Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. Nos. 154391-92

September 30, 2004

Spouses ISMAEL and TERESITA MACASAET, petitioners,

vs.
Spouses VICENTE and ROSARIO MACASAET, respondents.
DECISION
PANGANIBAN, J.:
The present case involves a dispute between parents and children. The children were
invited by the parents to occupy the latters two lots, out of parental love and a desire to
foster family solidarity. Unfortunately, an unresolved conflict terminated this situation. Out of
pique, the parents asked them to vacate the premises. Thus, the children lost their right to
remain on the property. They have the right, however, to be indemnified for the useful
improvements that they constructed thereon in good faith and with the consent of the
parents. In short, Article 448 of the Civil Code applies.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the March
22, 2002 Decision2 and the June 26, 2002 Resolution3 of the Court of Appeals (CA) in CAGR SP Nos. 56205 & 56467. The challenged Decision disposed as follows:
"WHEREFORE, the assailed Decision is AFFIRMED with the following
MODIFICATIONS:
1. Vicente and Rosario should reimburse Ismael and Teresita one-half of the
value of the useful improvements introduced in the premises prior to demand,
which is equivalent toP475,000.00. In case the former refuse to reimburse the
said amount, the latter may remove the improvements, even though the land
may suffer damage thereby. They shall not, however, cause any more
impairment upon the property leased than is necessary.
2. The award of attorneys fees is DELETED.
3. The records of these consolidated cases are REMANDED to the Court of
origin for further proceedings to determine the option to be taken by Vicente
and Rosario and to implement the same with dispatch."4
The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts
Petitioners Ismael and Teresita5 Macasaet and Respondents Vicente and Rosario
Macasaet are first-degree relatives. Ismael is the son of respondents, and Teresita is his
wife.6
On December 10, 1997, the parents filed with the Municipal Trial Court in Cities (MTCC) of
Lipa City an ejectment suit against the children.7 Respondents alleged that they were the
owners of two (2) parcels of land covered by Transfer Certificate of Title (TCT) Nos. T78521 and T-103141, situated at Banay-banay, Lipa City; that by way of a verbal lease
agreement, Ismael and Teresita occupied these lots in March 1992 and used them as their
residence and the situs of their construction business; and that despite repeated demands,
petitioners failed to pay the agreed rental of P500 per week.8
Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that
respondents had invited them to construct their residence and business on the subject lots
in order that they could all live near one other, employ Marivic (the sister of Ismael), and
help in resolving the problems of the family.9 They added that it was the policy of
respondents to allot the land they owned as an advance grant of inheritance in favor of their
children. Thus, they contended that the lot covered by TCT No. T-103141 had been allotted
to Ismael as advance inheritance. On the other hand, the lot covered by TCT No. T-78521
was allegedly given to petitioners as payment for construction materials used in the
renovation of respondents house.10
The MTCC11 ruled in favor of respondents and ordered petitioners to vacate the premises. It
opined that Ismael and Teresita had occupied the lots, not by virtue of a verbal lease
agreement, but by tolerance of Vicente and Rosario.12 As their stay was by mere tolerance,
petitioners were necessarily bound by an implied promise to vacate the lots upon
demand.13 The MTCC dismissed their contention that one lot had been allotted as an
advance inheritance, on the ground that successional rights were inchoate. Moreover, it
disbelieved petitioners allegation that the other parcel had been given as payment for
construction materials.14
On appeal, the regional trial court15 (RTC) upheld the findings of the MTCC. However, the
RTC allowed respondents to appropriate the building and other improvements introduced by
petitioners, after payment of the indemnity provided for by Article 448 in relation to Articles
546 and 548 of the Civil Code.16 It added that respondents could oblige petitioners to
purchase the land, unless its value was considerably more than the building. In the latter
situation, petitioners should pay rent if respondents would not choose to appropriate the
building.17
Upon denial of their individual Motions for Reconsideration, the parties filed with the CA
separate Petitions for Review, which were later consolidated.18
Ruling of the Court of Appeals
The CA sustained the finding of the two lower courts that Ismael and Teresita had been
occupying the subject lots only by the tolerance of Vicente and Rosario. 19 Thus, possession

