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G.R. No. 110427.

February 24, 1997]

The Incompetent, CARMEN CAIZA, represented by her legal guardian, AMPARO


EVANGELISTA, petitioner, vs. COURT OF APPEALS (SPECIAL FIRST DIVISION),
PEDRO ESTRADA and his wife, LEONORA ESTRADA, respondents.

DECISION

NARVASA, C.J.:

On November 20, 1989, being then ninety-four (94) years of age, Carmen Caiza, a spinster, a
retired pharmacist, and former professor of the College of Chemistry and Pharmacy of the
University of the Philippines, was declared incompetent by judgmenti[1] of the Regional Trial
Court of Quezon City, Branch 107,ii[2] in a guardianship proceeding instituted by her niece,
Amparo A. Evangelista.iii[3] She was so adjudged because of her advanced age and physical
infirmities which included cataracts in both eyes and senile dementia. Amparo A. Evangelista
was appointed legal guardian of her person and estate.

Caiza was the owner of a house and lot at No. 61 Tobias St., Quezon City. On September 17,
1990, her guardian Amparo Evangelista commenced a suit in the Metropolitan Trial Court
(MetroTC) of Quezon City (Branch 35) to eject the spouses Pedro and Leonora Estrada from
said premises.iv[4] The complaint was later amended to identify the incompetent Caiza as
plaintiff, suing through her legal guardian, Amparo Evangelista.

The amended Complaintv[5] pertinently alleged that plaintiff Caiza was the absolute owner of the
property in question, covered by TCT No. 27147; that out of kindness, she had allowed the
Estrada Spouses, their children, grandchildren and sons-in-law to temporarily reside in her
house, rent-free; that Caiza already had urgent need of the house on account of her advanced age
and failing health, "so funds could be raised to meet her expenses for support, maintenance and
medical treatment;" that through her guardian, Caiza had asked the Estradas verbally and in
writing to vacate the house but they had refused to do so; and that "by the defendants' act of
unlawfully depriving plaintiff of the possession of the house in question, they ** (were)
enriching themselves at the expense of the incompetent, because, while they ** (were) saving
money by not paying any rent for the house, the incompetent ** (was) losing much money as her
house could not be rented by others." Also alleged was that the complaint was "filed within one
(1) year from the date of first letter of demand dated February 3, 1990."

In their Answer with Counterclaim, the defendants declared that they had been living in Caiza's
house since the 1960's; that in consideration of their faithful service they had been considered by
Caiza as her own family, and the latter had in fact executed a holographic will on September 4,
1988 by which she "bequeathed" to the Estradas the house and lot in question.

Judgment was rendered by the MetroTC on April 13, 1992 in Caiza's favor,vi[6] the Estradas
being ordered to vacate the premises and pay Caiza P5,000.00 by way of attorney's fees.
But on appeal,vii[7] the decision was reversed by the Quezon City Regional Trial Court, Branch
96.viii[8] By judgment rendered on October 21, 1992,ix[9] the RTC held that the "action by which
the issue of defendants' possession should be resolved is accion publiciana, the obtaining factual
and legal situation ** demanding adjudication by such plenary action for recovery of possession
cognizable in the first instance by the Regional Trial Court."

Caiza sought to have the Court of Appeals reverse the decision of October 21, 1992, but failed in
that attempt. In a decisionx[10] promulgated on June 2, 1993, the Appellate Courtxi[11] affirmed the
RTC's judgment in toto. It ruled that (a) the proper remedy for Caiza was indeed an accion
publiciana in the RTC, not an accion interdictal in the MetroTC, since the "defendants have not
been in the subject premises as mere tenants or occupants by tolerance, they have been there as a
sort of adopted family of Carmen Caiza," as evidenced by what purports to be the holographic
will of the plaintiff; and (b) while "said will, unless and until it has passed probate by the proper
court, could not be the basis of defendants' claim to the property, ** it is indicative of intent and
desire on the part of Carmen Caiza that defendants are to remain and are to continue in their
occupancy and possession, so much so that Caiza's supervening incompetency can not be said to
have vested in her guardian the right or authority to drive the defendants out."xii[12]

Through her guardian, Caiza came to this Court praying for reversal of the Appellate Court's
judgment. She contends in the main that the latter erred in (a) holding that she should have
pursued an accion publiciana, and not an accion interdictal; and in (b) giving much weight to "a
xerox copy of an alleged holographic will, which is irrelevant to this case."xiii[13]

In the responsive pleading filed by them on this Court's requirement,xiv[14] the Estradas insist that
the case against them was really not one of unlawful detainer; they argue that since possession of
the house had not been obtained by them by any "contract, express or implied," as contemplated
by Section 1, Rule 70 of the Rules of Court, their occupancy of the premises could not be
deemed one "terminable upon mere demand (and hence never became unlawful) within the
context of the law." Neither could the suit against them be deemed one of forcible entry, they
add, because they had been occupying the property with the prior consent of the "real owner,"
Carmen Caiza, which "occupancy can even ripen into full ownership once the holographic will
of petitioner Carmen Caiza is admitted to probate." They conclude, on those postulates, that it is
beyond the power of Caiza's legal guardian to oust them from the disputed premises.

Carmen Caiza died on March 19, 1994,xv[15] and her heirs -- the aforementioned guardian,
Amparo Evangelista, and Ramon C. Nevado, her niece and nephew, respectively -- were by this
Court's leave, substituted for her.xvi[16]

Three issues have to be resolved: (a) whether or not an ejectment action is the appropriate
judicial remedy for recovery of possession of the property in dispute; (b) assuming desahucio to
be proper, whether or not Evangelista, as Caiza's legal guardian had authority to bring said
action; and (c) assuming an affirmative answer to both questions, whether or not Evangelista
may continue to represent Caiza after the latter's death.

I
It is axiomatic that what determines the nature of an action as well as which court has
jurisdiction over it, are the allegations of the complaint and the character of the relief
sought.xvii[17] An inquiry into the averments of the amended complaint in the Court of origin is
thus in order.xviii[18]

The amended Complaint alleges:xix[19]

"6. That the plaintiff, Carmen Caiza, is the sole and absolute owner of a house and lot at No.
61 Scout Tobias, Quezon City, which property is now the subject of this complaint;

** ** **

9. That the defendants, their children, grandchildren and sons-in-law, were allowed to live
temporarily in the house of plaintiff, Carmen Caiza, for free, out of her kindness;

10. That the plaintiff, through her legal guardian, has duly notified the defendants, for them
to vacate the said house, but the two (2) letters of demand were ignored and the defendants
refused to vacate the same. **

11. That the plaintiff, represented by her legal guardian, Amparo Evangelista, made another
demand on the defendants for them to vacate the premises, before Barangay Captain Angelina A.
Diaz of Barangay Laging Handa, Quezon City, but after two (2) conferences, the result was
negative and no settlement was reached. A photocopy of the Certification to File Action dated
July 4, 1990; issued by said Barangay Captain is attached, marked Annex "D" and made an
integral part hereof;

12. That the plaintiff has given the defendants more than thirty (30) days to vacate the house,
but they still refused to vacate the premises, and they are up to this time residing in the said
place;

13. That this complaint is filed within one (1) year from the date of first letter of demand
dated February 3, 1990 (Annex "B") sent by the plaintiff to the defendants, by her legal guardian
-- Amparo Evangelista;

14. By the defendants' act of unlawfully depriving the plaintiff of the possession of the house
in question, they are enriching themselves at the expense of the incompetent plaintiff, because,
while they are saving money by not paying any rent for the house, the plaintiff is losing much
money as her house could not be rented by others;

15. That the plaintiff's health is failing and she needs the house urgently, so that funds could
be raised to meet her expenses for her support, maintenance and medical treatment;

16. That because of defendants' refusal to vacate the house at No. 61 Scout Tobias, Quezon
City, the plaintiff, through her legal guardian, was compelled to go to court for justice, and she
has to spend P10,000.00 as attorney's fees."
Its prayerxx[20] is quoted below:

"WHEREFORE, in the interest of justice and the rule of law, plaintiff, Carmen Caiza,
represented by her legal guardian. Amparo Evangelista, respectfully prays to this Honorable
Court, to render judgment in favor of plaintiff and against the defendants as follows:

1. To order the defendants, their children, grandchildren, sons-in-law and other persons
claiming under them, to vacate the house and premises at No. 61 Scout Tobias, Quezon City, so
that its possession can be restored to the plaintiff, Carmen Caiza: and

2. To pay attorney's fees in the amount of P10,000.00;

3. To pay the costs of the suit."

In essence, the amended complaint states:

1) that the Estradas were occupying Caiza's house by tolerance -- having been "allowed to
live temporarily ** (therein) for free, out of ** (Caiza's) kindness;"

2) that Caiza needed the house "urgently" because her "health ** (was) failing and she **
(needed) funds ** to meet her expenses for her support, maintenance and medical treatment;"

3) that through her general guardian, Caiza requested the Estradas several times, orally and
in writing, to give back possession of the house;

4) that the Estradas refused and continue to refuse to give back the house to Caiza, to her
continuing prejudice; and

5) that the action was filed within one (1) year from the last demand to vacate.

