SAMUEL PARILLA, CHINITA PARILLA and DEODATO PARILLA, Petitioners, v. DR.

PROSPERO PILAR, Respondent.

Assailed via Petition for Review on Certiorari is the Court of Appeals Decision
1
of
January 19, 2005 reversin that of the Reional !rial Court "R!C# of $ian City, %ranch
20
2
which affir&ed the Decision
'
of (e)ruary ', 200' of the *unicipal !rial Court "*!C#
of %antay, +locos ,ur-
Petitioner-spouses Samue and C!inita Paria and t!eir "o-petitioner-son
Deodato Paria, as deaers
#
o$ Piipinas S!e Petroeum Corporation %Piipinas
S!e&, !a'e (een in possession o$ a par"e o$ and %t!e propert)& located at the
po)lacion of %antay, +locos ,ur which *as eased to it () respondent Dr. Prospero
Piar under a +,-)ear Lease A-reement
.
entered into in +//,.
0!en t!e ease "ontra"t (et*een Piipinas S!e and respondent e1pired in 2,,,,
petitioners remained in possession o$ t!e propert) on *!i"! t!e) (uit
impro'ements "onsistin- o$ a (iiard !a and a restaurant, maintained a sari-
sari store &anaed )y .eonardo Dada, Josefina Dada and /dwin Pual, and
allowed (lor Pelayo, (reddie %rinas and /dwin Pual to use a portion t!ereo$ as
par3in- ot.
4
Despite demands to 'a"ate, petitioners
5
and t!e ot!er o""upants
6
remained in t!e
propert).
0ence, respondent *!o !as (een residin- in t!e United States,
/
t!rou-! !is
attorne)-in-$a"t Mari'i" Pa7 Padre, $ied on 8e(ruar) #, 2,,2 a "ompaint $or
e9e"tment )efore the %antay *!C *it! pra)er $or t!e issuan"e o$ a *rit o$
preiminar) in9un"tion *it! dama-es
+,
a-ainst petitioners and t!e ot!er
o""upants o$ t!e propert).
A$ter tria, t!e MTC, () De"ision o$ 8e(ruar) :, 2,,:, ordered !erein petitioners
and t!eir "o-de$endants and a persons "aimin- ri-!ts under t!em to 'a"ate t!e
propert) and to pa) t!e painti$$-!erein respondent t!e amount o$ P.,,,,,.,, as
reasona(e "ompensation $or t!e use o$ t!e propert) and P10,000-00 as attorney1s
fees and to pay the cost of suit- And it ordered t!e painti$$-!erein respondent to
reim(urse de$endants Samue Paria, C!inita Paria and Deodato Paria t!e
amount o$ T*o Miion Pesos %P2,,,,,,,,.,,& representin- t!e 'aue o$ t!e
impro'ements introdu"ed on t!e propert).
Respondent appeaed to t!e RTC o$ ;i-an Cit) t!at portion o$ t!e tria "ourt<s
de"ision orderin- !im to reim(urse petitioners t!e amount o$ T*o Miion Pesos.
T!e RTC a$$irmed t!e MTC De"ision, however-
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On respondent<s Petition $or Re'ie*, t!e Court o$ Appeas set aside t!e
=uestioned order $or respondent to reim(urse petitioners T*o Miion Pesos.
+2
In
settin- aside t!e =uestioned order, t!e appeate "ourt, app)in- Arti"e .#4 o$ t!e
Ne* Ci'i Code which provides2
AR!- 534- 5ecessary e6penses shall )e refunded to every possessor7 )ut only the
possessor in ood faith &ay retain the thin until he has )een rei&)ursed therefor-
8seful e6penses shall )e refunded only to the possessor in ood faith with the sa&e
riht of retention, the person who has defeated hi& in the possession havin the option
of refundin the a&ount of the e6penses or of payin the increase in value which the
thin &ay have ac9uired )y reason thereof:,;
held that <:herein petitioners;1 tolerated occupancy - - - could not )e interpreted to
&ean - - - that they are )uilders or possessors in ood faith<
1'
and that for one to )e a
)uilder in ood faith, it is assu&ed that he clai&s title to the property which is not the
case of petitioners-
0ence, the present petition which faults the appellate court to have erred
+
- - - =0/5 +! ,/! A,+D/ !0/ D/C+,+>5, >( !0/ !R+A. C>8R!, =0+C0
>RD/R/D !0/ R/,P>5D/5! !> R/+*%8R,/ P/!+!+>5/R, !0/ A*>85! >(
!=> *+..+>5 "P2,000,000-00# P/,>, (>R !0/ ,8%,!A5!+A. +*PR>$/*/5!,
+5!R>D8C/D %? !0/* >5 !0/ ,8%J/C! PR/*+,/,-
++
- - - +5 5>! 0>.D+5@ !0A! P/!+!+>5/R, AR/ %8+.D/R, +5 @>>D (A+!0 >( !0/
,8%,!A5!+A. +*PR>$/*/5!, !0/? 0AD +5!R>D8C/D >5 !0/ PR/*+,/,,
0/5C/, !0/? AR/ /5!+!./D !> R/+*%8R,/*/5! >( ,8C0 +*PR>$/*/5!,-
+++
- - - +5 5>! 0>.D+5@ !0A! !0/ %8+.D+5@ =0+C0 P/!+!+>5/R, /R/C!/D >5
!0/ PR/*+,/, =A, =>R!0, A5D !0A! !0/ P/!+!+>5/R, AC!8A..? ,P/5!,
!0/ A*>85! >( !=> *+..+>5 "P2,000,000-00# P/,>,-
+$
- - - +5 5>! 0>.D+5@ !0A! P/!+!+>5/R, 0A$/ !0/ R+@0! >( R/!/5!+>5 >(
!0/ PR/*+,/, 85!+. !0/? AR/ R/+*%8R,/D >( !0/ ,A+D A*>85!