of the subject lots by petitioners became illegal upon their receipt of respondents letter to
vacate it.20
Citing Calubayan v. Pascual,21 the CA further ruled that petitioners status was analogous to
that of a lessee or a tenant whose term of lease had expired, but whose occupancy
continued by tolerance of the owner.22 Consequently, in ascertaining the right of petitioners
to be reimbursed for the improvements they had introduced on respondents
properties,23 the appellate court applied the Civil Codes provisions on lease. The CA
modified the RTC Decision by declaring that Article 448 of the Civil Code was inapplicable.
The CA opined that under Article 1678 of the same Code, Ismael and Teresita had the right
to be reimbursed for one half of the value of the improvements made. 24
Not satisfied with the CAs ruling, petitioners brought this recourse to this Court.25
The Issues
Petitioners raise the following issues for our consideration:
"1. a) Whether or not Section 17[,] Rule 70 of the Rules of Court on Judgment should
apply in the rendition of the decision in this case;
b) Whether or not the Complaint should have been dismissed;
c) Whether or not damages including attorneys fees should have been
awarded to herein petitioners;
"2. a) Whether or not the rule on appearance of parties during the Pretrial should
apply on appearance of parties during Preliminary Conference in an unlawful
detainer suit;
b) Whether or not the case of Philippine Pryce Assurance Corporation vs.
Court of Appeals (230 SCRA 164) is applicable to appearance of parties in an
unlawful detainer suit;
"3. Whether or not Article 1678 of the Civil Code should apply to the case on the
matters of improvements, or is it Article 447 of the Civil Code in relation to the Article
453 and 454 thereof that should apply, if ever to apply the Civil Code;
"4. Whether or not the [D]ecision of the Court of Appeals is supported by evidence,
appropriate laws, rules and jurisprudence;
"5. Whether or not Assisting Judge Norberto Mercado of the MTCC Lipa City should
be held accountable in rendering the MTCC [D]ecision;
"6. Whether or not Atty. Glenn Mendoza and Atty. Andrew Linatoc of the same [l]aw
office should be held accountable for pursuing the [e]jectment case[.]" 26
The Courts Ruling

The Petition is partly meritorious.

First Issue:
Ejectment
Who is entitled to the physical or material possession of the premises? At the outset, we
stress that this is the main issue in ejectment proceedings.27 In the present case, petitioners
failed to justify their right to retain possession of the subject lots, which respondents own.
Since possession is one of the attributes of ownership,28 respondents clearly are entitled to
physical or material possession.
Allegations of the Complaint
Petitioners allege that they cannot be ejected from the lots, because respondents based
their Complaint regarding the nonpayment of rentals on a verbal lease agreement, which
the latter failed to prove.29 Petitioners contend that the lower courts erred in using another
ground (tolerance of possession) to eject them.
In actions for unlawful detainer, possession that was originally lawful becomes unlawful
upon the expiration or termination of the defendants right to possess, arising from an
express or implied contract.30 In other words, the plaintiffs cause of action comes from the
expiration or termination of the defendants right to continue possession.31 The case
resulting therefrom must be filed within one year from the date of the last demand.
To show a cause of action in an unlawful detainer, an allegation that the defendant is
illegally withholding possession from the plaintiff is sufficient. The complaint may lie even if
it does not employ the terminology of the law, provided the said pleading is couched in a
language adequately stating that the withholding of possession or the refusal to vacate has
become unlawful.32It is equally settled that the jurisdiction of the court, as well as the nature
of the action, is determined from the averments of the complaint.33
In the present case, the Complaint alleged that despite demands, petitioners "refused to
pay the accrued rentals and [to] vacate the leased premises."34 It prayed that judgment be
rendered "[o]rdering [petitioners] and all those claiming rights under them to vacate the
properties x x x and remove the structures x x x constructed thereon."35 Effectively then,
respondents averred that petitioners original lawful occupation of the subject lots had
become unlawful.
The MTCC found sufficient cause to eject petitioners. While it disbelieved the existence of a
verbal lease agreement, it nevertheless concluded that petitioners occupation of the subject
lots was by mere tolerance of respondents. Basing its conclusion on the fact that the parties
were close relatives, the MTCC ruled thus:
"x x x [T]he parties herein are first degree relatives. Because of this relationship, this
Court takes judicial notice of the love, care, concern and protection imbued upon the
parents towards their [children], i.e., in the instant case, the love, care, concern and
protection of the [respondents] to the [petitioners]. With this in mind, this Court is

