Florentino, Troadio and Pedro, all surnamed Ochoa vs. Mauro Apeta and Apolonia Almazan

In a Rule 45 petition, the Supreme Court will not review factual findings of the lower courts absent the recognized exceptions; registered land cannot be acquired by prescription or adverse possession; and a builder in good faith on another's land is subject to Article 448 of the Civil Code, under which the landowner may choose either to appropriate the improvements upon payment of indemnity or to oblige the builder to pay the price of the land.

Petitioners Florentino, Troadio, and Pedro, all surnamed Ochoa, and their predecessors-in-interest had occupied Lot No. 1580 in Malaban, Biñan, Laguna since 1910 and built houses and an apartment building thereon. Respondents Mauro Apeta and Apolonia Almazan asserted a registered title to the same lot, while petitioners relied on Transfer Certificate of Title No. T-40624. The dispute implicated the Property Registration Decree (P.D. 1529) and the Civil Code provisions on builders in good faith, Articles 448, 546, and 548.

Petitioners Florentino, Troadio, and Pedro, all surnamed Ochoa, together with their predecessors-in-interest, had occupied Lot No. 1580, consisting of 886 square meters in Malaban, Biñan, Laguna, since 1910. The lot was covered by Transfer Certificate of Title No. T-40624 of the Registry of Deeds of Laguna, and petitioners built their houses and an apartment building thereon.

On May 10, 1982, respondents Mauro Apeta and Apolonia Almazan found that they were the true owners of Lot No. 1580 being occupied by petitioners. On January 22, 1988, respondents filed with the Regional Trial Court, Branch 24, Biñan, Laguna, a complaint for recovery of possession and damages against petitioners, docketed as Civil Case No. B-2777. They alleged in the main that they were the lawful owners of Lot No. 1580 covered by Certificate of Title No. RT-599 (10731) issued by the Registry of Deeds of Laguna. In their answer, petitioners specifically denied the allegations and contended that they were the owners of Lot No. 1580 as shown by TCT No. T-40624 issued by the Registry of Deeds of Laguna.

During the proceedings before the RTC, upon agreement of the parties, the trial judge commissioned Engr. Romulo Unciano of the Bureau of Lands of Region IV to conduct a resurvey of the disputed property. The result of the resurvey, approved by the Bureau of Lands, showed that Lot No. 1580, occupied by petitioners, was registered in the name of Margarita Almada, respondents' predecessor-in-interest; and that the lot covered by TCT No. T-40624 was not Lot No. 1580, but Lot No. 1581 registered in the name of Servillano Ochoa, petitioners' predecessor-in-interest. This lot has been occupied by Isidro Jasmin.

The complaint and answer thus joined issue on the ownership of Lot No. 1580. The lower courts relied on the Bureau of Lands resurvey in finding that respondents were the true and lawful owners of Lot No. 1580 and that petitioners' claim under TCT No. T-40624 actually pertained to Lot No. 1581.

• Ownership: Petitioners contended that Lot No. 1580 belongs to them.
• Prescription: Petitioners contended that respondents' action is barred by prescription.

• Ownership / Factual Findings: Whether petitioners' claim that they are the actual owners of Lot No. 1580 may be reviewed in a petition for review on certiorari under Rule 45, given that it requires a re-evaluation of the evidence and contradicts the lower courts' factual findings.
• Prescription: Whether respondents' action for recovery of possession is barred by prescription.
• Builders in Good Faith: Whether petitioners and their predecessors-in-interest were builders in good faith, and whether respondents may appropriate the houses and apartment building or oblige petitioners to pay the price of the lot under Articles 448, 546, and 548 of the Civil Code.

• Ownership / Factual Findings: No. The issue is factual and requires weighing evidence; under Rule 45, only questions of law may be raised, and the lower courts' finding that respondents are the true and lawful owners, based on the resurvey, is conclusive absent the recognized exceptions.
• Prescription: No. Section 47 of P.D. 1529 bars acquisition of registered land by prescription or adverse possession, and prescription does not run against the hereditary successors of the registered owner.
• Builders in Good Faith: Yes. Petitioners and their predecessors were builders in good faith; under Article 448, respondents as landowners may choose either to appropriate the improvements upon payment of indemnity or to oblige petitioners to pay the price of the lot, not more than the value of the improvements.

