Possession Digests

RIZAL CEMENT CO., INC. v. VILLAREAL G.R. No. L- 30272. February 28,1985. Cuevas, J. DOCTRINE: Neither tax receipts nor declaration of ownership for taxation purposes alone constitutes sufficient evidence of ownership or of the right to possess realty. They must be supported by other effective proofs. Neither can the survey plan or technical descriptions prepared at the instance of the party concerned be considered in his favour, the same being self-serving. FACTS: Respondents are applicants for the registration of 2 agricultural lands located in Rizal. They presented testimonial and documentary evidence appearing that the property applied for, designated as Lots Nos. 1 and 2 of Plan Psu-147662, have a total area of 26,015 sq.m.; that these lots originally belonged to one Maria Certeza; that upon her death, the property was involved in a litigation between her grandchildren and Gonzalo Certeza and that the lots were given by the latter to former Justice de Joya as the latter's attorney's fees; that the lots were then sold by de Joya to Filomeno Sta. Ana who, in turn sold the same to spouses Victoriano Cervo and Ignacia Guillermo in 1939; that sometime in November 1955, the said spouses sold the said lots to the herein applicants as shown by a duly notarized deed of sale. The spouses Cervo declared the property for taxation purposes in the name of the wife, Ignacia Guillermo, and paid for the realty taxes due thereon; that prior to the sale, the spouses Cervo had the two parcels surveyed first in 1950 and then in 1955. On the other hand, oppositor, (now petitioner) Rizal Cement Company, claims to be the owner of the subject lots, having bought the same from Maria Certeza, and to have been in continuous and adverse possession of the property since 1911. To substantiate its claim, Rizal Cement Co. submitted documentary evidence, the most important of which are the following: (a) Plan Psu-2260 which covers the survey of a big tract of land for the company designated as Lots 1, 2 and 4 of the Plan with a total area of 210,644 square meters (survey made in 1911 while plan was approved in 1912); (b) A sketch plan of the geographical position of the real proparties of Madrigal and Company; (c) Tax Declaration No. 1066 secured in 1949 from the Rizal Provincial Assessor which is a consolidation of all lands of the Rizal Cement Company located in Darangan with a total area of 2,496,712 sq.m. and which includes the land in litigation; (d) Tax Declaration No. 10570 which cancels Tax Declaration No. 1066; and (e) Real estate tax receipts issued for Madrigal and Company, covering among others the land applied for. After trial, the CFI denied the application for registration of respondents and ordered the issuance of a decree of registration in the name of Rizal Cement Co, after finality of said decision. Respondents appealed to the CA, which reversed and set aside the CFI’s decision in favour of the respondents. The CA denied Rizal’s MR, hence this petition. ISSUE: Whether the respondents had been in actual possession of the land in question. HELD: YES. As to who had been in actual possession of the land in question, the CA gave credence to the testimony of the witnesses for respondents applicants, namely: 1. Santiago Picadizo (one of the tenants of the land); 2. Isaac Reyes (worked on ½ of the 2 parcels of land since 1934 to the present); 3. Mr. Valentin Marqueza (rebuttal witness who averred that he began to live in Rizal since 1910 after buying a portion of the property from Maria Certeza and avers that Rizal Cement intended to make a factory by building a small house which was later on removed, and that Rizal Cement did not take possession of the land and that it was Maria

120

Certeza who had the possession of the land until her death and that the tenants gave the harvest of the land to Maria Certeza. The right to possess flows from ownership. No person will suffer adverse possession by another of what belongs to him. Were the Rizal Cement Co. the rightful owner of the land in question, it would not have allowed the tenants to cultivate the land and give the owner's share to appellants and/or their predecessors. It would have opposed the survey for applicants' vendors on May 21 and 28, 1950 and July 31, 1955, but did not as shown in the surveyor's certificate, Exhibit E. If Rizal really bought Lot 2 from Maria Certeza in 1909 as claimed, it has not been explained how she could sell a portion thereof to Apolonia Francisco, married to Valentin Marquez for P100.00 on April 15, 1924 by deed, Exhibit R,-an ancient document -as confirmed by the husband in his deposition who as employee of oppositor would have known of its acquisition. On the other hand, applicants' vendors in mortgaging the two lots to Pedro Picones in 1952, Exhibits 0 and 01, for P11, 000.00, exercised a dominical act; and Aniano Bautista's testimony that the Cervos were not owners of the land challenges belief since Bautista was a witness to Exhibits 0 and 0-1, being uncle of Picones. Very significantly petitioner Rizal Cement did not present any witness in actual possession of the land in question. As aptly found by the appellate court, respondents possess the property in the concept of an owner. Possession is acquired by the material occupation of a thing or the exercise of a right or by the fact it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right. Petitioner's evidence, consisting of tax receipts, tax declaration and survey plan are not conclusive and indisputable basis of one's ownership of the property in question. Assessment alone is of little value as proof of title. Mere tax declaration does not vest ownership of the property upon the declarant. Settled is the rule that neither tax receipts nor declaration of ownership for taxation purposes alone constitutes sufficient evidence of ownership or of the right to possess realty. They must be supported by other effective proofs. Neither can the survey plan or technical descriptions prepared at the instance of the party concerned be considered in his favor, the same being self-serving. The only documentary evidence which the Rizal Cement may capitalize for its claim of ownership is the notation in applicants' plan Exhibit D that the lots in question are portions of a previous survey made in 1911 for oppositor, Plan Psu-2260. The survey plan however has no original record in the Bureau of Lands. Be that as it may, survey plans merely delimit areas sought to be registered. Besides, the annotation relied upon by the lower court in its judgm ent in favor of the oppositor is nothing more than what it imports - a previous survey.