Undoubtedly, a cause of action for desahucio has been adequately set out. It is settled that in an
action for unlawful detainer, it suffices to allege that the defendant is unlawfully withholding
possession from the plaintiff is deemed sufficient,xxi[21] and a complaint for unlawful detainer is
sufficient if it alleges that the withholding of possession or the refusal to vacate is unlawful
without necessarily employing the terminology of the law.xxii[22]

The Estradas' first proffered defense derives from a literal construction of Section 1, Rule 70 of
the Rules of Court which inter alia authorizes the institution of an unlawful detainer suit when
"the possession of any land or building is unlawfully withheld after the expiration or termination
of the right to hold possession, by virtue of any contract, express or implied." They contend that
since they did not acquire possession of the property in question "by virtue of any contract,
express or implied" -- they having been, to repeat, "allowed to live temporarily ** (therein) for
free, out of ** (Caiza's) kindness" -- in no sense could there be an "expiration or termination of
** (their) right to hold possession, by virtue of any contract, express or implied." Nor would an
action for forcible entry lie against them, since there is no claim that they had "deprived (Caiza)
of the possession of ** (her property) by force, intimidation, threat, strategy, or stealth."
The argument is arrant sophistry. Caiza's act of allowing the Estradas to occupy her house, rent-
free, did not create a permanent and indefeasible right of possession in the latter's favor.
Common sense, and the most rudimentary sense of fairness clearly require that act of liberality
be implicitly, but no less certainly, accompanied by the necessary burden on the Estradas of
returning the house to Caiza upon her demand. More than once has this Court adjudged 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 him.xxiii[23]
The situation is not much different from that of a tenant whose lease expires but who continues
in occupancy by tolerance of the owner, in which case there is deemed to be an unlawful
deprivation or withholding of possession as of the date of the demand to vacate.xxiv[24] In other
words, one whose stay is merely tolerated becomes a deforciant illegally occupying the land or
property the moment he is required to leave.xxv[25] Thus, in Asset Privatization Trust vs. Court of
Appeals,xxvi[26] where a company, having lawfully obtained possession of a plant upon its
undertaking to buy the same, refused to return it after failing to fulfill its promise of payment
despite demands, this Court held that "(a)fter demand and its repudiation, ** (its) continuing
possession ** became illegal and the complaint for unlawful detainer filed by the ** (plant's
owner) was its proper remedy."

It may not be amiss to point out in this connection that where there had been more than one
demand to vacate, the one-year period for filing the complaint for unlawful detainer must be
reckoned from the date of the last demand,xxvii[27] the reason being that the lessor has the option
to waive his right of action based on previous demands and let the lessee remain meanwhile in
the premises.xxviii[28] Now, the complaint filed by Caiza's guardian alleges that the same was
"filed within one (1) year from the date of the first letter of demand dated February 3, 1990."
Although this averment is not in accord with law because there is in fact a second letter of
demand to vacate, dated February 27, 1990, the mistake is inconsequential, since the complaint
was actually filed on September 17, 1990, well within one year from the second (last) written
demand to vacate.

The Estradas' possession of the house stemmed from the owner's express permission. That
permission was subsequently withdrawn by the owner, as was her right; and it is immaterial that
the withdrawal was made through her judicial guardian, the latter being indisputably clothed with
authority to do so. Nor is it of any consequence that Carmen Caiza had executed a will
bequeathing the disputed property to the Estradas; that circumstance did not give them the right
to stay in the premises after demand to vacate on the theory that they might in future become
owners thereof, that right of ownership being at best inchoate, no transfer of ownership being
possible unless and until the will is duly probated.

Thus, at the time of the institution of the action of desahucio, the Estradas had no legal right to
the property, whether as possessors by tolerance or sufferance, or as owners. They could not
claim the right of possession by sufferance, that had been legally ended. They could not assert
any right of possession flowing from their ownership of the house; their status as owners is
dependent on the probate of the holographic will by which the property had allegedly been
bequeathed to them -- an event which still has to take place; in other words; prior to the probate
of the will, any assertion of possession by them would be premature and inefficacious.
In any case, the only issue that could legitimately be raised under the circumstances was that
involving the Estradas' possession by tolerance, i.e., possession de facto, not de jure. It is
therefore incorrect to postulate that the proper remedy for Caiza is not ejectment but accion
publiciana, a plenary action in the RTC or an action that is one for recovery of the right to
possession de jure.

II

The Estradas insist that the devise of the house to them by Caiza clearly denotes her intention
that they remain in possession thereof, and legally incapacitated her judicial guardian, Amparo
Evangelista, from evicting them therefrom, since their ouster would be inconsistent with the
ward's will.

A will is essentially ambulatory; at any time prior to the testator's death, it may be changed or
revoked;xxix[29] and until admitted to probate, it has no effect whatever and no right can be
claimed thereunder, the law being quite explicit: "No will shall pass either real or personal
property unless it is proved and allowed in accordance with the Rules of Court" (ART. 838,
id.).xxx[30] An owner's intention to confer title in the future to persons possessing property by his
tolerance, is not inconsistent with the former's taking back possession in the meantime for any
reason deemed sufficient. And that in this case there was sufficient cause for the owner's
resumption of possession is apparent: she needed to generate income from the house on account
of the physical infirmities afflicting her, arising from her extreme age.

Amparo Evangelista was appointed by a competent court the general guardian of both the person
and the estate of her aunt, Carmen Caiza. Her Letters of Guardianshipxxxi[31] dated December 19,
1989 clearly installed her as the "guardian over the person and properties of the incompetent
CARMEN CAIZA with full authority to take possession of the property of said incompetent in
any province or provinces in which it may be situated and to perform all other acts necessary for
the management of her properties ** "xxxii[32] By that appointment, it became Evangelista's duty
to care for her aunt's person, to attend to her physical and spiritual needs, to assure her well-
being, with right to custody of her person in preference to relatives and friends.xxxiii[33] It also
became her right and duty to get possession of, and exercise control over, Caiza's property, both
real and personal, it being recognized principle that the ward has no right to possession or control
of his property during her incompetency.xxxiv[34] That right to manage the ward's estate carries
with it the right to take possession thereof and recover it from anyone who retains it,xxxv[35] and
bring and defend such actions as may be needful for this purpose. xxxvi[36]

Actually, in bringing the action of desahucio, Evangelista was merely discharging the duty to
attend to "the comfortable and suitable maintenance of the ward" explicitly imposed on her by
Section 4, Rule 96 of the Rules of Court, viz.:

"SEC. 4. Estate to be managed frugally, and proceeds applied to maintenance of ward. A


guardian must manage the estate of his ward frugally and without waste, and apply the income
and profits thereof, so far as maybe necessary, to the comfortable and suitable maintenance of
the ward and his family, if there be any; and if such income and profits be insufficient for that
purpose, the guardian may sell or encumber the real estate, upon being authorized by order to do
so, and apply to such of the proceeds as may be necessary to such maintenance."

Finally, it may be pointed out in relation to the Estradas's defenses in the ejectment action, that as
the law now stands, even when, in forcible entry and unlawful detainer cases, the defendant
raises the question of ownership in his pleadings and the question of possession cannot be
resolved without deciding the issue of ownership, the Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts nevertheless have the undoubted competence to
resolve. "the issue of ownership ** only to determine the issue of possession."xxxvii[37]

III

As already stated, Carmen Caiza passed away during the pendency of this appeal. The Estradas
thereupon moved to dismiss the petition, arguing that Caiza's death automatically terminated the
guardianship, Amaparo Evangelista lost all authority as her judicial guardian, and ceased to have
legal personality to represent her in the present appeal. The motion is without merit.