inclined to believe the position of the [petitioners] that there was no such verbal
lease agreement between the parties herein that took place in 1992. x x x.
"From the allegations of the [petitioners], this Court is convinced that their stay and
occupancy of the subject premises was by mere tolerance of the [respondents], and
not by virtue of a verbal lease agreement between them."36
Having found a cause of action for unlawful detainer, the MTCC (as well as the RTC and
the CA) did not err in ordering the ejectment of petitioners as prayed for by respondents.
There was no violation of Section 17 of Rule 7037 of the Rules of Court. As earlier explained,
unlawful detainer was sufficiently alleged in the Complaint and duly proven during the trial.
Significantly, the issue of whether there was enough ground to eject petitioners was raised
during the preliminary conference.38
Not Merely Tolerated
Possession
Petitioners dispute the lower courts finding that they occupied the subject lots on the basis
of mere tolerance. They argue that their occupation was not under such condition, since
respondents had invited, offered and persuaded them to use those properties.39
This Court has consistently held that those who occupy the land of another at the latters
tolerance or permission, without any contract between them, are necessarily bound by an
implied promise that the occupants will vacate the property upon demand.40 A summary
action for ejectment is the proper remedy to enforce this implied obligation. 41 The unlawful
deprivation or withholding of possession is to be counted from the date of the demand to
vacate.42
Toleration is defined as "the act or practice of permitting or enduring something not wholly
approved of."43 Sarona v. Villegas44 described what tolerated acts means, in this language:
"Professor Arturo M. Tolentino states that acts merely tolerated are those which by
reason of neighborliness or familiarity, the owner of property allows his neighbor or
another person to do on the property; they are generally those particular services or
benefits which ones property can give to another without material injury or prejudice
to the owner, who permits them out of friendship or courtesy. x x x. And, Tolentino
continues, even though this is continued for a long time, no right will be acquired by
prescription." x x x. Further expounding on the concept, Tolentino writes: There is
tacit consent of the possessor to the acts which are merely tolerated. Thus, not
every case of knowledge and silence on the part of the possessor can be considered
mere tolerance. By virtue of tolerance that is considered as an authorization,
permission or license, acts of possession are realized or performed. The question
reduces itself to the existence or non-existence of the permission."45
We hold that the facts of the present case rule out the finding of possession by mere
tolerance. Petitioners were able to establish that respondents had invited them to occupy
the subject lots in order that they could all live near one other and help in resolving family

problems.46 By occupying those lots, petitioners demonstrated their acceptance of the

invitation. Hence, there was a meeting of minds, and an agreement regarding possession of
the lots impliedly arose between the parties.
The occupancy of the subject lots by petitioners was not merely "something not wholly
approved of" by respondents. Neither did it arise from what Tolentino refers to as
"neighborliness or familiarity." In point of fact, their possession was upon the invitation of
and with the complete approval of respondents, who desired that their children would
occupy the premises. It arose from familial love and a desire for family solidarity, which are
basic Filipino traits.
Right to Use the Lots Terminated
That Ismael and Teresita had a right to occupy the lots is therefore clear. The issue is the
duration of possession. In the absence of a stipulation on this point, Article 1197 of the Civil
Code allows the courts to fix the duration or the period.
"Article 1197. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the
duration thereof.
"The courts shall also fix the duration of the period when it depends upon the will of
the debtor.
"In every case the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once fixed by the
courts, the period cannot be changed by them."
Article 1197, however, applies to a situation in which the parties intended a period. Such
qualification cannot be inferred from the facts of the present case.
To repeat, when Vicente and Rosario invited their children to use the lots, they did so out of
parental love and a desire for solidarity expected from Filipino parents. No period was
intended by the parties. Their mere failure to fix the duration of their agreement does not
necessarily justify or authorize the courts to do so.47
Based on respondents reasons for gratuitously allowing petitioners to use the lots, it can be
safely concluded that the agreement subsisted as long as the parents and the children
mutually benefited from the arrangement. Effectively, there is a resolutory condition in such
an agreement.48 Thus, when a change in the condition existing between the parties occurs - like a change of ownership, necessity, death of either party or unresolved conflict or
animosity -- the agreement may be deemed terminated. Having been based on parental
love, the agreement would end upon the dissipation of the affection.
When persistent conflict and animosity overtook the love and solidarity between the parents
and the children, the purpose of the agreement ceased.49 Thus, petitioners no longer had
any cause for continued possession of the lots. Their right to use the properties became
untenable. It ceased upon their receipt of the notice to vacate. And because they refused to

