G.R. No. 153625 - Heirs of Cabal vs. Spouses Cabal

Marcelo Cabal was the owner of a 4,234-square meter parcel of land, Lot G, covered by Original Certificate of Title (OCT) No. 29 in Iba, Zambales.
Marcelo died in August 1954, survived by his wife Higinia Villanueva and nine children, including Marcelino and Lorenzo Cabal.

Around 1949, Marcelino, one of Marcelo's sons, was allowed by Marcelo to build his house on a portion of Lot G, now the southernmost part of Lot 1-E under Transfer Certificate of Title (TCT) No. 43419. Marcelino and later his son resided thereon.

In 1964, Marcelo’s heirs did an extrajudicial settlement dividing Lot G into equal undivided shares of 423.40 square meters each, and TCT No. T-8635 was issued.
In 1973, Daniel Cabal sold part of his share.
In 1976, the heirs subdivided Lot G into Lot G-1 (in favor of Marcelino; TCT No. T-22656) and Lot G-2 (in favor of the others; TCT No. 22657).
Marcelino mortgaged Lot G-1 in 1977 and released the mortgage in 1983.
Lot G-2 was further subdivided and distributed among co-owners, with Lorenzo acquiring several shares totaling 1,737 square meters by purchase in 1978.
A subdivision survey plan in 1982 designated specific lots (1-A to 1-E) reflecting the shares of various co-owners, including Lorenzo (Lot 1-E).
On July 13, 1993, TCT No. 43419 covering Lot 1-E was issued in Lorenzo’s name.

The disputed 423 sqm portion, on which Marcelino and his son built houses, is located on Lot 1-E, different from Lot G-1 which was titled to Marcelino.
Lorenzo and Rosita Cabal confronted Marcelino over the discrepancy in lot occupancy in 1989; an agreement to resurvey and swap lots for title reconstruction was made but never materialized.
Efforts to settle the matter amicably failed.

August 10, 1994, respondents filed a complaint for recovery of possession with damages before the Municipal Trial Court (MTC), claiming Marcelino was in bad faith for building improvements on their land.
Marcelino answered with a counterclaim, asserting good faith possession since 1949 and claiming acquisitive prescription.
Marcelino died during the pendency of the case before the MTC trial ended.
On November 19, 1997, the MTC ruled in favor of Marcelino, ordering plaintiffs to relinquish possession and pay damages and attorney’s fees.
Respondents filed a motion for reconsideration, denied in 1998.
Respondents appealed to the Regional Trial Court (RTC), which in 2000 reversed the MTC, directing Marcelino to vacate the disputed 423 sqm lot and pay damages and attorneys’ fees.
The RTC found Marcelino’s possession was in the concept of a co-owner and thus prescription did not apply; his possession was tolerated, not adverse.
Marcelino’s motion for reconsideration before the RTC was denied in 2001.
Marcelino appealed to the Court of Appeals (CA); the CA affirmed the RTC decision in 2001, ruling that Marcelino’s good faith diminished upon discovery of the survey discrepancy and that he could not hold both lots.
Motion for reconsideration of the CA decision was denied in 2002.

Petitioners, heirs of Marcelino represented by Victoria Cabal, filed the present petition.
Petitioners contend Marcelino never intended to hold both lots but only the disputed 423 sqm portion where he built in good faith.
Further argue good faith persisted until discovery of the title discrepancy in 1989, supported by the resurvey and swapping agreement.
Petitioners seek recognition of Marcelino as builder in good faith or, alternatively, enforcement of swapping of lots due to lack of improvements on Lot G-1.
Respondents maintain Marcelino acted in bad faith.

Whether Marcelino’s possession of the disputed lot since 1949 was in good faith and capable of ripening into ownership by acquisitive prescription.
Whether Marcelino’s possession was in the concept of a co-owner, barring the running of prescription.
Whether Marcelino is a builder in good faith entitled to protection and indemnity under Article 448 of the Civil Code.
Whether the swapping agreement made in 1989 is enforceable to adjust the disputed boundary and shares.