Title
Bermudez vs. Gonzales
Case
G.R. No. 132810
Decision Date
Dec 11, 2000
Severo Sales disputed a fraudulent land sale, leading to a decades-long legal battle. The Supreme Court reversed a demolition order, remanding to determine Esperanza's rights as a "builder in good faith."
due process
builder in good faith
demolition

Case Summary (G.R. No. 132810)

Factual Background: The Ownership Dispute and the Earlier Final Judgment

The dispute began when Severo and petitioner Esperanza filed in the Court of First Instance, Tarlac, Branch 3 a complaint for “Annulment of Deed” against Leonilo. They asserted ownership of an unregistered parcel of land in Bugallon, Pangasinan with an approximate area of five thousand two hundred and twenty nine (5,229) square meters. They alleged that Severo owned the land, that on December 24, 1968 he donated nine hundred (900) square meters to Esperanza, and that a lease arrangement existed in January 1959 involving the remaining land (approximately four thousand three hundred thirty nine (4,339) square meters) with an amount of P2,700.00. They further claimed that a document arising from the lease was signed but that they were not given a copy. Lastly, they alleged receipt of a photostatic copy of a Deed of Sale covering an area of five thousand seven hundred and thirty three (5,733) square meters, allegedly signed by Severo and his wife at San Manuel, Tarlac and notarized. Severo maintained that he never signed the deed of sale and that any transaction, if at all, was a mortgage rather than a sale, which led to the complaint to annul the deed.

Leonilo, as the son and predecessor-in-interest of the late Ernesto Gonzales, defended the action by claiming that the subject land had been transferred to him by virtue of the deed of sale. He also alleged that Severo and Esperanza were only ordinary occupants who had not paid rent and were there merely by his tolerance. He further claimed he had paid real estate taxes from 1960 to 1968.

On October 27, 1969, the Court of First Instance ruled in favor of Leonilo, holding that the testimonies of Severo and Esperanza did not convincingly overcome the deed of sale as a public document and that the evidence did not support fraud. It dismissed the complaint, declared Leonilo the lawful owner and entitled to possession, and ordered Severo and Esperanza to pay attorney’s fees and costs. The Court of Appeals affirmed on December 19, 1974, with a modification reducing attorney’s fees to P1,000.00 and removing pronouncements as to costs.

Petitioners elevated the matter to the Supreme Court. On July 29, 1992, the Supreme Court upheld the validity of the deed of sale and affirmed the Court of Appeals’ decision. The decision became final and executory on October 28, 1992, and entry of judgment was made.

Execution and Transfer of Possession

After the Supreme Court decision became final, Leonilo’s heirs substituted into the case. On August 11, 1993, the heirs filed a Notice of Substitution of Parties, and petitioner received a copy on August 20, 1993. On March 3, 1994, the trial court granted the heirs’ Motion for Execution and Appointment of Special Sheriff.

On October 21, 1994, the Regional Trial Court issued a writ of execution addressed to Special Sheriffs Robert Tuquero and Antonio Leano, directing execution of the judgment in accordance with Rule 39, Revised Rules of Court, with instructions to levy goods and chattels of the plaintiffs if sufficient personal property could be found, and if not, to levy and sell real property as provided for by law. On June 20, 1995, the trial court issued an Alias Writ of Execution in favor of respondents. On August 3, 1995, Sheriffs Leano and Toquero issued certification that respondents were placed in possession of the subject land pursuant to the June 20, 1995 alias writ.

Petition for Demolition and the Trial Court’s Order

On November 2, 1995, respondents filed in the trial court a Petition for Demolition, alleging that Severo and petitioner had been given thirty (30) days from August 3, 1995 to remove and transfer their house erected on the subject property. Respondents claimed that up to the time of the petition, there was no visible effort to comply with the execution and turnover.

On November 17, 1995, Severo and petitioner filed an opposition. On June 21, 1996, the trial court issued an order directing that a writ of demolition be issued “immediately.” Petitioner later moved for reconsideration on July 17, 1996, but on January 24, 1997, the trial court denied the motion. Petitioner then filed with the Court of Appeals a petition for certiorari with prayer for preliminary injunction and temporary restraining order on February 27, 1997.

The Court of Appeals dismissed the certiorari petition on December 12, 1997, and later denied petitioner’s motion for reconsideration on February 27, 1998, prompting petitioner’s resort to the Supreme Court.

The Parties’ Core Contentions in the Supreme Court

Petitioner’s position centered on the claim that the trial court gravely abused its discretion when it issued a writ of demolition without allowing her to establish her rights as a “builder in good faith” under Article 448 of the Civil Code. That provision, as quoted in the decision, recognizes that an owner of land who has something built, sown, or planted in good faith may appropriate the works after payment of indemnity or, alternatively, the builder may be compelled to pay the value of the land, subject to the terms the parties agree upon or, in disagreement, the court fixes.

Respondents, in contrast, supported the view that demolition was merely the implementation of a final Supreme Court ruling recognizing their ownership and right to possession, and they maintained that petitioner could no longer litigate factual matters that should have been resolved in the earlier ownership case. The trial court’s approach, as reflected in its reasoning, also treated demolition as an automatic consequence of the final decision.

The Supreme Court’s Review Standard in an Appeal by Certiorari

The Supreme Court emphasized the procedural limitation applicable to the appeal. It stated that in an appeal by certiorari to the Court, only questions of law may be raised. It further explained that a question of law exists only if the issue involves no examination of the probative value of the evidence presented by the litigants. The Court observed that it was not a trier of facts.

Nevertheless, the Court found an issue of law in the certiorari petition: whether the Court of Appeals erred when it refused to issue certiorari to correct a grave abuse of discretion committed by the trial court.

The Factual Controversy That Precluded Summary Demolition

The Supreme Court held that the heart of the case required the trial court to first resolve a factual controversy before issuing a writ of demolition. The factual question identified was when the house subject of demolition was built. Petitioner asserted that her house had been constructed long before the execution of the deed of sale in 1959. The trial court, however, implied that the house was built after petitioner had lost the case in the Supreme Court, remarking: “Knowing fully well that they have lost the case, they should not have built such kind of structure which is in direct defiance of the decision of the Court.”

The trial court also stated that it saw no need for evidence on that issue, explaining that “what remains is merely an implementation” of the Supreme Court’s decision dated July 29, 1992. The Supreme Court rejected that approach, holding that the actual turnover of land to respondents and whether petitioner was entitled to reimbursement for the value of the house were separate issues. It concluded that the trial court’s conclusion that the house was built after petitioner lost the case was not supported by evidence.

The Supreme Court further noted that in respondents’ comment filed with the Court of Appeals, respondents had impliedly admitted that the house initially existed and that petitioner and her father merely made constructions, renovations, and additions thereto in bad faith. The Supreme Court stressed that bad faith does not simply connote bad judgment or negligence. It imports a dishonest purpose, or some moral obliquity, and the conscious doing of wrong, meaning a breach of a known duty through a motive or interest or ill will bearing the nature of fraud.

In line with this, the Supreme Court reiterated that good faith is presumed and the burden of proving bad faith rests on the party alleging it. It characterized the issue of bad faith as a factual matter that must be proven. The Court held that the trial court’s statement was conjectural and had no support in the records.

Due Process and the Requirement of a Hearing Before Demolition

The Supreme Court then focused on the procedural defect the Court of Appeals had denied. The question before the Court of Appeals was whether the trial court acted with grave abuse of discretion in precipitately issuing a writ of demolition without a hearing. The Supreme Court held that the Court of Appeals committed reversible error.

It reasoned that Article

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