Alviola vs. Court of Appeals

A builder in bad faith who constructs transferable improvements on land owned by another has no right to indemnity under Article 448 of the Civil Code; the landowner's proper remedy is an action for recovery of possession to eject the builder, and the builder must remove the transferable construction.

Victoria Sonjaconda Tinagan purchased two parcels of land situated at Barangay Bongbong, Valencia, Negros Oriental from Mauro Tinagan on April 1, 1950. She and her son Agustin Tinagan took possession of the properties, introduced improvements, and occupied them in the concept of owners. Petitioners Editha and Porferio Alviola later occupied portions of the land where they built a copra dryer and a store for their copra-buying business. Victoria died on June 23, 1975, and Agustin died on October 26, 1975, survived by his wife Florencia Buling Vda. de Tinagan and their children, the private respondents.

On April 1, 1950, Victoria Sonjaconda Tinagan purchased two parcels of land situated at Barangay Bongbong, Valencia, Negros Oriental from Mauro Tinagan, as evidenced by a Deed of Sale. One parcel contained 5,704 square meters and the other 10,860 square meters. Thereafter, Victoria and her son Agustin Tinagan took possession of the properties, introduced improvements thereon, and for more than forty years maintained open, continuous, exclusive, and notorious occupation in the concept of owners.

Sometime in 1960, petitioners Editha and Porferio Alviola occupied portions of the land where they built a copra dryer and put up a store for buying and selling copra. Victoria died on June 23, 1975, and Agustin died on October 26, 1975, survived by his wife Florencia Buling Vda. de Tinagan and their children Demosthenes, Jesus, Zenaida, and Josephine, all surnamed Tinagan.

On December 24, 1976, petitioner Editha, assisted by her husband, filed a complaint for partition and damages before the then Court of First Instance of Negros Oriental, claiming to be an acknowledged natural child of the deceased Agustin Tinagan and demanding delivery of her shares in his estate. The case was dismissed on October 4, 1979, on the ground that recognition of natural children may be brought only during the lifetime of the presumed parent and that Editha did not fall under any exception in Article 285 of the Civil Code. Petitioners elevated the dismissal to the Supreme Court via certiorari and mandamus, but the petition was dismissed for lack of merit on August 9, 1982, and the motion for reconsideration was denied on October 19, 1982.

On March 29, 1988, private respondents filed a complaint for recovery of possession against petitioners before the Regional Trial Court of Negros Oriental, Branch 35, praying that they be declared absolute owners of the parcels and that petitioners be ordered to vacate, remove their copra dryer and store, and pay rentals, damages, litigation expenses, and attorney's fees. Petitioners contended in their answer that they owned the improvements on what they claimed was still public land, that they were qualified agrarian reform beneficiaries, and that they were rightful possessors by occupation for more than twenty years. Petitioners likewise asserted that Victoria Tinagan had ceded to them the portions where the copra dryer and store stood, in exchange for an alleged indebtedness of Agustin Tinagan in the sum of ₱7,602.04. The trial court found for private respondents, declaring them absolute owners and ordering petitioners to vacate and pay ₱150.00 monthly rentals from April 1988, ₱5,000.00 in attorney's fees, and ₱3,000.00 in litigation expenses. The Court of Appeals affirmed this judgment on April 8, 1994, and denied reconsideration on October 6, 1994.

• Ownership of Public Land: Petitioners contended that the disputed properties were public land and that ownership of public land cannot be declared by the courts but only by the Executive Department, citing Busante vs. Hon. Court of Appeals.
• Cession by Victoria Tinagan: Petitioners maintained that private respondents' predecessor-in-interest, Victoria Sonjaconda Tinagan, had ceded her right to the disputed portions in favor of petitioners during her lifetime.
• Bad Faith and Transferability of Improvements: Petitioners argued that the respondent court erred in holding them to be in bad faith and in ruling that the improvements were transferable, asserting that the copra dryer and store were permanent structures with hollow-block walls and cement floors.
• Rightful Possession by Occupation: Petitioners claimed to be rightful possessors by occupation of the disputed properties for more than twenty years and qualified beneficiaries under the Comprehensive Agrarian Reform Program.

• Ownership and Possession: Respondents countered that the question of whether the disputed properties were public land had been resolved by overwhelming evidence showing ownership and possession by the Tinagans and their predecessors-in-interest prior to 1949.
• Mere Tolerance: Respondents averred that they merely tolerated petitioners' possession of the disputed properties for a period less than that required for extraordinary prescription.

• Ownership of the Disputed Properties: Whether private respondents are the owners of the disputed parcels of land.
• Public Land Character: Whether the disputed properties are public land such that ownership may only be declared by the Executive Department.
• Cession Claim: Whether Victoria Tinagan ceded the portions occupied by petitioners in exchange for Agustin Tinagan's alleged debt.
• Bad Faith and Article 448: Whether petitioners and private respondents were in bad faith and whether Article 448 of the Civil Code applies.
• Transferability of Improvements: Whether the copra dryer and store are transferable structures such that Article 448 does not apply and the proper remedy is ejectment.

• Ownership of the Disputed Properties: Yes. Private respondents proved ownership through an unbroken chain of tax declarations and realty tax payments, as well as a Deed of Sale dated April 1, 1950.
• Public Land Character: No. The properties are not public land; overwhelming evidence of ownership and possession by the Tinagans and their predecessors-in-interest prior to 1949 refuted petitioners' claim.
• Cession Claim: No. The alleged cession was an afterthought not alleged in petitioners' answer, and their own tax declarations continued to acknowledge the Tinagans' ownership of the underlying land even after the purported 1967 exchange.
• Bad Faith and Article 448: Both parties were in bad faith — petitioners because they knew the land belonged to Victoria Tinagan, and private respondents because they knew of the arrangement between petitioners and Victoria regarding the construction. Article 448 was deemed applicable for purposes of indemnity.
• Transferability of Improvements: Yes. The copra dryer and store are transferable in nature and therefore do not fall under Article 448; the proper remedy is an action for recovery of possession to eject the builder.

