FIRST DIVISION

[G.R. No. 72188. September 15, 1986.]

RODOLFO EUSEBIO , petitioners, vs. INTERMEDIATE APPELLATE

COURT and ROHIMUST SANTOS , respondents.

Balgos & Perez Law Offices for petitioner.

Jesus G. Castro for private respondent.

SYLLABUS

1. CIVIL LAW; PROPERTY; CO-OWNERSHIP; DEFINED. — As stated in Cabello

v. Cabello, 37 Phil. 328, 336, "the possession held by a co-heir of the undivided estate is
understood to be enjoyed in the name of the rest of the heirs." An undivided estate is
co-ownership by the heirs. The ownership of the physically undivided thing pertains to
more than one person, thus de ned as "the right of common dominion which two or
more persons have in a spiritual part of a thing which is not physically divided."
2. ID.; ID.; ID.; ART. 543, NEW CIVIL CODE APPLIES. — The provision of the
Civil Code which should be applicable is Article 543, which provides: "ART. 543. Each
one of the participants of a thing possessed in common shall be deemed to have
exclusively possessed the part which may be allotted to him upon the division thereof,
for the entire period during which the co-possession lasted. Interruption in the
possession of the whole or a part of a thing possessed in common shall be to the
prejudice of all the possessors. However, in case of civil interruption, the Rules of Court
shall apply." Under the foregoing provision, after the LOT is actually partitioned,
ROHIMUST would be "deemed to have exclusively possessed" since April 15, 1974, the
part which may be allotted to him upon the division thereof" consisting of the de nite
200 sq. meter area assigned to him, together with all buildings and parts of buildings
erected therein (Section 11, Rule 69). RODOLFO can have no claim over such buildings
or parts of a building, which improvements ROHIMUST can keep or demolish without
paying any compensation thereof to RODOLFO. For the same reason, if there were
buildings or part of a building, found in the de nite 611.30 sq. m. area assigned to
RODOLFO, he will be deemed to have been in exclusive possession thereof since April
15, 1974, and he can keep or demolish these improvements without paying any
compensation therefor to ROHIMUST.

DECISION

MELENCIO-HERRERA , J : p

The controversy in this case is between two co-owners of a parcel of land of

811.30 sq. m. situated at Blumentritt Extension, corner Don Manuel Street, La Loma,
Quezon City (the LOT), Petitioner (RODOLFO), as one of the two, had led suit in 1981
against Private Respondent (ROHIMUST), the other co-owner, before the then Court of
First Instance of Quezon City (now Regional Trial Court) for determination of their
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 participations in the co-ownership, and for actual partition of the LOT. The dispositive
part of the Trial Court's Decision was as follows:
"WHEREFORE, judgment is hereby rendered ordering the partition of that
parcel of land, containing an area of 811.30 square meters, known as Lot No. 1,
Block No. 77 of the Subdivision Plan Psd. 157222, situated at Blumentritt
Extension corner Don Manuel Street, La Loma, Quezon City, covered by Transfer
Certificate of Title No. 37685 of the Register of Deeds, Quezon City, as follows:

"a) 611.30 sq. m. which shall be given to plaintiff, Rodolfo Y.

Eusebio;
"b) 200 sq. m. which shall be given to defendant, Rohimust
Santos.

"The expenses for the survey of the lot to de ne the metes and bounds of
the portions appertaining to plaintiff and defendant shall be equally shared by
both parties. After which any improvement existing thereon which encroached on
that portion appertaining to the other party shall be demolished so that the party
affected may fully enjoy and exercise his right over said portion." 1

We have gone over the Expediente in the Trial Court, as well as the Record in the
Appellate Tribunal, and we have found indications in the evidence that there are houses
constructed on the LOT which may be legally owned in common, or which one party
might claim to have been constructed by him separately from the co-ownership.
Addresses of both parties are at No. 4 Don Manuel, and it can be presumed they live
separately within the LOT. In his brief submitted to the Appellate Tribunal, ROHIMUST,
in part, had said:
". . . The said lot is located at the corner of Don Manuel and Blumentritt
Extension consisting of 811.30 square meters. There is an old house built and is
still standing in the middle of the land. The house was constructed by his late
grandfather Philip Zinsineth. (t.s.n., p. 6, Id.)."