121

IGNACIO WONG v. HON. LUCAS CARPIO and MANUEL MERCADO G.R. No. L-50264. October 21, 1991. Bidin, J. DOCTRINE: Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith. Such interruption takes place upon service of summons. FACTS: In 1972, Private respondent Manuel Mercado and William Giger executed a deed of sale with a right to repurchase a parcel of land, LOT 3, situated in Colonga, Sta. Maria, Davao del Sur for PHP 3,500.00. In 1973, Giger again asked an additional amount of P2,500.00 from Mercado and so he required William Giger to sign a new deed of Pacto de Retro Sale. Mercado began harvesting only the coconut fruits and he paid the taxes on the land for Mr. Giger. He went periodically to the land to make copra but he never placed any person on the land in litigation to watch it. Neither did he reside on the land as he is a businessman and storekeeper by occupation and resides at Lower Sta. Maria, Davao del Sur while the land in litigation is at Colongan, Sta. Maria. Neither did he put any sign or hut to show that he is in actual possession. He knew defendants' laborers were in the land in suit as early as August, 1976 and that they have a hut there but he did not do anything to stop them. Instead plaintiff was happy that there were people and a hut on the land in suit. Before July, 1976, Petitioner Ignacio Wong went to the land in litigation to find out if there were other people residing there or claiming it besides the owner and he found none. So, in July, 1976, Ignacio Wong bought the parcel of land in litigation from William Giger and his wife Cecilia Valenzuela. Wong asked for the delivery of the title to him and so he has in his possession the TCT in the name of William Giger. Wong declared the land in suit for taxation purposes in his name. He tried to register the pacto de retro sale with the Register of Deeds by paying the registration fee but due to some technicalities, the pacto de retro sale could not be registered. Wong placed laborers on the land in suit, built a small farm house after making some clearings and fenced the boundaries. He also placed signboards. On September 27, 1976, Mercado again went to the land in suit to make copras. That was the time the matter was brought to the attention of the police of Sta. Maria, Davao del Sur and the incident entered in the police blotter. Then on November 18, 1976, Wong ordered the hooking of the coconuts from the land in litigation and nobody disturbed him. But on November 29, 1976, Wong received a copy of Mercado's complaint for forcible entry with summons to answer which is the case now before the Court. During the pendency of this instant complaint for forcible entry, spouses William Giger and Cecilia Valenzuela filed a case for reformation of instrument with the Court of First Instance of Digos, Davao del Sur against plaintiff Mercado. On the basis of the aforestated undisputed facts, the Municipal found in favor of the petitioner. On appeal, the CFI of Davao del Sur, ruled in favor of Manuel Mercado. Hence, this petition. ISSUES: 1. Whether or not defendant Manuel Mercado established prior possession of the lot in question. 2. Whether or not petitioner Wong is liable to pay rent.

122

HELD: 1. YES. It should be stressed that "possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc. vs. Villareal, 135 SCRA 15 [1985]). In the instant case, it is clear that possession passed from vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a retro. Accordingly, the later sale a retro in favor of petitioner failed to pass the possession of the property because there is an impediment — the possession exercised by private respondent. Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessions, the one longer in possession, if the dates of possession are the same, the one who presents a title; and if these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings (Art. 538, Civil Code). 2. YES. It should be noted that possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. (Art. 528, Civi l Code). Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith. Such interruption takes place upon service of summons. A perusal of the records of the case shows that petitioner received private respondent's complaint for forcible entry with summons on November 29, 1976. His good faith therefore ceased on November 29,1976. Accordingly, the computation of the payment of monthly rental should start from December, 1976.

123

NICANOR SOMODIO v. COURT OF APPEALS G.R. No. 82680. August 15, 1994. Quiasion, J.: DOCTRINE: In ejectment cases, the only issue for resolution is who is entitled to the physical or material possession of the property involved, independent of any claim of ownership set forth by any of the party-litigants. Anyone of them who can prove prior possession de facto may recover such possession even from the owner himself. FACTS: A piece of land in General Santo City was sold to Wilfredo Mabugat. Nicanor Somodio contributed one-half of the purchase price, Mabugat executed an Affidavit of Trust, recognizing the right of Somodio over one-half portion of the lot. After they partitioned the property, Somodio immediately took possession of his portion and planted ipil-ipil trees, coconut trees and other fruit bearing trees. IN 1976, he allowed Ayco to enter the premises and construct a nipa hut thereon. When the time came that he wanted to remove Ayco, the latter refused, and Somodio filed suit for unlawful detainer. On June 1983, Ebeneco Purisima entered the property and started constructing a structure. A forcible entry case was filed against Purisima. Purisima contended that his father, a geodetic engineer, had surveyed the parcel of land comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond Association, Inc. in February 1958, and that his father's survey plan was approved by the Director of Lands in 1960. Ayco, on the other hand, did not present any evidence but merely anchored his right to possess the property on the evidence of Purisima. During suit, the MTC and RTC ruled in favor of Somodio, but the Court of Appeals set Aside the judgment, stating that Somodio did not clearly and conclusively establish physical, prior possession over the lot. ISSUE: Whether Somodio had prior possession over the lot in controversy. HELD: YES. In ejectment cases, the only issue for resolution is who is entitled to the physical or material possession of the property involved, independent of any claim of ownership set forth by any of the party-litigants. Anyone of them who can prove prior possession de facto may recover such possession even from the owner himself. This rule holds true regardless of the character of a party's possession, provided, that he has in his favor priority of time which entitles him to stay on the property until he is lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria. Petitioner took possession of the property sometime in 1974 when he planted the property to coconut trees, ipil- ipil trees and fruit trees. In 1976, he started the construction of a building on the property. It is immaterial that the building was unfinished and that he left for Kidapawan for employment reasons and visited the property only intermittently. Possession in the eyes of the law does not mean that a man has to have his feet on every square meter of ground before it can be said that he is in possession (Ramos v. Director of Lands, 39 Phil. 175 [1918]). It is sufficient that petitioner was able to subject the property to the action of his will. Article 531 of the Civil Code of the Philippines provides:

124

Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right. Even if the Court of Appeals is correct in its finding that petitioner started introducing improvements on the land only in 1981, he still enjoyed priority of possession because respondent Purisima entered the premises only in 1983. It should be emphasized that the Court of Appeals noted that none of the parties had produced tax declarations or applications as public land claimants. As such, what should have been scrutinized is who between the claimants had priority of possession. Moreover, neither is the fact that respondent Purisima's father surveyed the property of help to his cause. As the Court of Appeals found, respondent Purisima's father surveyed the land for the Small Farmers Fishpond Association, Inc., not for himself. Although respondent Purisima now claims that Lot No. 6328-X was in payment of his fee for the services of his father and that he caused the construction of a perimeter wall in the area, these facts do not mean that respondent Purisima himself had prior possession. He did not present any proof that his father had authorized him to enter the land as his successor-in-interest. Neither did he present proof that between 1958, when his father allegedly took possession of the land, and 1983, when said respondent himself entered the land, his father ever exercised whatever right of possession he should have over the property. Under these circumstances, priority in time should be the pivotal cog in resolving the issue of possession. The Court of Appeals opined that petitioner had not properly identified the lot he had occupied. The matter of identification of the land, however, had been resolved by respondent Purisima's admission in his pleadings, as well as by two ocular inspections. In his answer to the complaint, respondent Purisima claimed possession over Lot No. 6328-Y, while petitioner identified the lot adjacent to it, Lot NO. 6328-X, as the area where private respondents built their houses. That these two lots are distinct from one another was resolved by the ocular inspection conducted by a Senior Geodetic Engineer of the Office of the City Engineer, who found that "south of lot 6328-H across a 10 meter wide road is lot 6328-Y and from thence to the south is lot 6328-X." On June 13, 1985, the Municipal Trial Court judge himself went to the premises in question and discovered that aside from the houses of respondents Purisima and Ayco, five other houses had been built on Lot No. 6328-X. Petitioner's prior possession over the property, however, is not synonymous with his right of ownership over the same. As earlier stated, resolution of the issue of possession is far from the resolution of the issue of ownership. Forcible entry is merely a quieting process and never determines the actual title to an estate.

125

MAGLUCOT-AW v. MAGLUCOT G.R. No. 132518. March 28, 2000. Kapunan, J. DOCTRINE: Parties to a partition proceeding, who elected to take under partition, and who took possession of the portion allotted to them, are estopped from questioning the title to partition allotted to another party. FACTS: Petitioner filed a complaint for the recovery of possession and damages alleging that they are the owners of lot no. 1639-D which was originally part of lot no. 1639 which was covered by OCT no. 67 issued in the names of Hermogenes Olis, Pascual Olis, Bartolome Maglucot, Anselmo Lara, and Tomas Maglucot. Subsequently, Tomas and respondent's predecessor-in-interest filed a petition to subdivide the lot into six portions and was granted. Then in 1963, respondents rented portions of lot 1639-d paying rentals therefore. They likewise built houses on their corresponding leased lots. However, in 1992, they stopped paying rentals claiming ownership over the subject lot. Petitioners maintained that there was a valid partition and that the respondents are stopped from claiming to be co-owners of the subject lot in view of their agreement in 1946 and ruled that the sketch plan and tax declarations relied upon by petitioners are not conclusive evidence to partition. ISSUE: Whether or not the respondents are estopped from questioning the title to partition. HELD: YES. Parties to a partition proceeding, who elected to take under partition, and who took possession of the portion allotted to them, are estopped from questioning the title to partition allotted to another party. Here, respondents already occupied the lots in accordance with the sketch plan. This occupation continued until this action was filed. They cannot now be heard to question the possession and ownership of the other co-owners who took exclusive possession of lot 1639-d also in accordance with the sketch plan. Also, the payment of rentals reveals that respondents' possession of the land is that of a holder and not as owner thereof. One who possess as a mere holder acknowledges in another a superior right which he believes to be ownership. Hence, petitioners were in possession of the subject lot in the concept of an owner from 1952 up to the time the present action was commenced. Petition was granted.

126

FERNANDA MENDOZA CEQUENA AND RUPERTA MENDOZA LIRIO v. HONORATA BOLANTE G.R. No. 137944. April 6, 2000. Panganiban, J. DOCTRINE: For all intents and purposes, a possessor, even if physically ousted is still deemed to be the legal possessor. FACTS: Before 1954, the land in question was originally declared for tax purposes under the name of Sinforoso Mendoza, father of respondent. Sinforoso died in 1930. Petitioners were daughters of Margarito Mendoza. The tax declaration in the name of Sinforoso was cancelled, and subsequently placed the tax declaration under the name of Margarito. The respondent was the occupant of that land. During the cadastral survey of the land, the brother of petitioner and Honorata had a dispute over the ownership of the property. The trial court said that petitioners are the lawful owner of the property. However, in a turn of events, the appellate court held that the probative value of petitioners' tax receipts and declarations paled in comparison with the respondent's proof of ownership of the disputed parcel. Actual, physical, exclusive and continuous possession by respondent since 1985 indeed gave her a better title under Art. 538 of the Civil Code. ISSUE: Whether or not the respondent, Honorata had a better right over the property HELD: The Court of Appeals ruled that the respondent was the preferred possessor under Art. 538 of the Civil Code because she was in notorious, actual, exclusive and continuous possession of the land since 1985. The petitioners dispute this ruling. They contend that she came into possession through force and violence, contrary to Art 536 of the Civil Code. We concede that despite their dispossession in 1985, the petitioners did not lose legal possession because possession cannot be acquired through force or violence. To all intents and purposes, a possessor even if physically ousted, is still deemed the legal possessor. Indeed, anyone who can prove prior possession, regardless of its character, may recover such possession. However, possession by the petitioners does not prevail over that of the respondent. Possession by the former before 1985 was not exclusive, as the latter also acquired it before 1985. The records show that the petitioners' father and brother, as well as the respondent and her mother were simultaneously in adverse possession of the land. Before 1985, the subject land was occupied and cultivated by the respondent's father (Sinforoso), who was the brother of petitioners' father (Margarito), as evidenced by Tax Declaration No. 26425. When Sinforoso died in 1930, Margarito took possession of the land and cultivated it with his son Miguel. At the same time, respondent and her mother continued residing on the lot. Possession cannot be acquired through force or violence.