heed the demand, ejectment was the proper remedy against them. Their possession, which
was originally lawful, became unlawful when the reason therefor -- love and solidarity -ceased to exist between them.
No Right to Retain
Possession
Petitioners have not given this Court adequate reasons to reverse the lower courts
dismissal of their contention that Lots T-78521 and T-103141, respectively, were allegedly
allotted to them as part of their inheritance and given in consideration for past debts.
The right of petitioners to inherit from their parents is merely inchoate and is vested only
upon the latters demise. Indisputably, rights of succession are transmitted only from the
moment of death of the decedent.50 Assuming that there was an "allotment" of inheritance,
ownership nonetheless remained with respondents. Moreover, an intention to confer title to
certain persons in the future is not inconsistent with the owners taking back possession in
the meantime for any reason deemed sufficient.51 Other than their self-serving testimonies
and their affidavits, petitioners offered no credible evidence to support their outlandish claim
of inheritance "allocation."
We also agree with the lower courts that petitioners failed to prove the allegation that,
through a dation in payment, Lot T-78521 had been transferred to the latter as payment for
respondents debts.52 The evidence presented by petitioners related only to the alleged
indebtedness of the parents arising from the latters purported purchases and
advances.53 There was no sufficient proof that respondents had entered into a contract of
dation to settle the alleged debt. Petitioners even stated that there was a disagreement in
the accounting of the purported debt,54 a fact that disproves a meeting of the minds with the
parents.
Petitioners also admitted that a portion of the alleged debt is the subject matter of a
collection case against respondents (Civil Case No. 0594-96).55 Thus, the formers
allegation that the indebtedness has been paid through a dation cannot be given credence,
inconsistent as it is with their action to recover the same debt.
Despite their protestations, petitioners recognized the right of the parents to recover the
premises when they admitted in their Position Paper filed with the MTCC that respondents
had a title to the lots.
"The [respondents] want to get their property because the title is theirs, the
[petitioners] do not object but what is due the [petitioners] including the reparation for
the tarnish of their dignity and honor must be given the [petitioners] for the benefits
of their children before the premises will be turned over."56
As a rule, the right of ownership carries with it the right of possession.
Second Issue:

Appearance at the Preliminary Conference

Section 8 of Rule 70 of the Rules of Court requires the appearance of the plaintiff and the
defendant during the preliminary conference. On the basis of this provision, petitioners
claim that the MTCC should have dismissed the case upon the failure of respondents to
attend the conference. However, petitioners do not dispute that an attorney-in-fact with a
written authorization from respondents appeared during the preliminary conference.57 The
issue then is whether the rules on ejectment allow a representative to substitute for a partys
personal appearance.
Unless inconsistent with Rule 70, the provisions of Rule 18 on pretrial applies to the
preliminary conference.58 Under Section 4 of this Rule, the nonappearance of a party may
be excused by the showing of a valid cause; or by the appearance of a representative, who
has been fully authorized in writing to enter into an amicable settlement, to submit to
alternative modes of dispute resolution, and to enter into stipulations or admissions of facts
and of documents.59
Section 4 of Rule 18 may supplement Section 8 of Rule 70. Thus, the spirit behind the
exception to personal appearance under the rules on pretrial is applicable to the preliminary
conference. If there are valid reasons or if a representative has a "special authority," a
partys appearance may be waived. As petitioners are challenging only the applicability of
the rules on pretrial to the rule on preliminary conference, the written authorization from
respondents can indeed be readily considered as a "special authorization."
Third Issue:
Rights of a Builder in Good Faith
As applied to the present case, accession refers to the right of the owner to everything that
is incorporated or attached to the property.60 Accession industrial -- building, planting and
sowing on an immovable -- is governed by Articles 445 to 456 of the Civil Code.
Articles 447 and 1678 of the
Civil Code Inapplicable
To buttress their claim of reimbursement for the improvements introduced on the property,
petitioners cite Article 447.61 They allege that the CA erred in applying Article 1678, since
they had no lease agreement with respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that apply when the
owner of the property uses the materials of another. It does not refer to the instance when a
possessor builds on the property of another, which is the factual milieu here.
In view of the unique factual setting of the instant case, the contention of petitioners
regarding the inapplicability of Article 1678 deserves attention. The CA applied the
provisions on lease, because it found their possession by mere tolerance comparable with
that of a lessee, per the pronouncement in Calubayan v. Pascual,62 from which we quote:

"x x x. It has been held that a person who occupies the land of another at the latters
tolerance or permission, without any contract between them, is necessarily bound by
an implied promise that he will vacate upon demand, failing which a summary action
for ejectment is the proper remedy against them. The status of defendant is
analogous to that of a lessee or tenant whose term of lease has expired but whose
occupancy continued by tolerance of the owner. In such a case, the unlawful
deprivation or withholding of possession is to be counted from the date of the
demand to vacate."63 (Emphasis in the original.)
As explained earlier, Ismael and Teresitas possession of the two lots was not by mere
tolerance, a circumstance that negates the applicability of Calubayan.
Article 448 Applicable
On the other hand, when a person builds in good faith on the land of another, the applicable
provision is Article 448, which reads:64
"Article 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in Articles 546 and
548, or to oblige the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the builder or planter cannot be obliged
to buy the land if its value is considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon
the terms of the lease and in case of disagreement, the court shall fix the terms
thereof."
This Court has ruled that this provision covers only cases in which the builders, sowers or
planters believe themselves to be owners of the land or, at least, to have a claim of title
thereto.65 It does not apply when the interest is merely that of a holder, such as a mere
tenant, agent or usufructuary.66 From these pronouncements, good faith is identified by the
belief that the land is owned; or that -- by some title -- one has the right to build, plant, or
sow thereon.67
However, in some special cases, this Court has used Article 448 by recognizing good faith
beyond this limited definition. Thus, in Del Campo v. Abesia,68 this provision was applied to
one whose house -- despite having been built at the time he was still co-owner -overlapped with the land of another.69 This article was also applied to cases wherein a
builder had constructed improvements with the consent of the owner. The Court ruled that
the law deemed the builder to be in good faith.70 In Sarmiento v. Agana,71 the builders were
found to be in good faith despite their reliance on the consent of another, whom they had
mistakenly believed to be the owner of the land.72
Based on the aforecited special cases, Article 448 applies to the present factual milieu. The
established facts of this case show that respondents fully consented to the improvements
introduced by petitioners. In fact, because the children occupied the lots upon their
invitation, the parents certainly knew and approved of the construction of the improvements

introduced thereon.73 Thus, petitioners may be deemed to have been in good faith when
they built the structures on those lots.
The instant case is factually similar to Javier v. Javier.74 In that case, this Court deemed the
son to be in good faith for building the improvement (the house) with the knowledge and
consent of his father, to whom belonged the land upon which it was built. Thus, Article
44875 was applied.
Rule on Useful Expenses
The structures built by petitioners were "useful" improvements, because they augmented
the value or income of the bare lots.76 Thus, the indemnity to be paid by respondents under
Article 448 is provided for by Article 546, which we quote:
"Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor.
"Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention, the person who has defeated him in the possession having
the option of refunding the amount of the expenses or of paying the increase in value
which the thing may have acquired by reason thereof."
Consequently, respondents have the right to appropriate -- as their own -- the building and
other improvements on the subject lots, but only after (1) refunding the expenses of
petitioners or (2) paying the increase in value acquired by the properties by reason thereof.
They have the option to oblige petitioners to pay the price of the land, unless its value is
considerably more than that of the structures -- in which case, petitioners shall pay
reasonable rent.
In accordance with Depra v. Dumlao,77 this case must be remanded to the trial court to
determine matters necessary for the proper application of Article 448 in relation to Article
546. Such matters include the option that respondents would take and the amount of
indemnity that they would pay, should they decide to appropriate the improvements on the
lots. We disagree with the CAs computation of useful expenses, which were based only on
petitioners bare allegations in their Answer.78
Ruling on Improvement Justified
While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is limited to the
issue of physical or material possession of the property in question, this Court finds it
necessary to abbreviate the issue on the improvements in relation to Article 448. First, the
determination of the parties right to those improvements is intimately connected with the
MTCC proceedings in the light of the ejectment of petitioners. Second, there is no dispute
that while they constructed the improvements, respondents owned the land. Third, both
parties raised no objection when the RTC and the CA ruled accordingly on this matter.