As the manner of dividing the LOT has yet to be determined, and it could not then
be known which buildings have to be cut by a dividing line, the Trial Court simply
provided for the demolition of any building or part thereof, claimed by either party,
which would be within the area assigned to the other party. No mention of
compensation was made, and it is our opinion the omission shows the Trial Court
intended that no compensation shall be payable. cdphil

ROHIMUST took an appeal from the Trial Court's Decision to the Intermediate
Appellate Court (now Court of Appeals). The Appellate Tribunal initially a rmed the
judgment of the Trial Court in toto. However, on Motion for Reconsideration led by
ROHIMUST, it rendered a Resolution amending its previous a rmance, holding that
ROHIMUST "has the legal right to retain the house together with its improvements and
the possession thereof until full payment of the value thereof." It is that modi cation
which RODOLFO, in the instant Petition for Review, has alleged to be erroneous and
which should be set aside.
The LOT was part of a subdivision owned by J.M. Tuazon & Co., Incorporated,
represented by Gregorio Araneta, Incorporated (GA, Inc.). As early as 1924, it was
occupied by Philip Zinsineth as a lessee, and he had constructed a house and garage
thereon (Exhibit "7"). After his death, his "leasehold rights" were inherited by his two
daughters, Mary, the mother of ROHIMUST, and Isabel, the deceased mother of
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 RODOLFO's wife.
On April 15, 1974, the parties concerned agreed that the leasehold rights will be
placed in the name of RODOLFO to the extent of 383 sq. m., and in the name of
FERNANDO J. Santos, Jr., a son of Mary, to the extent of 428.30 sq. m. On that same
date, a contract to sell the LOT on installment was executed by GA, Inc. in favor of
RODOLFO. FERNANDO was not included in the contract because GA, Inc. wanted to deal
only with one person. However, on July 2, 1974, RODOLFO and FERNANDO signed an
affidavit reading in part as follows:
"xxx xxx xxx

"That actually the property was bought by us jointly and the monthly
installments shall be paid by us pro-rata to the area which we are presently
occupying, which is as follows:

"Rodolfo Y. Eusebio — 383.00 sq. m. at P49,790.00, of which the amount

of P9,958 was paid as down payment, shall pay a share in the monthly
installment corresponding to P1,048.94 monthly;

"Fernando J. Santos, Jr. — 428.30 sq. m. at P55,679.00, of which the

amount of P11,135.80 was paid as down payment, shall pay a share in the
monthly installment corresponding to P1,173.01 monthly;

"xxx xxx xxx

"That it is our understanding that as soon as the property is fully paid for
by us, the same shall be subdivided so as to have two transfer certi cates of title
issued to us for our corresponding portions;

"xxx xxx xxx"

By August 5, 1976, installment payments under the Contract to Sell had not been
kept up to date. RODOLFO and FERNANDO then made an agreement as follow:
"That all overdue monthly installment arising from the monthly share of
Fernando J. Santos, Jr. will be advanced by Rodolfo Y. Eusebio and the
corresponding payment will be charged an interest rate of 1% per month:
"That the said parcel of land is to be fully paid forty eight (48) months
from May 15, 1974. On the said due date of full payment, each party will have to
pay its corresponding full share of payment. Each party will be given a grace
period of ve (5) months to settle its corresponding share of payment with the
corresponding share thereon, and if after this date one party fails to pay its
corresponding share, the said parcel of land will be subdivided according to the
amount of payment by each party" (Exhibit "G").