127

JUAN M. ARAGON v. INSULAR GOVERNMENT G.R. No. L-6019, March 25, 1911. Carson, J. DOCTRINE: In a case of gradual encroachment or erosion by the ebb and flow of the tide, private property may not become "property of public ownership" where it appears that the owner has to all intents and purposes abandoned it and permitted it to be totally destroyed, so as to become a part of the "playa" (shore of the sea), "rada" (roadstead), or the like. FACTS: Juan Aragon filed for their land for an application for registry. Thereupon, the Government of the Philippine Islands, through its proper representatives, objected to the application for registry on the ground that the land in question is a part of the public domain as defined in Article 339 of the Civil Code since the land lies on shores and also, alleged to have violated Article 1 of The Law of Waters (Ley de Aguas) on the same ground that it lies on the shore. The latter law defined shores as: "Shore" is understood to be that space which is alternatively covered and uncovered by water with the movement of the tides. Its interior or terrestial limit is marked by the lone reached by the highest tides and equinoctials. Where the tides are not perceptible the shore begins at the line reached by the water during tempests and ordinary storms. At the time of the application, the land in question was so located that at high tide it was completely covered by the waters of the Bay of Manila, though the receding waters left it completely bare at low tide. However, it is noteworthy that in the year 1892 a possessory title to the land in question was duly registered in favor of Inocencio Aragon, one of the predecessors in interest of these applicants; that for a long period of years, and perhaps from a time beyond which the memory of man runneth not to the contrary, the applicant and their predecessors in interest have been in possession of the parcel of land in question, under and undisputed claim of ownership; that it is located toward the center of one of the most valuable residential sections of the city of Manila, and that for many years a house stood upon this land, and was occupied by some of the predecessors in interest of the applicants in these proceedings; that with some relatively small expenditure by way of a "fill" or a "retaining wall" it would still be a valuable building lot for residential purposes; that the adjoining lots extend toward the bay to a line formed by the extension of the outer boundary line of the lot in question, and that these adjoining lots would be in substantially the same physical condition, by relation to the ebb and flow of the tide, as lot in question, but for low retaining walls which protect them against the incoming sea; that the water which spreads over the lot in question at high tide is of but little depth, and would be wholly excluded by a very limited amount of "filling" materials or a low retaining wall; that there are strong reasons to believe that the land in question was originally well above the ebb and flow of the tide; and that only in later years have the waters risen to such a height along the shores of the Bay of Manila at this point as to cover the land in question completely at high tide; though it does not definitely appear whether this is due to changes in the current and flow of the waters in the bay, or to the gradual sinking of the land along the coast. ISSUE: Whether or not petitioner Aragon will lose possession and ownership over the land in question.

128

HELD: No, the Court ruled that the ownership of Aragon over the land cannot be disturbed and shall remain on the petitioner’s possession and ownership. The following pertinent provisions on the Civil Code states that: Article 446.Every possessor has a right to be respected in his possession; and should he be disturbed therein, he must be protected or possession must be restored to him by the means established in the laws of procedure. Article 460.The possessor may lose his possession — 1.By the abandonment of the thing. 2.By transfer to another for a good or valuable consideration. 3.By the destruction or total loss of the thing or by the thing becoming unmarketable. 4.By the possession of another, even against the will of the former possessor, if the new possession has lasted more than one year. Under the above-stated provisions of the code, it seems quite clear that if the Government is justified in disturbing the possession of the applicants, it can only be on the ground that they have abandoned their property, or that it has been totally destroyed and has now become a part of the public domain by the erosive action of the sea. It is quite clear that applicants have never abandoned their possession under a claim of ownership of this land. The Court held that the facts above stated fully sustain a finding that there has been no such destructive or total loss of the property as would justify a holding that the owners have lost possession. Doubtless the property has been injured by the erosive action of the sea. Doubtless the owners in order to profitably enjoy the possession of this property will be compelled to make some relatively small expenditures by way of a "fill" or a retaining wall. But the actual condition of the property as it appears from the record makes a claim that it has been totally lost or destroyed preposterous and wholly untenable. Furthermore, if the applicants have not lost their right of possession, the Government's claim of ownership, on the ground that this is a part of the playa (shore) of Manila Bay, necessarily falls to the ground. In a case of gradual encroachment or erosion by the ebb and flow of the tide, private property may not become "property of public ownership," as defined in article 339 of the code, where it appears that the owner has to all intents and purposes abandoned it and permitted it to be totally destroyed, so as to become a part of the "playa" (shore of the sea), "rada" (roadstead), or the like. The Honorable Court’s ruling in this case is merely that it affirmatively appears that the owners of the land in question have never in fact nor in intent abandoned it, and that keeping in mind its location and actual condition it can not be said to have been totally destroyed for the purposes for which it was held by them, so as to have become a part of the playa (shore) of the Bay of Manila.

