Primary Holding

A possessor who initially acquired property based on a court decision, even if later reversed, is considered a possessor in good faith until they are actually aware of a defect in their title. Bad faith is personal and not transmissible to heirs unless they have personal knowledge of the flaw. Good faith is presumed, and the burden of proving bad faith lies with the one alleging it.

Background

The case originates from a cadastral proceeding where Miguel Escritor claimed ownership of a land lot based on inheritance. The Court of First Instance initially adjudicated the land to Escritor. Years later, Simeon Acuna filed a petition for review alleging fraud and misrepresentation in Escritor's acquisition. This petition was eventually granted, and the land was adjudicated to Acuna. Acuna then sued Escritor's heirs for damages for unlawful possession of the land during the period between the initial adjudication and its reversal.

Facts

• 1. Miguel Escritor claimed ownership of Lot No. 2749 in cadastral proceedings, alleging inheritance.
• 2. Notice of hearing was published, and an order of general default was issued.
• 3. Only Escritor presented evidence, and the court adjudicated the land to him in 1958.
• 4. Simeon Acuna filed a petition to review this decision, claiming Escritor obtained it through fraud.
• 5. The petition for review was granted in 1960, and a new hearing was set.
• 6. In 1971, thirteen years after the initial decision, the court reversed its decision and adjudicated the land to Acuna.
• 7. Acuna then sued Escritor's heirs for damages, claiming unlawful possession from 1958 to 1971.
• 8. The trial court found the heirs to be possessors in good faith and dismissed the damages claim.
• 9. The Intermediate Appellate Court reversed this, finding bad faith and ordering damages.

Arguments of the Petitioners

• 1. Petitioners maintained that they, as heirs of Miguel Escritor, were possessors in good faith.
• 2. They relied on the initial court decision in 1958 adjudicating the land to Escritor.
• 3. They argued that Escritor believed he was the rightful owner based on the court decision.
• 4. They contended that even if Escritor was in bad faith, such bad faith is not transmissible to them as heirs unless they were personally aware of any defect in title.
• 5. They asserted that good faith is presumed and that Acuna failed to prove their bad faith.

Arguments of the Respondents

• 1. Respondent Acuna argued that the petitioners were possessors in bad faith from 1958 to 1971.
• 2. He based this claim on the 1971 court decision that re-adjudicated the land to him, stating Escritor forcibly took possession in 1958.
• 3. He claimed that Escritor obtained the original title through fraud, malice, and misrepresentation, making his possession unlawful from the beginning.
• 4. He argued that the Intermediate Appellate Court correctly reversed the trial court and ordered damages for the fruits of the land received by the petitioners during their possession.

Issues

• 1. Whether or not the petitioners, heirs of Miguel Escritor, should be held liable for damages to respondent Simeon Acuna for allegedly unlawful possession of Lot No. 2749 from 1958 to 1971.
• 2. Whether or not the petitioners were possessors in bad faith.
• 3. Whether bad faith is transmissible from a predecessor-in-interest to their heirs.

Ruling

• 1. The Supreme Court ruled in favor of the petitioners, reversing the decision of the Intermediate Appellate Court and reinstating the trial court's dismissal of Acuna's complaint for damages.
• 2. The Court held that Escritor was a possessor in good faith from 1958 to 1971 because he relied on a favorable court decision rendered by a competent court.
• 3. The Court stated that a possessor in bad faith is one who knows his title is defective, and there was no evidence Escritor knew of any flaw in his title at the time of the initial adjudication.
• 4. The Court further held that even assuming Escritor was in bad faith, such bad faith is personal and not transmissible to his heirs unless they were personally aware of the defect.
• 5. The Court emphasized the presumption of good faith in possession and that the burden of proving bad faith rests on the one alleging it, which Acuna failed to do.

Doctrines

• 1. Good Faith Possession: A possessor believes he has a valid title and is unaware of any defect that invalidates it. Escritor’s initial possession based on a court decision was considered to be in good faith.
• 2. Bad Faith Possession: A possessor knows that his title is defective or invalid. The Court found no evidence Escritor was aware of any defect in his title at the outset.
• 3. Presumption of Good Faith: Under Article 527 of the Civil Code, good faith is always presumed. The burden is on the one alleging bad faith to prove it. Acuna failed to prove bad faith on the part of the petitioners.
• 4. Intransmissibility of Bad Faith: Under Article 534 of the Civil Code, bad faith is personal and not transmissible from the predecessor to the heir unless the heir is aware of the defect. Even if Escritor was in bad faith, his heirs would not automatically inherit that bad faith without personal knowledge of the flaw in title.

Key Excerpts

• 1. "As defined in the law, a possessor in bad faith is one in possession of property knowing that his title thereto is defective."
• 2. "Nevertheless, assuming that claimant Escritor was a possessor in bad faith, this should not prejudice his successors-in-interest, petitioners herein, as the rule is that only personal knowledge of the flaw in one's title or mode of acquisition can make him a possessor in bad faith, for bad faith is not transmissible from one person to another, not even to an heir."
• 3. "Under Article 527 of the Civil Code, good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof."

Precedents Cited

• 1. Sotto vs. Enage, (CA) 43 Off. Gaz. 5057: Cited in relation to the principle that bad faith is not easily presumed and must be clearly proven. The citation supports the doctrine that good faith is presumed unless proven otherwise.

Statutory and Constitutional Provisions

• 1. Article 526, New Civil Code: Defines a possessor in bad faith as one who knows his title is defective. This definition was used to analyze whether Escritor was a possessor in bad faith.
• 2. Article 527, Civil Code: Establishes the presumption of good faith in possession. This was crucial in placing the burden of proof on Acuna to demonstrate bad faith.
• 3. Article 534, Civil Code: Addresses the intransmissibility of bad faith from a decedent to an heir. This article protected the heirs from automatically inheriting any bad faith of Miguel Escritor unless they had personal knowledge of it.