respondents Infantes were possessors in good faith four Members ruled that they were not, but as a matter of equity allowed them to remove the useful improvements they had introduced on the land. Justice Teehankee (now Chief Justice) concurred on the same premise as the dissenting opinion of Justice Munoz Palma that both the conflicting buyers of the real property in question, namely petitioner Carbonell as the first buyer and respondents Infantes as the second buyer, may be deemed purchasers in good faith at the respective dates of their purchase. Justice Munoz Palma dissented on the ground that since both purchasers were undoubtedly in good faith, respondents Infantes' prior registration of the sale in good faith entitled them to the ownership of the land. Inasmuch as only four Members concurred in ruling that respondents Infantes were possessors in bad faith and two Members ruled that they were possessors in good faith

said decision does not establish a precedent. Moreover, the equitable consideration present in said case are not present in the case at bar. WHEREFORE, the decision of the appellate court is affirmed with costs against petitioner. SO ORDERED.