129

CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE v. COURT OF APPEALS G.R. No. 80294-95, September 21, 1988. Gancayco, J. DOCTRINE: The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse possession on the part of the borrower. The bailee held in trust the property subject matter of commodatum. The adverse claim comes when it declared the lots for taxation purposes. FACTS: The documents and records presented reveal that the whole controversy started when the defendant Catholic Vicar Apostolic of the Mountain filed an application for registration of title over Lots Poblacion Central, La Trinidad, Benguet. On March 22, 1963 the Heirs of Juan Valdez and the Heirs of Egmidio Octaviano filed their Answer/Opposition asserting ownership and title thereto. After trial on the merits, the land registration court promulgated its Decision, dated November 17, 1965, confirming the registrable title of VICAR to the said lots. The Heirs of Juan Valdez and the Heirs of Egmidio Octaviano appealed the decision of the land registration court to the then Court of Appeals, which reversed the decision of the land registration court and dismissing the VICAR's application as to Lots 2 and 3, the lots claimed by the two sets of oppositors in the land registration. ISSUE: Whether or not a decision of the Court of Appeals promulgated a long time ago can properly be considered res judicata by respondent Court of Appeals in the present two cases between petitioner and two private respondents. HELD: The petition is bereft of merit. The Decision of the Court of Appeals did not positively declare private respondents as owners of the land, neither was it declared that they were not owners of the land, but it held that the predecessors of private respondents were possessors of Lots 2 and 3, with claim of ownership in good faith from 1906 to 1951. When petitioner applied for registration of Lots 2 and 3 in 1962, it had been in possession in concept of owner only for eleven years. Ordinary acquisitive prescription requires possession for ten years, but always with just title. Extraordinary acquisitive prescription requires 30 years. The Court of Appeals found that petitioner did not meet the requirement of 30 years possession for acquisitive prescription over Lots 2 and 3. Neither did it satisfy the requirement of 10 years possession for ordinary acquisitive prescription because of the absence of just title. Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar after the church and the convent were destroyed. They never asked for the return of the house, but when they allowed its free use, they became bailors in commodatum and the petitioner the bailee. The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse possession on the part of the borrower. The bailee held in trust the property subject matter of commodatum. The adverse claim of petitioner came only in 1951 when it dec lared the lots for taxation purposes. The action of petitioner Vicar by such adverse claim could not ripen into title by way of ordinary acquisitive prescription because of the absence of just title. The Court of Appeals found that the predecessors-in-interest and private respondents were possessors under claim of ownership in good faith from 1906; that petitioner Vicar was only a bailee in commodatum; and that the adverse claim and repudiation of trust came only in 1951.

130

EDCA PUBLISHING & DISTRIBUTING CORP. v. SPOUSES SANTOS G.R. No. 80298, April 26, 1990. Cruz, J. DOCTRINE: If the possessor of a movable lost or of which the owner has been unlawfully deprived has acquired it on good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefore. FACTS: On October 5, 1981, a person identifying himself as Professor Jose Cruz placed an order by telephone with the petitioner company for 406 books, payable on delivery. EDCA prepared the corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the purchase price of P8,995.65. On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos who, after verifying the seller’s ownership from the invoice he showed her, paid him P1,700. Meanwhile, EDCA having become suspicious over a second order by Cruz even before clearing of his first check, made inquiries with the De La Salle College where he had claimed to be a dean and was informed that there was no suc h person in its employ. Further verification revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against which he had drawn the payment check. In an entrapment operation, Cruz was arrested and in the investigation disclosed his real name as Tomas de la Peña and his sale of 120 of the books he had ordered from EDCA to the private respondents. On the night of the same date, EDCA sought the assistance of the police, which forced their way into the store of the private respondents and threatened Leonor Santos with prosecution for buying stolen property. They seized the 120 books without warrant, and thereafter turned them over to the petitioner. Private respondents sued for recovery of the books after demand for their return was rejected by EDCA. A writ of preliminary attachment was issued and the petitioner, after initial refusal, finally surrendered the books to the private respondents. The lower courts and the Court of Appeals ruled in favor of the respondents. Hence, this petition. ISSUE: Whether or not petitioner has been unlawfully deprived of the books because the checks issued by the impostor in payment therefore was dishonored. HELD: NO. Art. 559 provides: The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or of which the owner has been unlawfully deprived has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefore. Actual delivery of the books having been made, Cruz acquired ownership over the books which he could then validly transfer to the private respondents. The fact that he had not yet paid for them to EDCA was matter between him and EDCA and did not impair the title acquired by the private respondents to the books. One may well imagine the adverse consequences if the phrase ―unlawfully deprived‖ were to be interpreted in the manner suggested by petitioner. A person relying on the seller’s title who buys a movable property from him would have to surrender it to another person

131

claiming to be the original owner who had not yet been paid th e purchase price therefore. The buyer in the second sale would be left holding the bag, so to speak, and would be compelled to return the thing bought by him in good faith without even the right to reimbursement of the amount he had paid for it. It bears repeating that in the case at bar, Santos took care to ascertain first that the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her that the books had been paid for on delivery. By contrast, EDCA was less than cautious - in fact, too trusting in dealing with the impostor. Although it had never transacted with him before, it readily delivered the books he had ordered and as readily accepted his personal check in payment. It did not verify his identity although it was easy enough to do this. It did not wait to clear the check of this unknown drawer. Worse, it indicated in the sales invoice issued to him, by printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership in the buyer.

132

DE GARCIA v. COURT OF APPEALS G.R. No. L-20264 January 30, 1971. Fernando, J. DOCTRINE: One who has lost or has been unlawfully deprived of a movable may recover the same from the person in possession of the same and the only defense the latter may have is if he has acquired it in good faith at a public sale in which case the owner cannot obtain its return without reimbursing the price paid therefore. The only exception provided by law is when the possessor acquired the property through a public sale, in which case, the owner cannot recover without reimbursement. FACTS: Guevarra was the owner of a lady’s diamond ring with white gold mounting, solitaire 2karat diamond as well as 4 brills. It was stolen from her house. On a relevant date, while she was talking to Garcia, an owner of a restaurant, she recognized the ring on the latter’s finger and asked how she acquired the same. Garcia averred that she bought it from her comadre. Guevarra made Garcia know that the ring was stolen from her place days before. It was ascertained the ring was indeed Guevarra’s but despite written demands, Garcia refused to return the ring. ISSUE: Whether a person who has been unlawfully deprived of possession of a movable may recover the same. HELD: YES. The controlling provision is Article 559 of the Civil Code. It reads thus: "The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor." Respondent Angelina D. Guevara, having been unlawfully deprived of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price. As authoritative interpreted in Cruz v. Pahati, the right of the owner cannot be defeated even by proof that there was good faith by the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco. Thus: "Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by the another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and statutory provision, the latter must prevail in this jurisdiction." Hence, Guevarra who was unlawfully deprived of the ring was entitled to recover it from de Garcia who was found in possession of the same.