• Ownership / Factual Findings: In an appeal via petition for review on certiorari, only questions of law may be raised. The claim that petitioners own Lot No. 1580 is factual and requires weighing anew the evidence already passed upon by the Court of Appeals. The Supreme Court is not a trier of facts and may not review the Court of Appeals' findings except when: (a) the factual findings of the Court of Appeals and the trial court are contradictory; (b) the inference is manifestly mistaken or absurd; (c) the judgment is premised on a misapprehension of facts; or (d) the Court of Appeals failed to resolve relevant facts which, if properly considered, would justify a modification or reversal. None of these exceptions applies. The lower courts relied on the Bureau of Lands resurvey showing that Lot No. 1580 was registered in the name of Margarita Almada, respondents' predecessor-in-interest, while TCT No. T-40624 covered Lot No. 1581, registered in the name of Servillano Ochoa, petitioners' predecessor-in-interest. The finding that respondents are the true and lawful owners of Lot No. 1580 therefore stands.
• Prescription: Section 47 of P.D. 1529 provides that no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. Prescription cannot be allowed against the hereditary successors of the registered owner because they step into the shoes of the decedent and are merely the continuation of the personality of their predecessor-in-interest. Thus, respondents' action is not barred by prescription, and the Court of Appeals did not err in ruling that respondents are the true and lawful owners who should be placed in possession.
• Builders in Good Faith: Because petitioners and their predecessors-in-interest built houses and an apartment building on Lot No. 1580, the Court determined whether they were builders in good faith. Good faith is an intangible and abstract quality with no technical meaning or statutory definition; it encompasses an honest belief, the absence of malice, and the absence of design to defraud or to seek an unconscionable advantage. It implies honesty of intention and freedom from knowledge of circumstances which ought to put the holder upon inquiry. Its essence lies in an honest belief in the validity of one's right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if not aware that there exists in his title or mode of acquisition any flaw which invalidates it. Petitioners and their predecessors-in-interest were convinced that the lot was covered by their TCT No. T-40624, so they were builders in good faith. Under Articles 448, 546, and 548 of the Civil Code, the landowner can choose either to appropriate the building by paying the proper indemnity or to oblige the builder to pay the price of the land. The choice belongs to the owner of the land, consistent with the principle of accession that the accessory follows the principal and not the other way around, and the owner must choose only one. Respondents, as owners of Lot No. 1580, may therefore choose between appropriating the houses and apartment building by paying the proper indemnity or value, or obliging petitioners to pay the price of Lot No. 1580, which is not more than that of the improvements.

• Rule 45 limits review to questions of law — In a petition for review on certiorari under Rule 45, only questions of law may be raised; the Supreme Court is not a trier of facts and will not review the factual findings of the Court of Appeals except when (a) the factual findings of the Court of Appeals and the trial court are contradictory; (b) the Court of Appeals' inference is manifestly mistaken or absurd; (c) the judgment is premised on a misapprehension of facts; or (d) the Court of Appeals failed to resolve relevant facts which, if properly considered, would justify a modification or reversal. The Court applied this rule to decline review of petitioners' factual claim of ownership over Lot No. 1580.
• Registered land cannot be acquired by prescription — Under Section 47 of P.D. 1529, no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. The rule also cannot be invoked against the hereditary successors of the registered owner, who step into the shoes of the decedent and are merely the continuation of the personality of their predecessor-in-interest. The Court applied this to hold that respondents' action was not barred by prescription.
• Good faith of a builder or possessor — Good faith is an intangible and abstract quality with no technical meaning or statutory definition; it encompasses an honest belief, the absence of malice, and the absence of design to defraud or to seek an unconscionable advantage, and implies honesty of intention and freedom from knowledge of circumstances which ought to put the holder upon inquiry. Its essence lies in an honest belief in the validity of one's right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is in good faith if not aware that there exists in his title or mode of acquisition any flaw which invalidates it. The Court found petitioners and their predecessors-in-interest to be builders in good faith because they believed the lot was covered by TCT No. T-40624.
• Article 448 options of the landowner — Where a builder in good faith builds on another's land, the landowner has the right to appropriate the works after payment of the indemnity provided in Articles 546 and 548, or to oblige the builder to pay the price of the land. The choice belongs to the landowner, consistent with the principle of accession that the accessory follows the principal and not the other way around, and the landowner must choose only one. The Court applied this to allow respondents either to pay for the houses and apartment building or to oblige petitioners to pay the price of Lot No. 1580 not exceeding the value of the improvements.
• Accession — The accessory follows the principal and not the other way around. The Court invoked this principle to explain why the choice under Article 448 belongs to the owner of the land.