While it is indeed well-established rule that the relationship of guardian and ward is necessarily
terminated by the death of either the guardian or the ward,xxxviii[38] the rule affords no advantage
to the Estradas. Amparo Evangelista, as niece of Carmen Caiza, is one of the latter's only two (2)
surviving heirs, the other being Caiza's nephew, Ramon C. Nevado. On their motion and by
Resolution of this Courtxxxix[39] of June 20, 1994, they were in fact substituted as parties in the
appeal at bar in place of the deceased, in accordance with Section 17, Rule 3 of the Rules of
Court, viz.:xl[40]

"SEC. 18. Death of a party. After a party dies and the claim is not thereby extinguished, the
court shall order, upon proper notice, the legal representative of the deceased to appear and be
substituted for the deceased within a period of thirty (30) days, or within such time as may be
granted. If the legal representative fails to appear within said time, the court may order the
opposing party to procure the appointment of a legal representative of the deceased within a time
to be specified by the court, and the representative shall immediately appear for and on behalf of
the interest of the deceased. The court charges involved in procuring such appointment, if
defrayed by the opposing party, may be recovered as costs. The heirs of the deceased may be
allowed to be substituted for the deceased, without requiring the appointment of an executor or
administrator and the court may appoint guardian ad litem for the minor heirs.

To be sure, an ejectment case survives the death of a party. Caiza's demise did not extinguish the
desahucio suit instituted by her through her guardian.xli[41] That action, not being a purely
personal one, survived her death; her heirs have taken her place and now represent her interests
in the appeal at bar.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals promulgated
on June 2, 1993 -- affirming the Regional Trial Court's judgment and dismissing petitioner's
petition for certiorari -- is REVERSED and SET ASIDE, and the Decision dated April 13, 1992
of the Metropolitan Trial Court of Quezon City, Branch 35, in Civil Case No. 3410 is
REINSTATED and AFFIRMED. Costs against private respondents.
i[1] Petition, Annex "D", Rollo, pp. 41-43.

ii[2] Presided over by Judge Delilah Vidallon-Magtolis

Docketed as SP. PROC. No. Q-89-2603 of Branch 107, entitled "Petition for Guardianship of
iii[3]
the Person and Estate of the Incompetent Carmen Caiza, Amparo A. Evangelista, Petitioner"

iv[4] Docketed as Civil Case No. 3410 for Ejectment with Damages

v[5] Petition, Annex "K", Rollo, pp. 55-59

vi[6] Petition, Annex "B," Rollo, pp. 33-35.

vii[7] Docketed as Civil Case No. Q-92-12554

viii[8] Presided Over by Judge Lucas P. Bersamin

ix[9] Rollo, pp. 36-40

x[10] Rollo, pp. 27-32

Special First Division composed of Vailoces, J., ponente, with Lantin and Mabutas, Jr., JJ.,
xi[11]
concurring.

xii[12] CA Decision, p. 4, Rollo, p. 30

xiii[13] Petition, p. 11, Rollo p. 18

xiv[14] Rollo, pp. 97-112

xv[15] Manifestation dated March 25, 1994

xvi[16] Second Division Resolution dated June 20, 1994

Sumulong vs. Court of Appeals, 232 SCRA 372 [1994], citing Abrin vs. Campos, 203
xvii[17]
SCRA 420 [1991]; Mariategui vs. Court of Appeals, 205 SCRA 337 [1992]; Abad vs. Court of
First Instance, 206 SCRA 567 [1992]; Del Castillo vs. Aguinaldo, 212 SCRA 169 [1992]; Santos
vs. Court of Appeals, 214 SCRA 162 [1992]; Ganadin vs. Ramos, 99 SCRA 6132 (1980);
Ramirez v. Chit, 21 SCRA 1364 [1967]; Mediran vs. Villanueva, 37 Phil. 752 [1918]

xviii[18] Sarmiento vs. Court of Appeals, 150 SCRA 108 [1995]

xix[19] Rollo, pp. 56-57, underscoring in original text


xx[20] Rollo, pp. 57-58

Sumulong vs. Court of Appeals, 232 SCRA 372 [1994], citing Maddamu vs. Judge of
xxi[21]
Municipal Court of Manila, 74 Phil. 230 [1943]

Sumulong vs. Court of Appeals, supra, citing Co Tiamco vs. Diaz, 75 Phil. 672 [1946];
xxii[22]
Valderama Lumber Manufacturer's Co. vs. L.S. Sarmiento Co., 5 SCRA 287 [1962, Pangilinan
vs. Aguilar, 43 SCRA 136 [1972]

Yu vs. de Lara, 6 SCRA 785 [1962]; Pangilinan vs. Aguilar, 43 SCRA 136 [1972],
xxiii[23]
Dakudao vs. Consolacion, 122 SCRA 877 [1983]; Peran vs. Presiding Judge, Br. II, CFI,
Sorsogon, 125 SCRA 78 [1983]; Banco de Oro Savings and Mortgage Bank vs. Court of
Appeals, 182 SCRA 464 [1990]

Vda. de Catchuela vs. Francisco, 98 SCRA 172 [1980] citing Calubayan vs. Pascual, 21
xxiv[24]
SCRA 146, 148 [1967]

xxv[25] Odsigue vs. Court of Appeals, 233 SCRA 626 [1994]

xxvi[26] 229 SCRA 627, 636 [1994]

Sarmiento vs. Court of Appeals, 250 SCRA 108 [1995] citing Sarona, et al vs. Villegas, et
xxvii[27]
al, 22 SCRA 1257 [1968]

Peas, Jr. vs. Court of Appeals, 233 SCRA 744 [1994] citing Racaza vs. Susana Realty,
xxviii[28]
Inc. 18 SCRA. 1172 [1966].

xxix[29] ART. 828, Civil Code

xxx[30] ART. 838, Civil Code

xxxi[31] Petition, Annex "E", Rollo, p. 44

xxxii[32] Emphasis supplied

Francisco, The Revised Rules of Court in the Philippines, 1970 Ed., Vol. V-B, p. 457,
xxxiii[33]
citing Ex-parte Fletcher, 142 So. 30; 39 C.J.S. 86

Francisco, The Revised Rules of Court in the Philippines, 1970 Ed. Vol. V-B, p. 458,
xxxiv[34]
citing 39 C.J.S. 114-115.

Castillo v. Bustamante, 64 Phil. 839 [1937], cited in Moran, Comments on the Rules of
xxxv[35]
Court, Vol. 3, 1980 ed., p. 570

Conchita Juachon vs. Felix Manalo, G.R. No. L-42, 77 Phil. 1092, [January 20, 1947
xxxvi[36]
unreported], cited in Moran, Comments on the Rules of court, 1979 Ed., Volume I, p. 176
Sec. 3, R.A. No. 7691, amending Sec. 33 of B.P. 129; SEE Wilmon Auto Supply Corp.
xxxvii[37]
vs. Court of Appeals, 208 SCRA 108 [1992].

xxxviii[38] Francisco, The Revised Rules of Court in the Phils., Vol. V-B, 1970 Ed., citing 25 Am.
Jur. 37

xxxix[39] Second Division; SEE footnote 17, supra

xl[40] Emphasis supplied

Vda. de Salazar vs. Court of Appeals, et al., 250 SCRA 305 (Nov. 23, 1995) citing Vda. de
xli[41]
Haberes vs. Court of Appeals, 104 SCRA 534 [1981]; Republic vs. Bagtas, 6 SCRA 242 [1962];
Florendo Jr. vs. Coloma, 129 SCRA 304 [1984].

[G.R. No. 155110. March 31, 2005]

HABAGAT GRILL Through LOUIE BIRAOGO, Proprietor/Manager, petitioner, vs. DMC-


URBAN PROPERTY DEVELOPER, INC., respondent.