133

DOMINADOR DIZON v. LOURDES G. SUNTAY G.R. No. L-30817. September 29, 1972. Fernando, J. DOCTRINE: One who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. FACTS: Suntay is the owner of a 3-carat diamond ring which was delivered to Clarita Sison for sale on commission. After the lapse of a considerable time without Sis on having returned to Suntay the latter’s ring, Suntay made demands on Sison. Turns out that the ring was pledged by Clarita’s niece, evidently in connivance with her, with the defendant Dizon’s pawnshop for PhP 2, 600.00. When Suntay found out about the pledge, she filed a case against Sison and thereafter wrote a letter to Dizon asking for the delivery to her of her ring pledged. Dizon refused, hence, an action was filed with the CFI of Manila for the recovery of the ring. The CFI granted the action and declared Suntay as having the right of possession of the ring in question. ISSUE: Whether Suntay has the right of possession over the diamond ring. HELD: YES. The controlling provision is Article 559 of the Civil Code which provides in part that one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. Suntay having been unlawfully deprived of the ring in question, is entitled to recover it from Dizon who was found in possession of the same. Neither can Dizon’s defense of estoppels stand. Estoppel has its roots in equity with good faith as its basis. How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppels? Neither the promptings of equity nor the mandates of moral right and natural justice come to his rescue. He is engaged in a business where presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is offering jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such jewelry should be recognized.

134

JAIME LEDESMA v. COURT OF APPEALS and CITIWIDE MOTORS INC. G.R. No. 86051. September 1, 1992. Davide, Jr, J. DOCTRINE: The three requisites so that acquisition of movable property would be equivalent to title are: (1) possession in good faith; (2) owner voluntarily parted with the possession of the thing; and (3) possession is in the concept of an owner. FACTS: A person representing himself to be Jojo Consunji, purchased purportedly for his father, one Rustico Consunji, two brand new motor vehicles from Citiwide Motors – an Isuzu Gemini and a Holden Premier Model. Citiwide delivered the motor vehicles to Consunji and the latter in turn issued two manager’s checks as full payment of the two motor vehicles. When Citiwide deposited the said checks, the same were dishonored by the bank on the ground that it was tampered with the correct amount of P101.00 having been raised to P101,000.00. Citiwide reported the criminal act that transpired. Based on the findings of the Constabulary, it turned out that the impostor Jojo Consunji was actually one Armando Suarez who has a long line of criminal cases against him for estafa using his similar modus operandi. The Holden Premiere was recovered by Citiwide when it was found abandoned somewhere in Quezon City while the Isuzu Gemini was already transferred by Suarez to herein petitioner Jaime Ledesma. Citiwide instituted an action for replevin for the recovery of the said motor vehicle. Ledesma interposed that he purchased the same in good faith from its registered owner, one Pedro Neyra. The lower court ruled in favor of Ledesma. On appeal, the CA ruled that Citiwide had been unlawfully deprived of the vehicle and hence Ledesma is bound to return the same. Hence, this petition. ISSUE: Whether Citiwide Motors was unlawfully deprived of the cars when it sold the same to the purported father of the impostor Jojo Consunji. HELD: NO. Under Article 559 of the Civil Code, a party who has (a) lost any movable or (b) has been unlawfully deprived thereof can recover the same from the present possessor even if the latter acquired it in good faith and has therefore title thereto. The Court noted that there are three requisites to make possession of movable property equivalent to title: (1) possession should be in good faith; (2) owner voluntarily parted with the possession of the thing; and (3) possession is in the concept of an owner. In light of the foregoing, when one had been unlawfully deprived of a thing, he has not voluntarily parted of it and thus possessor cannot validly acquire title to the said thing. In the instant case, the Court noted that there is a perfected unconditional contract of sale between Citiwide and the original vendee (Amando Suarez, or Jojo Consunji). Consequently, Citiwide cannot be said to have been unlawfully deprived of the motor vehicles as it had voluntarily transferred title to the same. Thus, Ledesma, a buyer in good faith and for value cannot be deprived of the motor vehicle.

135

LEONARDO AZARCON, MANUEL AZARCON and ESTEBAN ABOBO v. VICTOR EUSEBIO G.R. No. L-11977. April 29, 1959. Labrador, J.: DOCTRINE: A person who has been ordered to leave certain premises is ordinarily not prohibited from taking with him his own effects and possession, unless there is an express prohibition to this effect. FACTS: Respondent Victor Eusebio and petitioners herein had a dispute over the possession of a certain parcel of public land in the year 1954. Victor Eusebio had filed a lease application, No. V-79, for a parcel of land known as lot No. 3807, containing an area of about 349 hectares. A portion thereof was occupied by petitioners herein, Leonardo L. Azarcon and his companions, under a homestead application. The conflict between the lessee and the homesteaders was ordered to be investigated on May 25, 1955 by the Director of Lands and again on August 3, 1955 by the Secretary of Agriculture and natural Resources. Before the dispute could be settled and on April 28, 1954, Victor Eusebio filed a complaint in the Court of First Instance of Nueva Ecija, alleging that he had acquired a big parcel of land, 349 hectares in area, by lease from the Bureau of Lands (lease application No. V-79); that while he was in possession thereof defendants occupied a portion, known as lot No. 2807, containing an area of six hectares more or less. Defendant Leonardo Azarc on answered the complaint alleging that he is in actual possession of a portion of 24 hectares since 1941 by virtue of a homestead application, No. V-42995; that the lease application of plaintiff is subsequent to said homestead application of Leonardo Azarcon; that Azarcon had occupied the land since 1941 with interruption during the war and again in 1950 up to the time of the filing of the action. While the case was pending in the Court of Appeals, a writ for the execution of the judgment of the lower court was issued on October 3, 1955. Various petitions were submitted by the parties, and among them was that of defendants-appellants asking for the lifting of the writ of execution. The evidence shows that in spite of the receipt by the defendants of the notice of the writ of execution of October 3, 1955, which writ of execution commanded defendants "to forthwith remove from said premises and that plaintiff have restitution of the same," defendantsappellants nevertheless entered the land to gather palay which was then pending harvest. ISSUE: Whether the defendant-appellants had a right over the palay. HELD: YES. Under the law a person who is in possession and who is being ordered to leave a parcel of land while products thereon are pending harvest, has the right to a part of the net harvest, as expressly provided by Article 545 of the Civil Code. ART. 545. If at the time the good faith ceases, there should be any natural or industrial fruits, the possessor shall have a right to a part of the expenses of cultivation, and to a part of the net harvest, both in proportion to the time of the possession. xxx