• "no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession." — This states the statutory rule under Section 47 of P.D. 1529 that defeated petitioners' prescription defense.
• "Neither can prescription be allowed against the hereditary successors of the registered owner, because they step into the shoes of the decedent and are merely the continuation of the personality of their predecessor-in-interest." — This explains why prescription did not run against respondents as hereditary successors of the registered owner.
• "The essence of good faith lies in an honest belief in the validity of one’s right, ignorance of a superior claim and absence of intention to overreach another." — This is the Court's canonical formulation of good faith, applied to find petitioners and their predecessors-in-interest as builders in good faith.
• "Under the foregoing provisions, the landowner can make a choice - either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one." — This states the Article 448 remedy and the landowner's election, which the Court applied in modifying the judgment.

• Fuentes vs. Court of Appeals, G.R. No. 109849, February 29, 1997, 268 SCRA 703 — Cited for the rule that the Supreme Court is not a trier of facts and may not review the Court of Appeals' factual findings except under the enumerated exceptions.
• Cordial vs. Miranda, G.R. No. 135495, December 14, 2000, 348 SCRA 158 — Cited in Fuentes vs. Court of Appeals as authority for the exceptions to the rule against factual review.
• Cabataje vs. Puduman, G.R. No. 134712, August 13, 2004, 436 SCRA 423 — Cited in Fuentes vs. Court of Appeals as authority for the exceptions to the rule against factual review.
• Alcantara-Daus vs. De Leon, G.R. No. 149750, June 16, 2003, 404 SCRA 74 — Cited for the rule that no title to registered land in derogation of the registered owner may be acquired by prescription or adverse possession.
• Bailon-Carilao vs. Court of Appeals, No. L-35767, April 15, 1988, 160 SCRA 738 — Cited for the rule that prescription cannot be allowed against the hereditary successors of the registered owner.
• Philippine National Bank vs. De Jesus, G.R. No. 149295, September 23, 2003, 411 SCRA 557 — Cited for the definition of good faith.
• Bernardo vs. Bernardo, 95 Phil. 202 — Cited in Philippine National Bank vs. De Jesus for the essence of good faith.
• Negrete vs. CFI of Marinduque, 48 SCRA 113 (1972) — Cited in Philippine National Bank vs. De Jesus for the essence of good faith.

• Rule 45, 1997 Rules of Civil Procedure, as amended — Petition for review on certiorari; only questions of law may be raised. Applied to reject review of the factual ownership issue.
• Section 47, P.D. 1529 (Property Registration Decree) — No title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. Applied to reject petitioners' prescription defense.
• Article 448, Civil Code — The owner of land on which anything has been built in good faith has the right to appropriate the works after payment of the indemnity under Articles 546 and 548, or to oblige the builder to pay the price of the land; the builder cannot be obliged to buy the land if its value is considerably more than the building, in which case he pays reasonable rent if the owner does not choose to appropriate; the parties agree on lease terms or the court fixes them. Applied to give respondents the option either to appropriate the improvements or to oblige petitioners to pay the price of the lot.
• Article 546, Civil Code — Necessary expenses shall be refunded to every possessor; only the possessor in good faith may retain the thing until reimbursed; useful expenses shall be refunded only to the possessor in good faith with the same right of retention, with the person who defeated him in possession having the option of refunding the amount or paying the increase in value. Applied as part of the indemnity framework under Article 448.
• Article 548, Civil Code — Expense for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; he may remove the ornaments if the principal thing suffers no injury and his successors in possession do not prefer to refund the amount expended. Applied as part of the indemnity framework under Article 448.
• Article 526, Civil Code — Cited for possession good faith: one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. Applied to petitioners and their predecessors-in-interest.

Puno, C.J., Chairperson, Corona, Azcuna, Garcia, JJ., concur.