DECISION

PANGANIBAN, J.:

Entitlement to physical or material possession of the premises is the issue in an ejectment suit.
The two forms of ejectment suits -- forcible entry and unlawful detainer -- may be distinguished
from each other mainly by the fact that in forcible entry, the plaintiffs must prove that they were
in prior possession of the premises until they were deprived thereof by the defendants; in
unlawful detainer, the plaintiffs need not have been in prior physical possession.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, challenging the April
12, 2002 Decision[2] and the August 19, 2002 Resolution[3] of the Court of Appeals (CA) in
CA-GR SP No. 53524. The assailed Decision disposed as follows:

WHEREFORE, finding merit in the petition, the Court REVERSES the appealed Decision and
renders judgment:

1. Commanding [Petitioner] Louie Biraogo and all persons acting for and in his behalf or by his
authority to remove the Habagat Grill and all improvements he has introduced into the lot in
question and to vacate said lot; and
2. Ordering said [petitioner] to pay the [respondent] P10,000.00 monthly compensation for the
occupation of the land in question until the possession from December 1, 1993 of said property
shall have been completely restored to the [respondent]; and

3. Ordering [petitioner] to pay [respondent] P10,000.00 as attorneys fees.[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts

The antecedents were ably summarized by the CA as follows:

On June 11, 1981, David M. Consunji, Inc. acquired and became the owner of a residential lot
situated in Matina, Davao City and covered by TCT No. T-82338. This lot shall henceforth be
called the lot in question. On June 13, 1981, David M. Consunji, Inc. transferred said lot to its
sister company, the DMC Urban Property Developers, Inc. (DMC) in whose favor TCT No. T-
279042 was issued. Alleging that Louie Biraogo forcibly entered said lot and built thereon the
Habagat Grill in December, 1993, DMC filed on March 28, 1994 a Complaint for Forcible Entry
against Habagat Grill and/or Louie Biraogo. The Complaint was docketed as Civil Case No.
1233-D-94 in the Municipal Trial Court in Cities, Branch 4, in Davao City. The Complaint
alleged that as owner DMC possessed the lot in question from June 11, 1981 until December 1,
1993; that on that day, December 1, 1993, Louie Biraogo, by means of strategy and stealth,
unlawfully entered into the lot in question and constructed the Habagat Grill thereon, thus
illegally depriving DMC of the possession of said lot since then up to the present; that the
reasonable rental value of said lot is P10,000.00 a month.

Louie Biraogo in his Answer denied illegally entering the lot in question. He averred that
Habagat Grill was built in 1992 inside Municipal Reservation No. 1050 (Presidential
Proclamation No. 20) and so DMC has no cause of action against him. Since one of the vital
issues in the case was the location of Habagat Grill, the Municipal Trial Court in Cities
constituted a team composed of three members, one a Geodetic Engineer representing the DMC,
another Geodetic Engineer representing Biraogo and the third from the DENR which was tasked
with the duty of determining where precisely was Habagat Grill located, on the lot in question or
on Municipal Reservation No. 1050. Biraogo was directed by the court to furnish the team with a
copy of Municipal Reservation No. 20. Biraogo never complied. Worse, his designated Geodetic
Engineer Panfilo Jayme never took oath as such and did not participate in the Relocation survey.
The ones who conducted the survey were Engr. Edmindo Dida of the DENR and Engr. Jose
Cordero, DMCs representative. After conducting the relocation survey on March 30, 1998,
engineers Dida and Cordero submitted their report to the Court specifically stating that the
Habagat Grill Restaurant was occupying 934 square meters of the lot in question.

After necessary proceedings, the Municipal Trial Court in Cities rendered a Decision on August
6, 1998 dismissing the case on the ground of lack of jurisdiction and lack of cause of action.
DMC appealed from said Decision to the Regional Trial Court and the same was docketed in
Branch 12, in Davao City as Civil Case No. x x x 26,860.98. On February 16, 1999, said court
rendered judgment affirming the appealed Decision. A Motion for Reconsider ation was filed but
was denied in the courts Order dated April 21, 1999.[5]

Consequently, respondent interposed an appeal to the CA.

Ruling of the Court of Appeals

Granting respondents appeal, the Court of Appeals ruled that the court of origin had jurisdiction
over the Complaint for Forcible Entry.[6] The CA gave greater weight to the testimony of
respondents real property manager, Bienamer Garcia, that Habagat Grill had been built on
December 1, 1993.[7] The appellate court opined that his testimony was credible, because he had
personal knowledge of the facts he had testified to -- it was his task to know such matters. On the
other hand, it was not clear in what capacity petitioners witness, Samuel Ruiz, came to know of
the facts he had testified to.[8] The CA further held that the minutes of the Urban Planning and
Economic Development hearings -- submitted by petitioner to prove the construction of Habagat
Grill in 1992 -- were immaterial, as these referred to another establishment.[9]

The CA faulted petitioner for not presenting any other documentary evidence to establish the
date of Habagat Grills construction.[10] It added that the court of origin had improperly
adjudged the subject property as part of the public domain. The appellate court explained that the
lower court could take cognizance of Presidential Proclamation No. 20, but not of the situational
relation between the property covered by the Proclamation and the land in question. The CA
further criticized petitioner for not presenting any evidence to show the basis of the latters
alleged authority to build Habagat Grill on the property.[11]

Hence, this Petition.[12]

The Issues

In its Memorandum, petitioner raises the following issues for our consideration:

1. That, with due respect, the Honorable Court of Appeals erred in not finding that the Honorable
Court of First Level has no jurisdiction over this case as petitioners possession and occupation of
the lot where Habagat Grill was constructed on the subject premises was yet in 1992 or for more
than one (1) year prior to the filing of this case on April 7, 1994 and that respondents predecessor
(David M. Consunji, Inc.) had not been in prior and physical possession of the subject premises,
as a matter of fact, it failed to allege the same in its Complaint in this case; and

2. That, with due respect, the Honorable Court of Appeals erred in not finding that the Complaint
of respondents predecessor (David M. Consunji, Inc.) in this case failed to state a valid cause of
action as the lot referred to therein is not particularly described and is different from the lot on
which the Habagat Grill was constructed.[13]

Simplified, the issues are (1) whether the MTC had jurisdiction over the case, and (2) whether
respondent alleged a sufficient cause of action in its Complaint.
This Courts Ruling

The Petition has no merit.

First Issue:
Jurisdiction

Petitioner argues that the lower court did not acquire jurisdiction over the case, because mere
allegation of ownership did not, by itself, show that respondent had prior possession of the
property.[14]

We disagree. Jurisdiction in ejectment cases is determined by the allegations pleaded in the


complaint.[15] As long as these allegations demonstrate a cause of action either for forcible entry
or for unlawful detainer, the court acquires jurisdiction over the subject matter. This principle
holds, even if the facts proved during the trial do not support the cause of action thus alleged, in
which instance the court -- after acquiring jurisdiction -- may resolve to dismiss the action for
insufficiency of evidence.

The necessary allegations in a Complaint for ejectment are set forth in Section 1 of Rule 70 of
the Rules of Court, which reads thus:

SECTION 1. Who may institute proceedings, and when. Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any
time within one (1) year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding
or depriving of possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.

In the present case, the Complaint filed before the trial court on March 28, 1994, stated:

2. That [respondent] had been in lawful and peaceful possession of a residential lot at Tulip
Drive, Ecoland and Subdivision covered by TCT T-82338 of the Registry of Deeds of Davao
City being owner thereof, since June 11, 1981, until the day and incident in the following
paragraph hereof.

3. That on or about December 1, 1993, [petitioner] by means of strategy and stealth,


unlawfully entered and occupied a portion of said residential lot and constructed what is now
known as the Habagat Grill, thereby illegally depriving [respondent] of the possession of the
premises.[16]

Notably, petitioner alleged (1) prior possession, (2) deprivation thereof by strategy and stealth,
and (3) the date such unlawful deprivation started, which was less than one year from the filing
of the Complaint. Considering the presence in the Complaint of all the necessary allegations,[17]
the trial court evidently acquired jurisdiction over the subject matter of the case.

Date of Entry

Petitioner further contends that, as determined by the court of origin and the regional trial court,
respondent has not adduced preponderance of evidence to prove that this case was filed within
the one-year prescriptive period.[18] Petitioner presented the testimony of a certain Samuel Ruiz
and offered the minutes of the hearings conducted by the Urban Planning and Economic
Development (UPED) to prove that the construction of the Habagat Grill began in 1992.[19]

Respondent counters that the CA properly relied on the testimony of the formers real property
manager, Bienamer Garcia, as he had personal knowledge of the facts.[20] On the other hand,
the two trial courts allegedly relied on the hearings conducted by the UPED in resolving that
petitioner had been in possession of the property since 1992. Respondent avers that those
hearings referred to a restaurant located 330 meters away, not to Habagat Grill.[21]

The determination of the date of entry into the subject lot is a question of fact. This Court has
held in a long line of cases that the review of cases brought before it via Rule 45 of the Rules of
Court is limited to errors of law. Findings of fact by the CA are conclusive except in a number of
instances, one of which is when its factual findings are contrary to those of the courts below, as
in the present case.[22]

The appellate court held that the minutes of the UPED hearing pertained to matters relating to a
different establishment, the Kawayan Restaurant.[23] Thus, the UPED minutes did not have any
material bearing on the resolution of the present case. Consequently, the determination of the
date of entry into the subject lot boils down to the appreciation of the testimonies of Garcia and
Ruiz.