xxx

xxx

136

As the order of execution did not expressly prohibit the defendants-appellants from gathering the pending fruits, which fruits were the result of their possession and cultivation of the land, it cannot be said that the defendants-appellants committed an act which is clear violation of the courts' order. Besides, the defendants-appellants had presented, after receipt of the order of execution, a motion to set aside the said order of execution, and this motion to stay execution was granted. Defendants furthermore presented a bond in accordance with the order of the court and had it approved by the Court of First Instance. It was perhaps in expectation of this resolution of the court setting aside the order of execution that defendants -appellants may have felt justified in entering the land and harvesting the fruits existing thereon. We are not ready to conclude that the defendants-appellants can be held to have committed a clear defiance of the order of the court. Their act in harvesting the pending fruits was not only justified by law but was not expressly prohibited by the court's order, and was even ratified when the court ordered the suspension of the execution. There was, therefore, no open, clear and contumacious refusal to obey a definite order of the court such as would constitute contempt. Furthermore, a person who has been ordered to leave certain premises is ordinarily not prohibited from taking with him his own effects and possession, unless there is an express prohibition to this effect. No such, prohibition was contained in the order for the defendants to leave the land. There may have been a technical violation of an order not to enter the premises, but not of one prohibiting them from removing anything therefrom. Such technical violation of the order cannot be considered as one amounting to a defiance of the court's authority, punishable as contempt.

137

FELIPA CORDERO, MAURO OCAMPO, CASIMIRO OCAMPO and ELISEA OCAMPO v. VICTORIA CABRAL, ALEJANDRO BERBOSO, DALMACIO MONTAOS and CA G.R. No. L-36789. July 25, 1983. Abad Santos, J. DOCTRINE: Possessors in bad faith shall reimburse the fruits received and those which the legitimate possessor could have received from the time their good faith ceased, or from the moment facts exist that they are unaware that their possession is improper or wrongful. FACTS: Plaintiffs herein Felipa Cordero et.al. are the successors in interest of Gregorio Ocampo, who owned a parcel of land, measuring 78, 181 square meters located at Meycauayan, Bulacan. They filed a civil case against defendants Victoria Cabral, et. al. due to their alleged illegal possession of a 4,303 square meter rice land included in the aforementioned property they inherited from Ocampo. Due to such illegal possession, they averred that they were deprived of harvesting at least 10 cavans of palay at the rate of P10.00 per cavan from the harvest time of 1958 up to the time of their filing of the case. On their reply, the defendant denied the allegations of the plaintiffs arguing among other things that they are the true owners of the 4,303 square meter land and that there was an error in the inclusion of the said land in the title of the plaintiffs. This is so since their predecessor, late Antonio Rodriguez and Gregorio Ocampo had an oral sale regarding the disputed land and from then on Ocampo admitted, acknowledged, and recognized their possession of the same. These contentions were rebutted by the plaintiffs saying that the oral sale they were referring to never materialized. If their predecessors were in possession of the said land before, such was due to Ocampo’s mere toleration. The trial court dismissed the said complaint of the plaintiffs. On appeal, CA affirmed the decision of the lower court ruling on one hand that the disputed land was part of the land originally registered in the name of the plaintiffs’ predecessor in interest but the said title cannot be used to defeat the personal agreement between the parties’ predecessors in interest. It thus held that such agreement should be binding upon the plaintiffs as much as it is binding upon their predecessor in interest, Ocampo. Hence, this petition. ISSUE: Whether Cabral, et. al. are possessors in bad faith. HELD: YES. The Court resolved first the issue of ownership in the case at bar. It ruled that the disputed land is included in the original title issued to the predecessor in interest of the plaintiffs. There was no error or fraud attendant of such inclusion. It held that CA erred in its finding that Ocampo orally sold the land in question to Rodriguez. It is a clear fact in the case at bar that the respondents are in possession of the land. As much as there is no evidence that they are possessors in bad faith, the Court noted that their good faith ceased when the respondents were served with summons to answer the complaint filed by herein plaintiffs. Consequently, as possessors in bad faith, the Court ruled that they shall reimburse the fruits received and those which the legitimate possessor could have received from the time that their good faith ceased, i.e. from the time of service of summons.

138

MARTIN MENDOZA v. M ANUEL DE GUZMAN G.R. No. L- 28721. October 5, 1928. Malcolm, J. DOCTRINE: In as much as the one who intend retention, one who is not actually a possessor in good faith within the meaning of the law, seeks to be reimbursed for the necessary and useful expenditures, it is only just that he should account to the owners of the property any fruits, rents or even crops he had gathered from it. FACTS: By virtue of a court order, Martin Mendoza was put in possession of the disputed property. In a cadastral proceeding, said lot was adjudicated in favor of Martin Mendoza and Natalio Enriquez in equal parts pro diviso subject to the right of retention on the part of Manuel De Guzman until he shall have been indemnified for the improvements existing on the land. From the time Leandra Solis and Bernardo Solis, as well as Manuel de Guzman who was working on the land, were ejected from the disputed land, Martin Mendoza possessed it until June 25, 1924, when de Guzman obtained the writ of possession and since then De Guzman has had dominion over the land. An action was filed requesting the court to determine the value of necessary and useful expenses incurred by Manuel De Guzman in introducing the improvements, require the defendant to render an accounting of the fruits received by him and order that the value of the fruits be applied to the payment of the necessary and useful expenses. ISSUE: Whether or not the defendant has the right to be indemnified. HELD: YES. The amount of the indemnification is the amount of the expenditures which is the necessary and useful expenses incurred by the defendant. In the case at bar, the plaintiff have chosen to take the improvements introduced on the land and are disposed to pay the amount of the necessary and useful expenses incurred by the defendant. In as much as the one who intend retention, one who is not actually a possessor in good faith within the meaning of the law, seeks to be reimbursed for the necessary and useful expenditures, it is only just that he should account to the owners of the property any fruits, rents or even crops he had gathered from it. Necessary expenses are those made for the preservation of the thing, without which the thing would deteriorate or be lost and those that augment the income of the things upon which they are expanded. Among the necessary expenditures are those incurred for cultivation, production, upkeep, etc. Under the law, necessary expenses shall be refunded to every possessor but only those in good faith may retain the thing until he has been reimbursed and useful expenses shall be refunded only to the possessor in good faith with the same right of retention.

