G.R. No. L-11093 - Labajo vs. Enriquez

Case Summary (G.R. No. L-11093)

Factual Background

In their complaint, the plaintiffs alleged that they were co-owners of Lot No. 676 and that, from May, 1945, up to June, 1950, they neglected or abandoned the lot due to their absence from Tacloban, Leyte. They further alleged that Enriquez, without their knowledge and consent, voluntarily administered the lot by leasing it to several tenants and collecting rentals during that period totaling P2,552, which allegedly unjustly enriched him. The plaintiffs claimed that they repeatedly demanded reimbursement from Enriquez, but he refused, prompting them to seek judgment for the rentals (P2,552) plus P200 as damages.

Enriquez, in his answer, denied that the lot had been abandoned since May, 1945, and instead claimed abandonment beginning in 1932. He explained that when he purchased Lot No. 2059, which was contiguous and adjacent to Lot No. 676, he thought Lot 676 was included in what he had bought. He asserted good faith in occupying and renting the property to tenants together with his own parcel and stated that the rentals he received did not reach the plaintiffs’ claimed figure. He also claimed he paid the real estate taxes on the lot during the relevant period. Invoking Articles 526, 527, 528, and 544 of the New Civil Code, Enriquez argued that he was at least a possessor in good faith and was therefore entitled to the fruits (the rentals) he received.

Enriquez also filed a counterclaim. He alleged that in connection with the plaintiffs’ demand for reimbursement—refused by him—the plaintiffs filed fabricated charges of estafa in the Municipal Court of the City of Tacloban on September 16, 1953. He alleged that on October 30 of the same year the Municipal Court dismissed the charges on the ground that there was no estafa and that the matter was more civil in nature. He claimed damages of P5,000 for humiliation, embarrassment, and mental anguish, and an additional P500 for attorney’s fees, and prayed for judgment on the pleadings. The plaintiffs admitted filing the criminal charges and the dismissal, but stated that they disagreed with the Municipal Court’s resolution and intended to revive the criminal case in the Court of First Instance. They also agreed to the petition for judgment on the pleadings, but insisted that Enriquez’s prayer be understood as admitting all material allegations in the complaint, including the allegation that he unjustly enriched himself in the amount of P2,552; they also prayed for P200 as damages as attorney’s fees due to Enriquez’s refusal to pay.

Trial Court Proceedings

Acting on the parties’ motion for judgment on the pleadings, the trial court applied Articles 526, 527, 528, and 544 of the Civil Code and dismissed both the complaint and the counterclaim. The plaintiffs then appealed, stating that they were appealing to the Supreme Court on pure question of law. Although the appeal was first taken to the Court of Appeals, it was later certified to the Supreme Court for review on the ground that only questions of law were involved.

In their appeal brief, the plaintiffs claimed that the trial court erred in rendering judgment on the pleadings. However, the record showed that plaintiffs had earlier expressed no objection to Enriquez’s motion for judgment on the pleadings, provided that Enriquez would be treated as admitting the material allegations in the complaint, including the receipt of the amount demanded and his refusal to pay it.

The Parties’ Contentions

The plaintiffs’ principal theory in the pleadings was that Enriquez voluntarily administered Lot 676 without their knowledge and consent and collected rentals totaling P2,552, for which they demanded reimbursement and P200 in damages (attorney’s fees). They also sought dismissal of the counterclaim, while maintaining that the estafa charge had been filed by them and that they intended to revive it.

Enriquez maintained that he acted in good faith, believing that the lot he leased was included within the boundaries of the parcel he bought. He invoked the Civil Code rules governing possession in good faith and argued that he was entitled to the fruits he collected and did not have to reimburse rentals. He also contended that the plaintiffs’ estafa accusations were fabricated and that the dismissal of the criminal case justified his damages claim for humiliation, mental anguish, and attorney’s fees.

Issues for Resolution

The appeal presented legal questions on whether the trial court correctly dismissed the complaint by applying the Civil Code rules on possession in good faith and on whether the counterclaim was properly dismissed for failure to show bad faith or improper motive in filing the criminal charges, considering that the case was resolved through judgment on the pleadings.

Legal Basis and Reasoning

The Court held that the trial court was justified in dismissing the complaint. The Court reasoned that, under both the Old and the New Civil Code, a person occupying property belonging to another was deemed a possessor in good faith, and that the one who alleged bad faith had the burden of proof. It found that Enriquez claimed good faith by alleging that Lot 676 was adjacent to his and that he believed it formed part of what he purchased. The Court observed that the plaintiffs neither disproved Enriquez’s claim of good faith nor presented evidence establishing bad faith. Accordingly, the Court concluded that Enriquez, as a possessor in good faith, was entitled to the fruits he received up to June, 1950, when the plaintiffs advised him that the lot belonged to them.