Preponderance of evidence means that the evidence adduced by one side is, as a whole, superior
to or has greater weight than that of the other.[24] Where the evidence presented by one side is
insufficient to ascertain the claim, there is no preponderance of evidence.[25] In criminal cases in
which the quantum of evidence required is greater than in civil cases, the testimony of only one
witness -- if credible, straightforward, and worthy of belief -- is sufficient to convict.[26] With
more reason then, Garcias testimony, if clear and positive, may be sufficient to establish
respondents claim.

Under Section 1 of Rule 133 of the Rules of Court, among the facts and circumstances to be
considered by the court in determining which of the presented evidence has superior weight is
the witnesses means and opportunity to know the facts to which they testify.[27]

The extent of such means and opportunity are determined by the following considerations:

First, the Actor Rule. This rule maintains that a persons recollection of his own acts and of the
attendant circumstances is more definite and trustworthy than another persons recollection of it,
especially if it was an act done in the performance of a duty, or if the other persons testimony is
little more than an expression of opinion or judgment. Apart from comparative tenacity of
memory, the actor usually knows better than any one else what he did or did not do, and his
testimony is generally, but not always, entitled to superior weight on that account. Thus, the
execution and attestation of a will or other legal document may be so far regarded as the act of
the lawyer who superintends the transactions and knows the formalities required by law, and his
testimony to the circumstances will generally outweigh that of a non-professional witness.

The Actor Rule has been applied in a multitude of admiralty cases and any other cases where a
persons testimony concerning his own conduct conflicts with the testimony of a non-
participating observer or with inconclusive inferences from facts proved, especially where the
actor witness testifies to an act which the duties of his employment required him to perform. But
it said that the testimony of one who evidently speaks rather to his custom than to his acts on the
particular occasion will hardly suffice to put him in the category of those who are specially
favored by the Actor Rule.

Second, the witness who had the greater interest in noticing and remembering the facts is to be
believed in preference to the one that had a slighter interest to observe or was wholly indifferent.
Interest has effect on the power of observation of witness. Thus, it has been held that it was not
remarkable that witnesses would not have observed traces of blood along the route through
which the deceased was taken because said witnesses had no reason to suspect that the crime was
not committed in the place where the dead body was found. Similarly, the failure of witnesses to
notice whether or not there were houses at the place where they say the accused maltreat the
offended party was attributed as due to the fact that their attention was concentrated to what they
say, and they had no interest in knowing whether or not there were houses in or around the place.

Third, the witness who gives reasons for the accuracy of his observations is preferred to him who
merely states the fact to be so, without adverting to any circumstances showing that his attention
was particularly called to it. Thus, the testimony of the crew of a vessel that their light on the
night of a collision was red, and nothing more, was easily overcome by testimony of witnesses
on the other vessel that the light was white, not red, and that fact was a matter of remark among
them when the light was observed.

Fourth, the witness in a state of excitement, fear, or terror is generally incapable of observing
accurately. This is so because, if men perceive the most insignificant facts in the most diverse
ways, even when it is impossible that these facts should produce on the observer any emotion
preventing him from observing with absolute calm, even much more will their impressions be
diversified under circumstances calculated to produce in the onlookers excitement, fear or terror.

Fifth, intoxication tends to impair accuracy both of observation and memory of a witness.[28]
(Citations omitted)

Based on the foregoing criteria, the testimony of Garcia must be given greater weight,
considering that it was his task -- as the real property manager of respondent -- to know about
matters involving the latters properties. In contrast, it was not explained how Ruiz could be
deemed competent and credible in his testimony as to those matters.
The lower courts dismissed the testimony of Garcia -- regardless of how clear, positive and
straightforward it was -- solely on the ground that he was not a disinterested witness. True, he
was an employee of respondent; relationship, however, will not by itself determine the true worth
of ones testimony.[29] The essential test is whether such testimony is disencumbered, credible,
and in accord with human experience.[30] It cannot easily be dismissed by the mere invocation
of the witness relationship with respondent. In sum, we have no reason to disagree with the CAs
evaluation that, being credible, Garcias direct testimony was sufficient to establish respondents
claim that petitioner had entered the premises on December 1, 1993.

Second Issue:
Cause of Action

Petitioner avers that no cause of action was alleged by respondent, as shown by the following
circumstances: (1) the latters property was not encroached upon by Habagat Grill, which had
allegedly been constructed on a portion of land owned by the City Government of Davao;[31]
and (2) respondent failed to prove that its predecessor-in-interest had prior possession of the
property.[32]

On the other hand, respondent argues that the trial court indiscriminately ignored the Report of
the survey team that had been constituted to determine the exact location of Habagat Grill.
Respondent further contends that the trial court erred in taking judicial notice of the metes and
bounds of the property covered by Presidential Proclamation No. 20.[33] Although the lower
court may take judicial notice of PD No. 20, it may not do so in regard to the metes and bounds
of Times Beach. Neither, may it claim knowledge of the situational relation between the land in
question and Times Beach.

Location of the Property

We agree with respondent. Judicial notice is the cognizance of certain facts which judges may
properly take and act on without proof because they already know them.[34] Its object is to save
time, labor and expense in securing and introducing evidence on matters that are not ordinarily
capable of dispute or actually bona fide disputed, and the tenor of which can safely be assumed
from the tribunals general knowledge or from a slight search on its part.

Indeed, municipal courts may take judicial notice of the municipal ordinances in force in the
municipality in which they sit.[35] Such notice, however, is limited to what the law is and what it
states.[36] As can be gleaned from its discussions, the trial court took judicial notice of the
existence of Presidential Proclamation No. 20, which declared Times Beach a recreation center.
The MTC also took judicial notice of the location of the beach, which was from the shoreline to
the road towards the shoreline. On the basis of these premises, the trial court resolved that the lot
on which petitioners restaurant was located should necessarily be inside Times Beach, which was
owned by the City of Davao. Hence, it was the City -- not respondent -- that had a cause of
action against petitioner. To arrive at this conclusion, the MTC made its own estimate of the
location of the metes and bounds of the property mentioned by the law.[37]
The location of Habagat Grill cannot be resolved by merely taking judicial notice of Presidential
Proclamation No. 20; such location is precisely at the core of the dispute in this case. Moreover,
considering respondents allegation that the supposed lot covered by the Ordinance has been lost
due to inundation by the sea, we cannot fathom how the trial court could have known of the
actual location of the metes and bounds of the subject lot.

Neither may the MTC take discretionary judicial notice under Section 2 of Rule 129 of the Rules
of Court, because the exact boundaries of the lot covered by that law are not a matter of public
knowledge capable of unquestionable demonstration. Neither may these be known to judges
because of their judicial functions.

Hence, the CA was correct in disregarding the findings of the trial courts, because they had erred
in taking judicial notice of the exact metes and bounds of the property. The appellate court aptly
relied on the Report submitted by the survey team that had been constituted by the trial court,
precisely for the purpose of determining the location of Habagat Grill in relation to respondents
lot.

Prior Possession

Finally, petitioner avers that respondent failed to prove that the latters predecessor-in-interest had
prior possession of the property.[38] Conversely, respondent alleges that its predecessor was in
prior physical possession of the property as the registered owner thereof since June 11, 1981.[39]
Again, we rule for respondent.

There is only one issue in ejectment proceedings: who is entitled to physical or material
possession of the premises; that is, to possession de facto, not possession de jure? Issues as to the
right of possession or ownership are not involved in the action; evidence thereon is not
admissible, except only for the purpose of determining the issue of possession.[40]

The two forms of ejectment suits -- forcible entry or unlawful detainer -- may be distinguished
from each other mainly by the fact that in forcible entry, the plaintiffs must prove that they were
in prior possession of the premises until they were deprived thereof by the defendant; in unlawful
detainer, the plaintiff need not have been in prior physical possession.[41]

Spouses Benitez v. CA[42] has held that possession can be acquired not only by material
occupation, but also by the fact that a thing is subject to the action of ones will or by the proper
acts and legal formalities established for acquiring such right.