In 1978, full payment was made to GA, Inc., and Transfer Certi cate of Title No.
244154 of the Registry of Deeds of Metro Manila (originally No. 37685, Quezon City)
was issued solely in the name of RODOLFO. For the full payment of the amount paid to
GA, Inc., FERNANDO was not able to contribute his full share. In 1980, FERNANDO
transferred his rights to ROHIMUST who is his brother.
In the case instituted by RODOLFO against ROHIMUST in 1981, the Trial Court
found that, as a result of RODOLFO's payments made to GA, Inc. on behalf of
FERNANDO, his share in the LOT had to be increased from 383 sq. m. to 611.30 sq. m.,
with the participation of ROHIMUST being decreased to 200 sq. m. That adjudication is
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 now final. LLpr

The legal issue to be resolved in this instance is the correctness of the Appellate
Tribunal's Resolution that:
". . . It is undisputed that defendant-appellant's house was erected on the
land in question at the time that said portion was under his claim of ownership.
They were therefore in possession thereof unquestionably in good faith. And, par.
2 of Article 546 of the Civil Code reads:

"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.

The Appellate Tribunal was in error in invoking Article 546 which prescribes the
rights of the possessor in good faith as regards useful expenses. Article 546
presupposes, but does not establish, possession in good faith, the requisites of which
are laid down in Article 526, thus:
"ART. 526. He is deemed a possessor in good faith who is not aware
that there exists in his title or mode of acquisition any flaw which invalidates it.

"He is deemed a possessor in bad faith who possesses in any case

contrary to the foregoing.
"Mistake upon a doubtful or di cult question of law may be the basis of
good faith."

It may be mentioned that, prior to April 15, 1974, the possession of the parties was in
the concept of lessees of the LOT, which was not possession in good faith for
purposes of Article 546. Conceding, for the sake of avoiding immaterial complications,
that the parties became co-owners after April 15, 1974, when the contract to sell was
executed, neither co-owner can claim possession in himself of any particular identi ed
part of the LOT. As stated in Cabello v. Cabello, 37 Phil. 328, 336, "the possession held
by a co-heir of the undivided estate is understood to be enjoyed in the name of the rest
of the heirs." An undivided estate is co-ownership by the heirs. The ownership of the
physically undivided thing pertains to more than one person, thus de ned as "the right
of common dominion which two or more persons have in a spiritual part of a thing
which is not physically divided" (Sanchez Roman).
The provision of the Civil Code which should be applicable is Article 543, which
provides:
"ART. 543. Each one of the participants of a thing possessed in
common shall be deemed to have exclusively possessed the part which may be
allotted to him upon the division thereof, for the entire period during which the co-
possession lasted. Interruption in the possession of the whole or a part of a thing
possessed in common shall be to the prejudice of all the possessors. However, in
case of civil interruption, the Rules of Court shall apply."

Under the foregoing provision, after the LOT is actually partitioned, ROHIMUST
would be "deemed to have exclusively possessed" since April 15, 1974, the part which
may be allotted to him upon the division thereof" consisting of the de nite 200 sq.
meter area assigned to him, together with all buildings and parts of buildings erected
therein (Section 11, Rule 69). RODOLFO can have no claim over such buildings or parts
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 of a building, which improvements ROHIMUST can keep or demolish without paying any
compensation thereof to RODOLFO. For the same reason, if there were buildings or
parts of a building, found in the de nite 611.30 sq. m. area assigned to RODOLFO, he
will be deemed to have been in exclusive possession thereof since April 15, 1974, and
he can keep or demolish these improvements without paying any compensation
therefor to ROHIMUST. cdrep

WHEREFORE, the Resolution of June 14, 1985 of respondent Court promulgated

in its case AC-G.R. CV No. 02022 is hereby set aside, and its Decision of September 19,
1984 in the same case, a rming the judgment of the Trial Court in toto, shall stand
without modification. Let this case be remanded to the Trial Court for actual partition of
the LOT between its co-owners under the provisions of Rule 69 of the Rules of Court.
Without pronouncement as to costs.
SO ORDERED.
Yap (Chairman), Narvasa, Cruz and Feliciano, JJ., concur.

Footnotes

1. Decision, pp. 93, 100, R.A.

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