Equitable considerations compel us to settle this point immediately, pro hoc vice, to avoid
needless delay. Both parties have already been heard on this issue; to dillydally or
equivocate would not serve the cause of substantial justice.
Other Issues Raised
Given the foregoing rulings, it is no longer necessary to address petitioners allegation that
the MTCC judge and respondents lawyers should be respectively held personally
accountable for the Decision and for filing the case.79 The insinuation of petitioners that the
lawyers manipulated the issuance of a false barangay certification is unavailing.80 Their
contention that respondents did not attend the barangay conciliation proceedings was
based solely on hearsay, which has little or no probative value. 81
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals
are AFFIRMED with the following MODIFICATIONS:
1. The portion requiring Spouses Vicente and Rosario Macasaet to reimburse one
half of the value of the useful improvements, amounting to P475,000, and the right of
Spouses Ismael and Rosita Macasaet to remove those improvements (if the former
refuses to reimburse) is DELETED.
2. The case is REMANDED to the court of origin for further proceedings to
determine the facts essential to the proper application of Articles 448 and 546 of the
Civil Code, specifically to the following matters:
a. Spouses Vicente and Rosario Macasaets option to appropriate -- as their
own -- the improvements on the lots, after paying the indemnity, as provided
under Article 546 in relation to Article 448 of the Civil Code; or in requiring
Spouses Ismael and Rosita Macasaet to pay for the value of the lots, unless it
is considerably more than that of the improvements, in which case petitioners
shall pay reasonable rent based upon the terms provided under the Civil
Code
b. The value of the useful expenses incurred by Spouses Ismael and Rosita
Macasaet in the construction of the improvements on the lots
c. The increase in value acquired by the lots by reason of the useful
improvements
d. Spouses Vicente and Rosario Macasaets choice of type of indemnity to be
paid (whether b or c)
e. Whether the value of the lots is considerably more than that of the
improvements built thereon
No pronouncement as to costs.
SO ORDERED.

Sandoval-Gutierrez, Corona, and Carpio Morales, JJ., concur.

Footnotes
1

Rollo, pp. 35-76.

Id., pp. 209-229. Ninth Division. Penned by Justice Mariano C. del Castillo, with the
concurrence of Justices Ruben T. Reyes (Division chairman) and Renato C.
Dacudao (member).
3

Id., pp. 264-265.

Assailed Decision, p. 20; rollo, p. 228.

Also referred to as "Rosita" in some parts of the records.

Id., pp. 2 & 210.

Respondents Complaint; rollo, pp. 85-88.

Assailed Decision, pp. 2-3; rollo, pp. 210-211. Respondents Complaint, pp. 1-2;
rollo, pp. 85-86.
8

Id., pp. 3-4 & 211-212. Petitioners Answer with Compulsory Counterclaim, p. 4;
rollo, p. 94.
9

10

Ibid.

11

Presided by Assisting Judge Norberto P. Mercado.

12

Assailed Decision, pp. 5-6; rollo, pp. 213-214. MTCC Decision dated August 27,
1998, pp. 3-4; rollo, pp. 167-168.
13

Ibid.

14

Ibid.

15

Presided by Judge Jane Aurora C. Lantion.

16

RTC Decision dated July 15, 1999, pp. 4-5; rollo, pp. 173-174.

17

Ibid.

18

Assailed Decision, p. 9; rollo, p. 217.

19

Id., pp. 10 & 218.

20

Id., pp. 11 & 219.

21

128 Phil. 160, September 18, 1967.

22

Ibid.

23

Assailed Decision, p. 13; rollo, p. 221.

24

The CA computed the total value of the improvements at P950,000, which

represented the cost of constructing a one-storey structure (P700,000), the
equipment necessary for the construction business (P130,000), and the cost of filling
materials (P120,000). See Assailed Decision, p. 15; rollo, p. 223.
25

This case was deemed submitted for resolution on May 13, 2003, upon this
Courts receipt of respondents Memorandum signed by Atty. Glenn P. Mendoza.
Petitioners Memorandum, signed by Atty. Ismael H. Macasaet, was filed on April 14,
2003.
26

Petitioners Memorandum, p. 15; rollo, p. 432.

27

Rivera v. Rivera, 405 SCRA 466, 471, July 8, 2003; Balanon-Anicete v. Balanon,
402 SCRA 514, 518, April 30, 2003; De Luna v. Court of Appeals, 212 SCRA 276,
278, August 6, 1992.
28

Co v. Militar, GR No. 149912, January 29, 2004.

29

Petitioners Memorandum, p. 16; rollo, p. 433.

30

Varona v. Court of Appeals, GR No. 124148, May 20, 2004; Sarmiento v. Court of
Appeals, 320 Phil. 146, 153, November 16, 1995; Sumulong v. Court of Appeals,
232 SCRA 372, May 10, 1994.
31

Sarmiento v. Court of Appeals, supra; Sumulong v. Court of Appeals, supra.