Possession can be acquired by juridical acts. These are acts to which the law gives the force of
acts of possession. Examples of these are donations, succession, x x x execution and registration
of public instruments, and the inscription of possessory information titles.[43] For one to be
considered in possession, one need not have actual or physical occupation[44] of every square
inch of the property at all times. In the present case, prior possession of the lot by respondents
predecessor was sufficiently proven by evidence of the execution and registration of public
instruments and by the fact that the lot was subject to its will from then until December 1, 1993,
when petitioner unlawfully entered the premises and deprived the former of possession thereof.
WHEREFORE, the Petition is DENIED and the challenged Decision and Resolution
AFFIRMED. Costs against petitioner.

SO ORDERED.

ELVIRA T. ARANGOTE, Petitioner, - versus - SPS. MARTIN MAGLUNOB and LOURDES S. MAGLUNOB, and
ROMEO SALIDO,Respondents. (2009)

FACTS:
Elvira T. Arangote, herein petitioner married to Ray Mars E. Arangote, is the registered owner of the subject property,
as evidenced by Original Certificate of Title (OCT) No. CLOA-1748.6[6] Respondents Martin (Martin II) and Romeo
are first cousins and the grandnephews of Esperanza Maglunob-Dailisan (Esperanza), from whom petitioner acquired
the subject property.
The Petition stems from a Complaint filed by petitioner and her husband against the respondents for Quieting of Title.

ISSUE:
Whether Arangote has legal title to the land

RULING:
1. No. It is clear from the records that the subject property was not Esperanzas exclusive share, but also that of the
other heirs of her father, Martin I. Esperanza expressly affixed her thumbmark to the Deed of Extrajudicial Settlement
of July 1981 not only for herself, but also on behalf of the other heirs of Martin I. Logically, if Esperanza fully owned
the subject property, she would have simply waived her rights to and interest in the subject property, without
mentioning her share and participation in the same. By including such words in her Affidavit, Esperanza was
aware of and was limiting her waiver, renunciation, and quitclaim to her one-third share and participation in the
subject property.
Esperanzas Affidavit is, in fact, a Donation. Esperanzas real intent in executing the said Affidavit was to donate her
share in the subject property to petitioner and her husband. As no onerous undertaking is required of petitioner and
her husband under the said Affidavit, the donation is regarded as a pure donation of an interest in a real property
Three requisites for the validity of a simple donation of a real property, to wit:
(1) it must be made in a public instrument;
(2) it must be accepted, which acceptance may be made either in the same Deed of Donation or in a separate public
instrument; and
(3) if the acceptance is made in a separate instrument, the donor must be notified in an authentic form, and the same
must be noted in both instruments.
The title to immovable property does not pass from the donor to the donee by virtue of a Deed of Donation until and
unless it has been accepted in a public instrument and the donor duly notified thereof.
Therefore, the Affidavit executed by Esperanza in favor of petitioner and her husband is null and void.

[G.R. No. 151815. February 23, 2005]

SPOUSES JUAN NUGUID AND ERLINDA T. NUGUID, petitioners, vs. HON. COURT OF
APPEALS AND PEDRO P. PECSON, respondents.

DECISION

QUISUMBING, J.:

This is a petition for review on certiorari of the Decisionxli[1] dated May 21, 2001, of the Court
of Appeals in CA-G.R. CV No. 64295, which modified the Order dated July 31, 1998 of the
Regional Trial Court (RTC) of Quezon City, Branch 101 in Civil Case No. Q-41470. The trial
court ordered the defendants, among them petitioner herein Juan Nuguid, to pay respondent
herein Pedro P. Pecson, the sum of P1,344,000 as reimbursement of unrealized income for the
period beginning November 22, 1993 to December 1997. The appellate court, however, reduced
the trial courts award in favor of Pecson from the said P1,344,000 to P280,000. Equally assailed
by the petitioners is the appellate courts Resolutionxli[2] dated January 10, 2002, denying the
motion for reconsideration.

It may be recalled that relatedly in our Decision dated May 26, 1995, in G.R. No. 115814,
entitled Pecson v. Court of Appeals, we set aside the decision of the Court of Appeals in CA-
G.R. SP No. 32679 and the Order dated November 15, 1993, of the RTC of Quezon City, Branch
101 and remanded the case to the trial court for the determination of the current market value of
the four-door two-storey apartment building on the 256-square meter commercial lot.

The antecedent facts in this case are as follows:

Pedro P. Pecson owned a commercial lot located at 27 Kamias Road, Quezon City, on which he
built a four-door two-storey apartment building. For failure to pay realty taxes, the lot was sold at
public auction by the City Treasurer of Quezon City to Mamerto Nepomuceno, who in turn sold
it for P103,000 to the spouses Juan and Erlinda Nuguid.

Pecson challenged the validity of the auction sale before the RTC of Quezon City in Civil Case
No. Q-41470. In its Decision,xli[3] dated February 8, 1989, the RTC upheld the spouses title but
declared that the four-door two-storey apartment building was not included in the auction
sale.xli[4] This was affirmed in toto by the Court of Appeals and thereafter by this Court, in its
Decisionxli[5] dated May 25, 1993, in G.R. No. 105360 entitled Pecson v. Court of Appeals.

On June 23, 1993, by virtue of the Entry of Judgment of the aforesaid decision in G.R. No.
105360, the Nuguids became the uncontested owners of the 256-square meter commercial lot.

As a result, the Nuguid spouses moved for delivery of possession of the lot and the apartment
building.

In its Orderxli[6] of November 15, 1993, the trial court, relying upon Article 546xli[7] of the Civil
Code, ruled that the Spouses Nuguid were to reimburse Pecson for his construction cost of
P53,000, following which, the spouses Nuguid were entitled to immediate issuance of a writ of
possession over the lot and improvements. In the same order the RTC also directed Pecson to
pay the same amount of monthly rentals to the Nuguids as paid by the tenants occupying the
apartment units or P21,000 per month from June 23, 1993, and allowed the offset of the amount
of P53,000 due from the Nuguids against the amount of rents collected by Pecson from June 23,
1993 to September 23, 1993 from the tenants of the apartment.xli[8]

Pecson duly moved for reconsideration, but on November 8, 1993, the RTC issued a Writ of
Possession,xli[9] directing the deputy sheriff to put the spouses Nuguid in possession of the
subject property with all the improvements thereon and to eject all the occupants therein.
Aggrieved, Pecson then filed a special civil action for certiorari and prohibition docketed as CA-
G.R. SP No. 32679 with the Court of Appeals.

In its decision of June 7, 1994, the appellate court, relying upon Article 448xli[10] of the Civil
Code, affirmed the order of payment of construction costs but rendered the issue of possession
moot on appeal, thus:

WHEREFORE, while it appears that private respondents [spouses Nuguid] have not yet
indemnified petitioner [Pecson] with the cost of the improvements, since Annex I shows that the
Deputy Sheriff has enforced the Writ of Possession and the premises have been turned over to
the possession of private respondents, the quest of petitioner that he be restored in possession of
the premises is rendered moot and academic, although it is but fair and just that private
respondents pay petitioner the construction cost of P53,000.00; and that petitioner be ordered to
account for any and all fruits of the improvements received by him starting on June 23, 1993,
with the amount of P53,000.00 to be offset therefrom.

IT IS SO ORDERED.xli[11] [Underscoring supplied.]

Frustrated by this turn of events, Pecson filed a petition for review docketed as G.R. No. 115814
before this Court.

On May 26, 1995, the Court handed down the decision in G.R. No 115814, to wit:

WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order of
15 November 1993 of the Regional Trial Court, Branch 101, Quezon City in Civil Case No. Q-
41470 are hereby SET ASIDE.

The case is hereby remanded to the trial court for it to determine the current market value of the
apartment building on the lot. For this purpose, the parties shall be allowed to adduce evidence
on the current market value of the apartment building. The value so determined shall be
forthwith paid by the private respondents [Spouses Juan and Erlinda Nuguid] to the petitioner
[Pedro Pecson] otherwise the petitioner shall be restored to the possession of the apartment
building until payment of the required indemnity.

No costs.

SO ORDERED.xli[12] [Emphasis supplied.]

In so ruling, this Court pointed out that: (1) Article 448 of the Civil Code is not apposite to the
case at bar where the owner of the land is the builder, sower, or planter who then later lost
ownership of the land by sale, but may, however, be applied by analogy; (2) the current market
value of the improvements should be made as the basis of reimbursement; (3) Pecson was
entitled to retain ownership of the building and, necessarily, the income therefrom; (4) the Court
of Appeals erred not only in upholding the trial courts determination of the indemnity, but also in
ordering Pecson to account for the rentals of the apartment building from June 23, 1993 to
September 23, 1993.
On the basis of this Courts decision in G.R. No. 115814, Pecson filed a Motion to Restore
Possession and a Motion to Render Accounting, praying respectively for restoration of his
possession over the subject 256-square meter commercial lot and for the spouses Nuguid to be
directed to render an accounting under oath, of the income derived from the subject four-door
apartment from November 22, 1993 until possession of the same was restored to him.

