Case Summary (G.R. No. 126995)
Petitioner
Spouses Crispin and Teresa V. Aquino, represented by Attorney-in-Fact Amador D. Ledesma, seek to eject respondents and recover compensation for use of their property.
Respondent
Spouses Eusebio and Josefina V. Aguilar claim co-ownership or builder-in-good-faith status for their contributions to the new building, seeking P5 million plus damages, attorney’s fees, and costs.
Key Dates
• 1981 – Respondents begin possession.
• July 15, 1983 – Petitioners warn respondents against constructing improvements.
• September 22, 2003 – Formal demand to vacate property.
• November 19, 2003 – Complaint for ejectment filed in MeTC.
• November 12, 2004 – MeTC Decision for ejectment and monthly rental.
• January 3, 2006 – RTC affirms MeTC.
• April 25, 2008 – CA affirms ejectment but remands for improvement expenses.
• June 29, 2015 – SC Decision under the 1987 Constitution.
Applicable Law
Civil Code provisions on accession and improvements (Articles 448–452, 1678, 546); Rules of Court, Rule 45; Local Government Code Section 412; principles on tolerance occupancy and ejectment.
Facts
Petitioners own the land by TCT No. 148338. Respondents occupied with consent, filled marshy ground, demolished an old house, and built a three-storey structure. Respondents lived rent-free until petitioners demanded vacation in 2003.
MeTC Decision
The Makati MeTC held that respondents were mere toleration occupants and builders in bad faith, entitled neither to co-ownership nor reimbursement for improvements. It ordered ejectment, monthly rent of P7,000 from October 22, 2003, P10,000 attorney’s fees, and costs.
RTC Decision
The RTC affirmed the MeTC, reiterating lack of good faith and co-ownership. It emphasized the 1983 letter forbidding improvements and sustained ejectment relief without compensation for construction costs.
Court of Appeals Ruling
The CA agreed respondents were not co-owners or good-faith builders but analogized their status to a tenant whose lease expired yet remained by tolerance. Relying on Articles 1678 and 546, it remanded to determine necessary and useful improvement expenses, awarded half the value of useful improvements upon appropriation, and monthly rent of P7,000 starting October 2003.
Issue on Review
Whether the CA erred in applying Article 1678 to respondents and in remanding to quantify useful improvements for reimbursement.
Good Faith and Builder Status
All lower courts found respondents admitted petitioners’ ownership and were aware their occupancy was temporary. Under Article 448, good faith requires honest belief of ownership and absence of superior claim—absent here. Respondents’ failure to appeal binds them to this finding.
Inapplicability of Article 1678
Article 1678 applies only to lessees. Occupancy by mere tolerance lacks lease contract; Calubayan v. Pascual’s analogy does not extend Article 1678 to toleration occupants. Respondents did not assert or prove landlord-tenant relationship.
Bad Faith and Articles 449–450
Respondents built despite the 1983 prohibition, rendering them builders in bad faith. Articles 449 and 450 disallow indemnity for useful expenses and permit landowner to demand demolition or pay land value. Petitioners may appropriate improvements without payment.
Necessary Expenses under Article 452
Bad-faith builders are entitled only to reimbursement
Case Syllabus (G.R. No. 126995)
Facts
- Petitioners Crispin and Teresa Aquino hold Transfer Certificate of Title No. 148338 over a house and lot at No. 6948 Rosal Street, Guadalupe Viejo, Makati City.
- Since 1981, respondents Eusebio and Josefina Aguilar (Teresa’s sister and brother-in-law) have occupied the property with the Aquinos’ consent while the latter resided abroad.
- Respondents demolished the existing house and erected a three-storey building, occupying half of the third floor rent-free for about 20 years.
- On 22 September 2003 petitioners demanded surrender of the premises within ten days, citing family need; respondents did not vacate.
- A barangay ejectment proceeding failed to resolve the dispute amicably under Section 412, Local Government Code.
- On 19 November 2003 petitioners filed ejectment with the Makati MeTC, seeking respondents’ vacation of their portion and reasonable compensation for use from demand.
- Respondents counterclaimed, alleging (a) co-ownership or partnership in the improvement based on monetary and supervisory contributions; (b) builder in good faith status; and (c) entitlement to reimbursement of P5 million plus damages, fees and costs.
Procedural History
- MeTC (12 November 2004): Judgment for petitioners; ordered respondents to vacate immediately, pay P7,000 monthly rental from 22 October 2003, attorney’s fees of P10,000 and costs; held respondents builders in bad faith, unentitled to recovery.
- RTC (3 January 2006): Affirmed MeTC; rejected co-ownership and good faith building; emphasized respondents’ occupation was by mere tolerance and warned against improvements per 15 July 1983 letter.
- CA (25 April 2008): Affirmed non-co-ownership and bad faith findings; analogized respondents’ status to tenant at expired lease, implying duty to vacate on demand; nevertheless remanded to quantify necessary and useful improvements under Arts. 1678 and 546, Civil Code — to reimburse respondents for necessary expenses and one-hal