On the counterclaim, the Court likewise held that Enriquez failed to prove bad faith and ulterior motives on the part of the plaintiffs in filing the estafa charges. The Court accepted that the plaintiffs could reasonably have believed, in good faith, that Enriquez’s refusal to reimburse the rentals amounted to estafa, until they were disabused by the Municipal Court’s ruling that Enriquez’s responsibility was civil rather than criminal. The Court also treated Enriquez’s long receipt of rentals in connection with the property as supporting the fairness of denying his damages claim, since, under the good faith theory accepted for the rentals, Enriquez did not have to reimburse the fruits as against the plaintiffs. The Court characterized it as a matter of justice and equity that Enriquez be required to forego the damages asserted in the counterclaim.

Ruling of the Supreme Court

The Supreme Court affirmed the judgment appealed from, dismiss ing both the complaint and the counterclaim. The Court also stated that it imposed no costs.

Separate Opinion

Justice Padilla dissented. He observed that the parcels were registered under Act No. 496. He took the view that Enriquez’s belief that the adjoining registered parcel belonged to him did not render him a possessor in good faith, emphasizing that a purchaser of a Torrens system parcel is presum

Case Syllabus (G.R. No. L-11093)

The case involved an action filed in the Court of First Instance of Leyte and later appealed to the Supreme Court, arising from a controversy over rentals collected from a registered parcel of land allegedly abandoned by the plaintiffs.
The plaintiffs (co-owners) sought reimbursement of rentals allegedly amounting to P2,552, plus P200 as damages, on the theory of unjust enrichment.
The defendant denied liability, asserted good faith possession over the property during the relevant period, and invoked Articles 526, 527, 528, and 544 of the New Civil Code to support entitlement to the fruits he received.
The defendant also filed a counterclaim for damages in the sum of P5,000 and attorney’s fees of P500, alleging that the plaintiffs filed fabricated estafa charges that were dismissed for lack of criminal liability.
The trial court, on a judgment on the pleadings posture, dismissed both the complaint and the counterclaim by applying the cited Civil Code provisions.
The plaintiffs appealed to the Court of Appeals as a “pure question of law,” and the Court of Appeals certified the appeal to the Supreme Court on the same ground.

Parties and Procedural Posture

The plaintiffs were the registered co-owners of Lot No. 676 of the Tacloban cadastre, covered by Original Certificate of Title No. 10552.
The defendant was the purchaser of Lot No. 2059 of the Tacloban cadastre, contiguous and adjacent to Lot No. 676.
The plaintiffs commenced the action on February 16, 1954 in the Leyte court against the defendant.
The trial court rendered judgment on the pleadings dismissing the complaint and the counterclaim.
The plaintiffs’ notice of appeal invoked an appeal to the Supreme Court on pure question of law, but the appeal was first taken to the Court of Appeals before certification to the Supreme Court.
The plaintiffs asserted in their brief that the trial court erred in rendering judgment on the pleadings, yet the Court observed that the plaintiffs had accepted the judgment on pleadings under a stated condition.

Key Factual Allegations

The plaintiffs alleged that they were co-owners of Lot No. 676, and that from May 1945 up to June 1950, they were absent from Tacloban, Leyte.
The plaintiffs further alleged that during their absence they neglected or abandoned the lot.
The plaintiffs alleged that the defendant, without their knowledge and consent, voluntarily administered the lot by leasing it to several tenants and collecting rentals totaling P2,552.
The plaintiffs claimed they made repeated demands for reimbursement, but the defendant refused, prompting them to ask for judgment for P2,552 plus P200 damages.
The defendant alleged that the lot had been abandoned not since May 1945, but since 1932.
The defendant asserted that when he bought Lot No. 2059, he believed that Lot No. 676 was included in the parcel purchased, and he occupied and rented Lot No. 676 together with his parcel in good faith.
The defendant denied that the rentals reached P2,552.
The defendant claimed he had paid the real estate taxes on the lot during the relevant period.
The defendant relied on Articles 526, 527, 528, and 544 of the New Civil Code to justify his status as a possessor in good faith entitled to the fruits received.
The defendant alleged a counterclaim arising from the plaintiffs’ criminal filings: fabricated estafa charges filed on September 16, 1953, dismissed by the Municipal Court on October 30, 1953 on the ground that no estafa was committed and the matter was more civil in nature.
The defendant alleged that as a result of the filed charges he suffered humiliation, embarrassment, mental anguish, incurred attorney’s fees of P500, and sought damages of P5,000.
The plaintiffs admitted filing the criminal charges and the dismissal, but claimed they disagreed with the municipal ruling and intended to revive the case in the Court of First Instance.
The plaintiffs also stated that they had no objection to judgment on the pleadings, provided the defendant’s prayer was understood as admitting all material and relevant allegations, including that the defendant unjustly enriched himself by receiving rentals of P2,552 and refusing to pay them.

Contentions of the Parties

The plaintiffs contended that the trial court erred in rendering judgment on the pleadings.
The Court noted that the plaintiffs themselves stated they had no objection to the judgment on the pleadings, subject to the con