In an Orderxli[13] dated January 26, 1996, the RTC denied the Motion to Restore Possession to the
plaintiff averring that the current market value of the building should first be determined.
Pending the said determination, the resolution of the Motion for Accounting was likewise held in
abeyance.

With the submission of the parties assessment and the reports of the subject realty, and the
reports of the Quezon City Assessor, as well as the members of the duly constituted assessment
committee, the trial court issued the following Orderxli[14] dated October 7, 1997, to wit:

On November 21, 1996, the parties manifested that they have arrived at a compromise agreement
that the value of the said improvement/building is P400,000.00 The Court notes that the plaintiff
has already received P300,000.00. However, when defendant was ready to pay the balance of
P100,000.00, the plaintiff now insists that there should be a rental to be paid by defendants.
Whether or not this should be paid by defendants, incident is hereby scheduled for hearing on
November 12, 1997 at 8:30 a.m.

Meantime, defendants are directed to pay plaintiff the balance of P100,000.00.

SO ORDERED.xli[15]

On December 1997, after paying the said P100,000 balance to Pedro Pecson the spouses Nuguid
prayed for the closure and termination of the case, as well as the cancellation of the notice of lis
pendens on the title of the property on the ground that Pedro Pecsons claim for rentals was
devoid of factual and legal bases.xli[16]

After conducting a hearing, the lower court issued an Order dated July 31, 1998, directing the
spouses to pay the sum of P1,344,000 as reimbursement of the unrealized income of Pecson for
the period beginning November 22, 1993 up to December 1997. The sum was based on the
computation of P28,000/month rentals of the four-door apartment, thus:

The Court finds plaintiffs motion valid and meritorious. The decision of the Supreme Court in
the aforesaid case [Pecson vs. Court of Appeals, 244 SCRA 407] which set aside the Order of
this Court of November 15, 1993 has in effect upheld plaintiffs right of possession of the
building for as long as he is not fully paid the value thereof. It follows, as declared by the
Supreme Court in said decision that the plaintiff is entitled to the income derived therefrom, thus

...

Records show that the plaintiff was dispossessed of the premises on November 22, 1993 and that
he was fully paid the value of his building in December 1997. Therefore, he is entitled to the
income thereof beginning on November 22, 1993, the time he was dispossessed, up to the time of
said full payment, in December 1997, or a total of 48 months.

The only question left is the determination of income of the four units of apartments per month.
But as correctly pointed out by plaintiff, the defendants have themselves submitted their
affidavits attesting that the income derived from three of the four units of the apartment building
is P21,000.00 or P7,000.00 each per month, or P28,000.00 per month for the whole four units.
Hence, at P28,000.00 per month, multiplied by 48 months, plaintiff is entitled to be paid by
defendants the amount of P1,344,000.00.xli[17]

The Nuguid spouses filed a motion for reconsideration but this was denied for lack of merit.xli[18]

The Nuguid couple then appealed the trial courts ruling to the Court of Appeals, their action
docketed as CA-G.R. CV No. 64295.

In the Court of Appeals, the order appealed from in CA-G.R. CV No. 64295, was modified. The
CA reduced the rentals from P1,344,000 to P280,000 in favor of the appellee.xli[19] The said
amount represents accrued rentals from the determination of the current market value on January
31, 1997xli[20] until its full payment on December 12, 1997.

Hence, petitioners state the sole assignment of error now before us as follows:

THE COURT OF APPEALS ERRED IN HOLDING PETITIONERS LIABLE TO PAY RENT


OVER AND ABOVE THE CURRENT MARKET VALUE OF THE IMPROVEMENT WHEN
SUCH WAS NOT PROVIDED FOR IN THE DISPOSITIVE PORTION OF THE SUPREME
COURTS RULING IN G.R. No. 115814.

Petitioners call our attention to the fact that after reaching an agreed price of P400,000 for the
improvements, they only made a partial payment of P300,000. Thus, they contend that their
failure to pay the full price for the improvements will, at most, entitle respondent to be restored
to possession, but not to collect any rentals. Petitioners insist that this is the proper interpretation
of the dispositive portion of the decision in G.R. No. 115814, which states in part that [t]he value
so determined shall be forthwith paid by the private respondents [Spouses Juan and Erlinda
Nuguid] to the petitioner [Pedro Pecson] otherwise the petitioner shall be restored to the
possession of the apartment building until payment of the required indemnity.xli[21]

Now herein respondent, Pecson, disagrees with herein petitioners contention. He argues that
petitioners are wrong in claiming that inasmuch as his claim for rentals was not determined in the
dispositive portion of the decision in G.R. No. 115814, it could not be the subject of execution.
He points out that in moving for an accounting, all he asked was that the value of the fruits of the
property during the period he was dispossessed be accounted for, since this Court explicitly
recognized in G.R. No. 115814, he was entitled to the property. He points out that this Court
ruled that [t]he petitioner [Pecson] not having been so paid, he was entitled to retain ownership
of the building and, necessarily, the income therefrom.xli[22] In other words, says respondent,
accounting was necessary. For accordingly, he was entitled to rental income from the property.
This should be given effect. The Court could have very well specifically included rent (as fruit or
income of the property), but could not have done so at the time the Court pronounced judgment
because its value had yet to be determined, according to him. Additionally, he faults the appellate
court for modifying the order of the RTC, thus defeating his right as a builder in good faith
entitled to rental from the period of his dispossession to full payment of the price of his
improvements, which spans from November 22, 1993 to December 1997, or a period of more
than four years.

It is not disputed that the construction of the four-door two-storey apartment, subject of this
dispute, was undertaken at the time when Pecson was still the owner of the lot. When the
Nuguids became the uncontested owner of the lot on June 23, 1993, by virtue of entry of
judgment of the Courts decision, dated May 25, 1993, in G.R. No. 105360, the apartment
building was already in existence and occupied by tenants. In its decision dated May 26, 1995 in
G.R. No. 115814, the Court declared the rights and obligations of the litigants in accordance with
Articles 448 and 546 of the Civil Code. These provisions of the Code are directly applicable to
the instant case.

Under Article 448, the landowner is given the option, either to appropriate the improvement as
his own upon payment of the proper amount of indemnity or to sell the land to the possessor in
good faith. Relatedly, Article 546 provides that a builder in good faith is entitled to full
reimbursement for all the necessary and useful expenses incurred; it also gives him right of
retention until full reimbursement is made.

While the law aims to concentrate in one person the ownership of the land and the improvements
thereon in view of the impracticability of creating a state of forced co-ownership,xli[23] it guards
against unjust enrichment insofar as the good-faith builders improvements are concerned. The
right of retention is considered as one of the measures devised by the law for the protection of
builders in good faith. Its object is to guarantee full and prompt reimbursement as it permits the
actual possessor to remain in possession while he has not been reimbursed (by the person who
defeated him in the case for possession of the property) for those necessary expenses and useful
improvements made by him on the thing possessed.xli[24] Accordingly, a builder in good faith
cannot be compelled to pay rentals during the period of retentionxli[25] nor be disturbed in his
possession by ordering him to vacate. In addition, as in this case, the owner of the land is
prohibited from offsetting or compensating the necessary and useful expenses with the fruits
received by the builder-possessor in good faith. Otherwise, the security provided by law would
be impaired. This is so because the right to the expenses and the right to the fruits both pertain to
the possessor, making compensation juridically impossible; and one cannot be used to reduce the
other.xli[26]

As we earlier held, since petitioners opted to appropriate the improvement for themselves as
early as June 1993, when they applied for a writ of execution despite knowledge that the auction
sale did not include the apartment building, they could not benefit from the lots improvement,
until they reimbursed the improver in full, based on the current market value of the property.

Despite the Courts recognition of Pecsons right of ownership over the apartment building, the
petitioners still insisted on dispossessing Pecson by filing for a Writ of Possession to cover both
the lot and the building. Clearly, this resulted in a violation of respondents right of retention.
Worse, petitioners took advantage of the situation to benefit from the highly valued, income-
yielding, four-unit apartment building by collecting rentals thereon, before they paid for the cost
of the apartment building. It was only four years later that they finally paid its full value to the
respondent.