32

Varona v. Court of Appeals, supra; Caiza v. Court of Appeals, 335 Phil. 1107,
1115, February 24, 1997; Sumulong v. Court of Appeals, supra, p. 386.
33

Lopez v. David, GR No. 152145, March 30, 2004; Arcal v. Court of Appeals, 348
Phil. 813, 823, January 26, 1998; Hilario v. Court of Appeals, 329 Phil. 202, 210,
August 7, 1996;Sarmiento v. Court of Appeals, supra; Sumulong v. Court of Appeals,
supra, p. 385.
34

Respondents Complaint, p. 2; rollo, p. 86.

35

Id., pp. 3 & 87.

36

MTCC Decision dated August 27, 1998, pp. 3-4; rollo, pp. 167-168.

"Section 17. Judgment. If after the trial the court finds that the allegations of the
complaint are true, it shall render judgment in favor of the plaintiff for the restitution
of the premises, the sum justly due as arrears of rent or as reasonable
compensation for the use and occupation of the premises, attorneys fees and costs.
If it finds that said allegations are not true, it shall render judgment for the defendant
to recover his costs. If a counterclaim is established, the court shall render judgment
for the sum found in arrears from either party and award costs as justice requires."
37

38

MTCC Order on the Preliminary Conference dated July 30, 1998; rollo, p. 108.

39

Petitioners Memorandum, p. 22; rollo, p. 439.

40

Rivera v. Rivera, 405 SCRA 466, 471, July 8, 2003; Pengson v. Ocampo Jr., 412
Phil. 860, 866, June 29, 2001; Arcal v. Court of Appeals, supra, p. 825; Refugia v.
Court of Appeals, 327 Phil. 982, 1010, July 5, 1996; Dakudao v. Consolacion, 207
Phil. 750, 756, June 24, 1983.
41

Ibid.

42

Lopez v. David, supra; Arcal v. Court of Appeals, supra, p. 825; Villaluz v. Court of
Appeals, 344 Phil. 77, 89, September 5, 1997.
43

Blacks Law Dictionary (8th ed., 1999), p. 1525.

44

131 Phil. 365, March 27, 1968.

45

Id., pp. 372-373, per Sanchez, J.

46

MTCC Decision, dated August 27, 1998, p. 3 (rollo, p. 167); RTC Decision, dated
July 15, 1999, p. 2 (rollo, p. 171).
47

Id., p. 198. The term "may" in Article 1197 connotes discretion on the part of the
courts to exercise this power.
48

In an obligation with a resolutory condition, the extinguishment of the right

acquired depends upon the occurrence of the event that constitutes the condition
(Article 1181 of the Civil Code).
49

The records do not disclose the exact date when the conflict between petitioners
and respondents arose. It can be readily assumed to have transpired not later than
June 6, 1996, the date of petitioners demand letter, which became the subject of
Civil Case No. 0594-96 (Demand Letter; rollo, p. 145). At any rate, an animosity
between the parties was confirmed by respondents demand letter dated August 13,
1997, asking petitioners to vacate the subject lots (rollo, p. 89), and the subsequent
filing of this case.
50

Art. 777 of the Civil Code.

51

Caiza v. Court of Appeals, supra, p. 1118.

Petitioners Memorandum, pp. 43-44; rollo, pp. 460-461. In a dation in payment,

property is alienated to the creditor in satisfaction of a debt. Such contract is
governed by the law on sales. Art. 1245 of the Civil Code.
52

53

Ibid.

54

In the Affidavits submitted with their Position Paper, petitioners alleged that the
execution of the Deed of Assignment did not occur, because their father had refused
to agree to the accounting of the materials supplied. Petitioners Memorandum, pp.
45-46; rollo, pp. 462-463.
Petitioners Memorandum, p. 44; rollo, p. 461. The recovery of P235,908, which
forms a significant part of respondents alleged P391,338 debt, is the subject matter
of Civil Case No. 0594-96.
55

56

Petitioners Position Paper, p. 3; rollo, p. 111.

Petitioners Memorandum, p. 31; rollo, p. 448. Petitioner challenges the

applicability of Philippine Pryce Assurance Corp. v. Court of Appeals (230 SCRA
164, 170, February 21, 1994 per Nocon, J.), in which this Court reiterated the rule
that "where a party may not himself be present at the pre-trial, and another person
substitutes for him, or his lawyer undertakes to appear not only as an attorney but in
substitution of the clients person, it is imperative for that representative or the lawyer
to have special authority to enter into agreements which otherwise only the client
has the capacity to make."
57

58

8 of Rule 70 of the Rules of Court.