139

EVARISTA ROBLES and ENRIQUE MARTIN v. LIZARRAGA HERMANOS and the REGISTER OF DEED OF ILOILO G.R. No. L-16662. December 21, 1921. Romualdez, J. DOCTRINE: Necessary expenditures shall be refunded to every possessor, but only the possessor in good faith may retain the thing until they are repaid to him. Useful expenditures shall be paid the possessor in good faith with the same right to retention, the person who has defeated him in his possession having the opinion of refunding the amount of such expenditures or paying him the increase in value which the thing has acquired by reason thereof. FACTS: Anastasia de la Rama died, leaving six children, to wit, Magdalena, Jose, Evarista, Zacarias, Felix, and Purificacion, surnamed Robles, and some properties, among which is house No. 4 on Iznart Street in the city of Iloilo, concerning which a controversy arose which developed into the three cases now under consideration. The children and heirs of Anastasia de la Rama entered into partnership with Lizarraga Hermanos in liquidation and settlement of their accounts, by virtue of which the competent court awarded to said partnership the properties left by the deceased, including the aforesaid house No. 4 on Iznart Street. Evarista Robles, one of the aforesaid heirs, since before the death of her mother Anastasia de la Rama, has been with her husband occupying the aforesaid house No. 4 on Iznart Street, at the beginning, by permission of her mother, later on by the consent of her coheirs, and lastly by agreement with the partnership, Lizarraga Hermanos, to whom it had been awarded, having made some improvements on the house, the value of which is fixed at P4,500, and paying to said partnership P40 monthly as rent of the upper story. Lizarraga Hermanos notified Evarista Robles that beginning April next the rent of the upper story of the house would be raised to P60 a month, and that, if she did not agree to the new rate of rent, she might vacate the house. Evarista Robles refused to pay such a new rate of rent and to vacate the house, and Lizarraga Hermanos brought suit against her for ejectment. Evarista Robles sued Lizarraga Hermanos afterwards to recover the value of the improvements, and demanded, in another action, that said value be noted on the certificate of title as an encumbrance. ISSUE: Whether Evarista Robles and Enrique Martin has the right to retain the property until she is paid for the value of the improvements. HELD: YES. Article 434 provides that "good faith is always presumed and the burden of proving bad faith on the part of the possessor rests upon the person alleging it." Lizarraga Hermanos did not allege, nor prove in the first instance the bad faith characterizing Evarista Robles' possession, who, as shown in the records and heretofore stated, began to occupy the house by permission of the former owner, her mother Anastasia de la Rama, and continued later in the occupation by the consent of her coheirs, and afterwards by considering herself the future owner of the building by virtue of the contract with the present owner, Lizarraga Hermanos. The evidence shows that said improvements were begun about the end of December, 1916, after the agreement with Lizarraga Hermanos for the sale thereof to Evarista Robles. If the improvements are useful and Evarista Robles' possession was in good faith, the conclusion set out in article 453 of the Civil Code, supra, is inevitable; Evarista Robles is the owner of such improvements, and entitled to reimbursement therefor, and to retain the building until the same is made.

140

METROPOLITAN WASTE AND SEWERAGE SYSTEM v. COURT OF APPEALS G.R. No. L-54526. August 25, 1986. Feria, J. DOCTRINE: The right given to a possessor in bad faith to remove improvements applies only to improvements for pure luxury or mere pleasure, provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they have at the time he enters into possession. FACTS: The City of Dagupan filed a complaint against the former National Waterworks and Sewerage Authority now the Metropolitan Waterworks and Sewerage System, for recovery of the ownership and possession of the Dagupan Waterworks System. NAWASA interposed as one of its special defenses R.A. 1383 which vested upon it the ownership, possession and control of all waterworks systems throughout the Philippines and as one of its counterclaims the reimbursement of the expenses it had incurred for necessary and useful improvem ents amounting to P255,000.00. The trial court found NAWASA to be a possessor in bad faith and hence not entitled to the reimbursement claimed by it. The Court of Appeals affirmed the judgment of the trial court. MWSS appealed to the Court arguing that the pertinent laws on the subject, particularly Articles 546, 547 and 549 of the Civil Code of the Philippines, do not definitely settle the question of whether a possessor in bad faith has the right to remove useful improvements. ISSUE: Whether MWSS has the right to remove all the useful improvements introduced by NAWASA to the Dagupan Waterworks System, notwithstanding the fact that NAWASA was found to be a possessor in bad faith. HELD: NO. It is provided under Article 449 of the Civil Code of the Philippines that "he who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity." As a builder in bad faith, NAWASA lost whatever useful improvements it had made without right to indemnity. Under Article 546 of same law, only a possessor in good faith shall be refunded for useful expenses with the right of retention until reimbursed. Article 547 provides that only a possessor in good faith may remove useful improvements if the can be done without damage to the principal thing and if the person who recovers the possession does not exercise the option of reimbursing the useful expenses. Thus, the right given to a possessor in bad faith to remove improvements applies only to improvements for pure luxury or mere pleasure, provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they have at the time he enters into possession.

141