Petitioners interpretation of our holding in G.R. No. 115814 has neither factual nor legal basis.
The decision of May 26, 1995, should be construed in connection with the legal principles which
form the basis of the decision, guided by the precept that judgments are to have a reasonable
intendment to do justice and avoid wrong.xli[27]

The text of the decision in G.R. No. 115814 expressly exempted Pecson from liability to pay
rentals, for we found that the Court of Appeals erred not only in upholding the trial courts
determination of the indemnity, but also in ordering him to account for the rentals of the
apartment building from June 23, 1993 to September 23, 1993, the period from entry of
judgment until Pecsons dispossession. As pointed out by Pecson, the dispositive portion of our
decision in G.R. No. 115814 need not specifically include the income derived from the
improvement in order to entitle him, as a builder in good faith, to such income. The right of
retention, which entitles the builder in good faith to the possession as well as the income derived
therefrom, is already provided for under Article 546 of the Civil Code.

Given the circumstances of the instant case where the builder in good faith has been clearly
denied his right of retention for almost half a decade, we find that the increased award of rentals
by the RTC was reasonable and equitable. The petitioners had reaped all the benefits from the
improvement introduced by the respondent during said period, without paying any amount to the
latter as reimbursement for his construction costs and expenses. They should account and pay for
such benefits.

We need not belabor now the appellate courts recognition of herein respondents entitlement to
rentals from the date of the determination of the current market value until its full payment.
Respondent is clearly entitled to payment by virtue of his right of retention over the said
improvement.

WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated May 21,
2001 of the Court of Appeals in CA-G.R. CV No. 64295 is SET ASIDE and the Order dated July
31, 1998, of the Regional Trial Court, Branch 101, Quezon City, in Civil Case No. Q-41470
ordering the herein petitioners, Spouses Juan and Erlinda Nuguid, to account for the rental
income of the four-door two-storey apartment building from November 1993 until December
1997, in the amount of P1,344,000, computed on the basis of Twenty-eight Thousand
(P28,000.00) pesos monthly, for a period of 48 months, is hereby REINSTATED. Until fully
paid, said amount of rentals should bear the legal rate of interest set at six percent (6%) per
annum computed from the date of RTC judgment. If any portion thereof shall thereafter remain
unpaid, despite notice of finality of this Courts judgment, said remaining unpaid amount shall
bear the rate of interest set at twelve percent (12%) per annum computed from the date of said
notice. Costs against petitioners.

SO ORDERED.
[G.R. No. 149295. September 23, 2003]

PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS, represented by his


Attorney-in-Fact, CHRISTIAN DE JESUS, respondent.

DECISION

VITUG, J.:

Petitioner Philippine National Bank disputes the decision handed down by the Court of Appeals
promulgated on 23 March 2001 in CA-G.R. CV No. 56001, entitled Generoso De Jesus,
represented by his Attorney-in-Fact, Christian De Jesus, versus Philippine National Bank. The
assailed decision has affirmed the judgment rendered by the Regional Trial Court, Branch 44, of
Mamburao, Occidental Mindoro, declaring respondent Generoso de Jesus as being the true and
lawful owner of the 124-square-meter portion of the land covered by Transfer Certificate of Title
(TCT) No. T-17197 and ordering petitioner bank to vacate the premises, to deliver possession
thereof to respondent, and to remove the improvement thereon.

It would appear that on 10 June 1995, respondent filed a complaint against petitioner before the
Regional Trial Court of Occidental Mindoro for recovery of ownership and possession, with
damages, over the questioned property. In his complaint, respondent stated that he had acquired a
parcel of land situated in Mamburao, Occidental Mindoro, with an area of 1,144 square meters
covered by TCT No. T-17197, and that on 26 March 1993, he had caused a verification survey of
the property and discovered that the northern portion of the lot was being encroached upon by a
building of petitioner to the extent of 124 square meters. Despite two letters of demand sent by
respondent, petitioner failed and refused to vacate the area.

Petitioner, in its answer, asserted that when it acquired the lot and the building sometime in 1981
from then Mayor Bienvenido Ignacio, the encroachment already was in existence and to remedy
the situation, Mayor Ignacio offered to sell the area in question (which then also belonged to
Ignacio) to petitioner at P100.00 per square meter which offer the latter claimed to have
accepted. The sale, however, did not materialize when, without the knowledge and consent of
petitioner, Mayor Ignacio later mortgaged the lot to the Development Bank of the Philippines.

The trial court decided the case in favor of respondent declaring him to be the righ tful owner of
the disputed 124-square-meter portion of the lot and ordering petitioner to surrender possession
of the property to respondent and to cause, at its expense, the removal of any improvement
thereon.

The Court of Appeals, on appeal, sustained the trial court but it ordered to be deleted the award
to respondent of attorneys fees, as well as moral and exemplary damages, and litigation
expenses.
Petitioner went to this Court, via a petition for review, after the appellate court had denied the
banks motion for reconsideration, here now contending that -

1. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING PNB A


BUILDER IN BAD FAITH OVER THE ENCROACHED PROPERTY IN QUESTION;

2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT APPLYING IN FAVOR


OF PNB THE PROVISION OF ARTICLE 448 OF THE CIVIL CODE AND THE RULING IN
TECNOGAS PHILIPPINES MANUFACTURING CORP. VS. COURT OF APPEALS, G.R.
No. 108894, February 10, 1997, 268 SCRA 7.xli[1]

The Regional Trial Court and the Court of Appeals have both rejected the idea that petitioner can
be considered a builder in good faith. In the context that such term is used in particular reference
to Article 448, et seq., of the Civil Code, a builder in good faith is one who, not being the owner
of the land, builds on that land believing himself to be its owner and unaware of any defect in his
title or mode of acquisition.

The various provisions of the Civil Code, pertinent to the subject, read:

Article 448. The owner of the land on which anything has been built, sown, or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment
of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted
to pay the price of the land, and the one who sowed, the proper rent. However, the builder or
planter cannot be obliged to buy the land if its value is considerably more than that of the
building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper indemnity. The parties shall agree upon
the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

Article 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.

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.

A builder in good faith can, under the foregoing provisions, compel the landowner to make a
choice between appropriating the building by paying the proper indemnity or obliging the builder
to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with
the principle of accession, i.e., that the accessory follows the principal and not the other way
around.xli[2] Even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive. He much choose one. He cannot, for instance, compel the owner of the building to
instead remove it from the land.xli[3] In order, however, that the builder can invoke that accruing
benefit and enjoy his corresponding right to demand that a choice be made by the landowner, he
should be able to prove good faith on his part.
Good faith, here understood, is an intangible and abstract quality with no technical meaning or
statutory definition, and it encompasses, among other things, an honest belief, the absence of
malice and the absence of design to defraud or to seek an unconscionable advantage. An
individuals personal good faith is a concept of his own mind and, therefore, may not
conclusively be determined by his protestations alone. It implies honesty of intention, and
freedom from knowledge of circumstances which ought to put the holder upon inquiry.xli[4] The
essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior
claim, and absence of intention to overreach another.xli[5] Applied to possession, 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.xli[6]

Given the findings of both the trial court and the appellate court, it should be evident enough that
petitioner would fall much too short from its claim of good faith. Evidently, petitioner was quite
aware, and indeed advised, prior to its acquisition of the land and building from Ignacio that a
part of the building sold to it stood on the land not covered by the land conveyed to it.

Equally significant is the fact that the building, constructed on the land by Ignacio, has in
actuality been part of the property transferred to petitioner. Article 448, of the Civil Code refers
to a piece of land whose ownership is claimed by two or more parties, one of whom has built
some works (or sown or planted something) and not to a case where the owner of the land is
the builder, sower, or planter who then later loses ownership of the land by sale or
otherwise for, elsewise stated, where the true owner himself is the builder of works on his
own land, the issue of good faith or bad faith is entirely irrelevant. xli[7]

In fine, petitioner is not in a valid position to invoke the provisions of Article 448 of the Civil
Code. The Court commiserates with petitioner in its present predicament; upon the other hand,
respondent, too, is entitled to his rights under the law, particularly after having long been
deprived of the enjoyment of his property. Nevertheless, the Court expresses hope that the parties
will still be able to come up with an arrangement that can be mutually suitable and acceptable to
them.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56001 is


AFFIRMED. No costs.

SO ORDERED.