59

This rule on substitution of a party through a "special authority" can be traced to

jurisprudential pronouncements. See Home Insurance Co. v. United States Lines
Co., 129 Phil. 106, 109, November 15, 1967, in which this Court held that attorneys
needed a "special authority" to compromise litigation. See also Development Bank of
the Phils. v. Court of Appeals, 169 SCRA 409, 413, January 26, 1989, in which we
noted that a special authority is imperative to make substantive agreements that,
otherwise, only the client has capacity to make.
60

Jose C. Vitug, Civil Law Annotated (2003), Vol. II, p. 23.

61

Petitioners Memorandum, pp. 33-37; rollo, pp. 450-454.

62

Supra.

63

Id., p. 163, per Angeles, J.

64

See Depra v. Dumlao, 136 SCRA 475, 481, May 16, 1985, in which this Court
explained the philosophy behind this provision.

65

Pada-Kilario v. Court of Appeals, 379 Phil. 515, 530, January 19, 2000; Chua v.
Court of Appeals, 361 Phil. 308, 318, January 21, 1999; Balucanag v. Francisco, 207
Phil. 433, 438;Floreza v. Evangelista, 96 SCRA 130, 136, February 21,
1980; Quemuel v. Olaes, 111 Phil. 797, April 29, 1961; Alburo v. Villanueva, 7 Phil.
277, 280, January 2, 1907.
66

Chua v. Court of Appeals, supra; Balucanag v. Francisco, supra; Quemuel v.

Olaes, supra; Alburo v. Villanueva, supra. See also Edgardo L. Paras, Civil Code of
the Philippines Annotated (14th ed., 1999), Vol. 2, p. 212. In Pecson v. Court of
Appeals (314 Phil. 313, 322 per Davide, J.), this Court also ruled that "Article 448
does not apply to a case where the owner of the land is the builder, sower, or planter
who then later loses ownership of the land by sale or donation."
67

Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the

Philippines (1992), Vol. 2, p. 111.
68

160 SCRA 379, 383, April 15, 1988.

69

Id., pp. 382-383. Article 448 does not apply where a co-owner builds, plants, or
sows on land owned in common, since such co-owner does not do so on land that
he or she does not own. See also Arturo M. Tolentino, Commentaries and
Jurisprudence on the Civil Code of the Philippines (1992), Vol. 2, p. 117.
70

De Guzman v. Fuente, 55 Phil. 501, 503, December 29, 1930; Aringo v. Arena, 14
Phil. 263, 268-269; Javier v. Javier, 7 Phil. 261, 267, January 2, 1907. [Cited in
Edgardo L. Paras, Civil Code of the Philippines Annotated (14th ed., 1999), Vol. 2, p.
211]; See also Boyer-Roxas v. Court of Appeals, 211 SCRA 470, 488, July 15, 1992.
71

129 SCRA 122, April 30, 1984.

72

Id., p. 125.

73

The RTC observed that petitioners had merely been invited by the parents
(respondents) to transfer to the premises. Considering that the parties were living
near one other, it was readily assumed that respondents had known of the structures
built and had not opposed their construction. RTC Decision dated July 15, 1999, p.
4; rollo, p. 173.
74

Supra, note 70.

75

Then Art. 361 of the Civil Code.

76

Cabangis v. Court of Appeals, 200 SCRA 414, 420, August 9, 1991.

77

Supra. Also cited in National Housing Authority v. Grace Baptist Church, GR No.
156437, March 1, 2004; and Technogas Philippines Manufacturing v. Court of
Appeals, 335 Phil. 471, 485, February 10, 1997.

78

Assailed Decision, p. 15; rollo, p. 223. This Court also notes that petitioners merely
submitted a list of expenses with their corresponding costs, without showing any
proof (e.g., actual receipts) that these costs had been incurred. Petitioners Position
Paper, p. 15, rollo, p. 123; Itemized List of Materials, rollo, p. 588.

81

79

Petitioners Memorandum, pp. 49-51; rollo, pp. 466-468.

80

Id., pp. 51 & 468.

This contention was based on information from an alleged barangay councilor of Banaybanay that no conciliation had transpired on October 14, 1997, the scheduled date.
Petitioner Teresita Macasaets Affidavit; rollo, p. 77. In a letter dated October 14, 1997,
addressed to the barangay captain, it appears that petitioners waived their presence at the
conciliation proceedings. Rollo, p. 103.