• Ownership of the Disputed Properties: Private respondents adduced overwhelming documentary evidence of ownership, including a Deed of Sale dated April 1, 1950, whereby Mauro Tinagan sold the two parcels to Victoria S. Tinagan. Tax declarations for Parcel 1 traced an unbroken chain from Mauro Tinagan (Tax Declaration No. 3335) to Agustin Tinagan (Tax Declaration No. 016740, effective 1974) to Jesus Tinagan (Tax Declaration Nos. 08-421 and 08-816). For Parcel 2, tax declarations likewise tracked ownership from Mauro Tinagan to Agustin Tinagan. Realty taxes were consistently paid by private respondents. Victoria and Agustin Tinagan had been in open, continuous, exclusive, and notorious occupation for more than forty years in the concept of owners. Petitioners' own tax declarations stated that their house and copra dryer were located on the land of Victoria/Agustin Tinagan, thereby undermining any claim of ownership on their part.

• Public Land Character: Petitioners' assertion that the properties were public land was a factual issue resolved against them by the evidence. The unbroken chain of tax declarations, the Deed of Sale, and the continuous possession by the Tinagans established private ownership. The Court found no basis to treat the properties as public land requiring executive disposition.

• Cession Claim: Petitioners claimed that Victoria Tinagan ceded the portions where the copra dryer and store stood in exchange for Agustin Tinagan's debt of ₱7,602.04, allegedly incurred in 1967. The Court of Appeals rejected this as an afterthought not alleged in petitioners' answer. Although the supporting evidence was deemed admissible for lack of timely objection, examination of the oral and documentary evidence revealed the weakness of the claim. Petitioner testified that no document was executed reflecting the agreement because the Tinagans were "our parents." Critically, petitioners' own tax declarations even after 1967 continued to declare that the land belonged to Victoria and Agustin Tinagan. Had petitioners truly believed they owned the specific portions, they could have declared the same in their tax declarations.

• Bad Faith and Article 448: Petitioners were in bad faith when they constructed the copra dryer and store because they were fully aware the land belonged to Victoria Tinagan. Private respondents were likewise in bad faith because they had knowledge of the arrangement between petitioners and Victoria regarding the construction. Under Article 448 of the Civil Code, where both parties are in bad faith, the provisions governing builders in bad faith apply for purposes of indemnity.

• Transferability of Improvements: The copra dryer and store were determined by both the trial court and the Court of Appeals to be transferable in nature. Citing Senator Arturo Tolentino's commentary, the Court explained that Article 448 applies only to constructions of permanent character attached to the soil with an idea of perpetuity; if the construction is of transitory or transferable character, there is no accession, and the builder must remove the construction. The landowner's proper remedy is an action to eject the builder. The private respondents' action for recovery of possession was therefore the suitable solution.

• Accession — Article 448 of the Civil Code — When the builder, planter, or sower is in bad faith and the owner of the land is also in bad faith, the provisions on builders in bad faith apply. However, Article 448 applies only to constructions of permanent character attached to the soil with an idea of perpetuity. If the construction is of transitory or transferable character, there is no accession; the builder must remove the construction, and the landowner's remedy is an action to eject the builder.

• Tolerated Possession Does Not Ripen into Ownership — Possession by mere tolerance of the owner does not constitute possession in the concept of an owner and cannot serve as a basis for acquisitive prescription, whether ordinary or extraordinary. The period of tolerated occupation is excluded from the computation of the prescriptive period.

• Tax Declarations as Evidence of Ownership — Tax declarations and realty tax receipts, while not conclusive proof of ownership, constitute strong evidence of possession in the concept of owner when supported by other evidence such as a deed of sale and continuous, open, and notorious occupation.

• "To fall within the provision of this Article, the construction must be of permanent character, attached to the soil with an idea of perpetuity; but if it is of a transitory character or is transferable, there is no accession, and the builder must remove the construction. The proper remedy of the landowner is an action to eject the builder from the land." — This passage, quoting Senator Arturo Tolentino's commentary on Article 448, defines the distinction between permanent and transferable constructions and determines the respective remedies available to landowner and builder.

• "Considering that the petitioners' occupation of the properties in dispute was merely tolerated by private respondents, their posture that they have acquired the property by 'occupation' for 20 years does not have any factual or legal foundation." — This statement articulates the principle that tolerated possession cannot ripen into ownership by prescription, a key basis for rejecting petitioners' claim of acquisitive prescription.

• Busante vs. Hon. Court of Appeals, 214 SCRA 774 (Oct. 20, 1992) — Cited by petitioners for the proposition that ownership of public land cannot be declared by the courts but by the Executive Department. The Court effectively distinguished this case by finding that the disputed properties were not public land, private ownership having been established by overwhelming evidence.

• Article 448, Civil Code of the Philippines — Governs the rights and obligations of a builder in good faith or bad faith who builds on land belonging to another. The Court applied this provision for purposes of indemnity, finding both parties in bad faith, but ultimately held it inapplicable because the improvements were transferable in nature.
• Article 285, Civil Code of the Philippines — Provides the exceptions under which an action for recognition of natural children may be brought after the death of the presumed parent. The trial court dismissed petitioner Editha's partition complaint because she did not fall under any of these exceptions.

Regalado, Melo, Puno, and Mendoza, JJ., concurred.