G.R. No. 169136 - Asiatic Development Corp. vs. Spouses Brogada

The dispute involves two co-owners of a parcel of land measuring 811.30 square meters located at Blumentritt Extension, corner Don Manuel Street, La Loma, Quezon City.
The co-owners are Rodolfo Y. Eusebio (Petitioner) and Rohimust Santos (Respondent).

In 1981, Rodolfo filed suit before the then Court of First Instance (now Regional Trial Court) to determine their respective participations in the co-owned lot and to obtain its partition.
The Trial Court rendered a decision partitioning the LOT by allotting 611.30 sq. m. to Rodolfo and 200 sq. m. to Rohimust.
It was ordered that the survey expenses defining the metes and bounds of the portions be shared equally, and any improvement constructed in the area assigned to the other party be demolished without any provision for compensation.

Reports and evidence indicate the existence of houses and buildings on the LOT.
There was a possibility that some buildings might have been legally owned in common or constructed individually, with indications that the respective parties lived separately within the LOT.

The LOT was part of a subdivision owned by J.M. Tuazon & Co., Incorporated and had been occupied since 1924 by Philip Zinsineth as a lessee, who also constructed a house and garage on the property.
After Philip’s death, leasehold rights were inherited by his two daughters, Mary (mother of Rohimust) and Isabel (mother of Rodolfo’s wife).
On April 15, 1974, an agreement was reached to allocate the leasehold rights: 383 sq. m. in the name of Rodolfo and 428.30 sq. m. in the name of Fernando J. Santos, Jr. (son of Mary).
A contract to sell was executed, and an affidavit stipulated that monthly installments would be paid pro rata based on the area each party occupied, with the understanding that full payment would lead to partition and issuance of separate Transfer Certificates of Title.
By 1978, full payment was made to GA, Inc., and the title was issued solely in Rodolfo’s name. However, Fernando failed to pay his full share, and in 1980, his rights were transferred to his brother, Rohimust.

The Trial Court found that, as a result of Rodolfo’s payments made on behalf of Fernando, Rodolfo’s share in the LOT increased to 611.30 sq. m., while Rohimust’s share decreased to 200 sq. m.
The partition judgment thereby became final.

Rohimust appealed the Trial Court’s decision.
Initially, the Intermediate Appellate Court (now Court of Appeals) affirmed the Trial Court’s ruling in toto.
On filing a Motion for Reconsideration, the Appellate Tribunal issued a Resolution modifying its former affirmance by holding that Rohimust “has the legal right to retain the house together with its improvements and the possession thereof until full payment of the value thereof.”

Whether the Appellate Tribunal erred in granting Rohimust the right to retain the house and its improvements pending full payment.

Is the invocation of Article 546, which provides for refund of useful expenses for a possessor in good faith, appropriate in this case of undivided co-ownership?
What is the proper legal framework when one party claims exclusive rights over improvements on an undivided property?

Whether the possession of the property by the co-owners qualifies as “possession in good faith” under Article 526, thereby justifying the application of Article 546.

Does the historical context—beginning as leasehold possession—affect the classification of possession as being in good faith?
How should the law treat improvements and exclusive possession in a property that is still legally undivided?