ADJ8D@/D +5 !0/+R (A$>R %? !0/ C>8R!, A A8>-
13
Petitioners, profferin that neither respondent nor his aents or representatives
perfor&ed any act to prevent the& fro& introducin the i&prove&ents,
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"ontend that
the appellate court should have applied Article 35' of the 5ew Civil Code which
provides that <:i;f there was )ad faith not only on the part of the person who )uilt,
planted or sowed on the land of another, )ut also on the part of the owner of such land,
the rihts of one and the other shall )e the sa&e as thouh )oth had acted in ood
faith-<
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Petitioners t!us "on"ude t!at (ein- (uiders in -ood $ait!, unti t!e) are
reim(ursed o$ t!e T*o Miion Peso-'aue o$ t!e impro'ements t!e) !ad
introdu"ed on t!e propert), t!e) !a'e t!e ri-!t o$ retention or o""upan") t!ereo$
pursuant to Arti"e ##6, in reation to Arti"e .#4, o$ t!e Ne* Ci'i
Code,
+5
ot!er*ise, respondent *oud (e un9ust) enri"!ed at t!eir e1pense.
!he petition fails in liht of the followin discussions-
T!e e'iden"e s!o*s t!at in +/4,, a ease "ontra"t o'er t!e propert) *as $or-ed
(et*een S!e Compan) o$ t!e P!iippines Limited and respondent<s
prede"essors-in-interest. In +//,, t!e ease "ontra"t *as rene*ed () Piipinas
S!e and respondent.
Petitioners, (ein- deaers o$ Piipinas S!e<s petroeum produ"ts, *ere ao*ed to
o""up) t!e propert). Petitioners are t!us "onsidered a-ents
+6
o$ Piipinas S!e.
T!e $a"tua miieu o$ t!e instant "ase "as t!en $or t!e appi"ation o$ t!e
pro'isions on ease under t!e Ne* Ci'i Code.
T!e ri-!t o$ t!e essor upon t!e termination o$ a ease "ontra"t *it! respe"t to
use$u impro'ements introdu"ed on t!e eased propert) () a essee is "o'ered ()
Arti"e +456 which reads2
Art- 14BC- +f the lessee &aDes, in ood faith, useful i&prove&ents which are suita)le to
the use for which the lease is intended, without alterin the for& or su)stance of the
property leased, t!e essor upon t!e termination o$ t!e ease s!a pa) t!e essee
one-!a$ o$ t!e 'aue o$ t!e impro'ements at t!at time- ,hould the lessor refuse to
rei&)urse said a&ount, the lessee &ay re&ove the i&prove&ents, even thouh the
principal thin &ay suffer da&ae there)y- 0e shall not, however, cause any &ore
i&pair&ent upon the property leased than is necessary-
6 6 6 6 "Emphasis supplied#
T!e $ore-oin- pro'ision is a modi$i"ation o$ t!e od Code under *!i"! t!e essee
!ad no ri-!t at a to (e reim(ursed $or t!e impro'ements introdu"ed on t!e
eased propert), !e (ein- entited mere) to t!e ri-!ts o$ a usu$ru"tuar) - ri-!t o$
remo'a and set-o$$, (ut not o$ reim(ursement.
+/
T!e modi$i"ation introdu"ed in t!e a(o'e-=uoted para-rap! o$ Arti"e +456 on
partia reim(ursement *as intended to pre'ent un9ust enri"!ment o$ t!e essor
*!i"! no* !as to pa) one-!a$ o$ t!e 'aue o$ t!e impro'ements at t!e time t!e
ease terminates (e"ause t!e essee !as aread) en9o)ed t!e same, *!ereas t!e
essor "oud en9o) t!em inde$inite) t!erea$ter.
2,
As the law on lease under the 5ew Civil Code has specific rules concernin useful
i&prove&ents introduced )y a lessee on the property leased, it is erroneous on the part
of petitioners to ure this Court to apply Article 33C, in relation to Article 534, reardin
their clai& for rei&)urse&ent and to invoDe the riht of retention )efore rei&)urse&ent
is &ade- Article 33C and Article 534 read2
ART. ##6- !he owner of the land on which anythin has )een )uilt, sown or planted in
ood faith, shall have the riht to appropriate as his own the worDs, sowin or plantin,
after pay&ent of the inde&nity provided for in articles 534 and 53C, or to o)lie the one
who )uilt or planted to pay the price of the land, and the one who sowed, the proper
rent- 0owever, the )uilder or planter cannot )e o)lied to )uy the land if its value is
considera)ly &ore than that of the )uildin or trees- +n such case, he shall pay
reasona)le rent, if the owner of the land does not choose to appropriate the )uildin or
trees after proper inde&nity- !he parties shall aree upon the ter&s of the lease and in
case of disaree&ent, the court shall fi6 the ter&s thereof-
ART. .#4- 5ecessary e6penses shall )e refunded to every possessor7 )ut only the
possessor in ood faith &ay retain the thin until he has )een rei&)ursed therefor-
8seful e6penses shall )e refunded only to the possessor in ood faith with the sa&e
riht of retention, the person who has defeated hi& in the possession havin the option
of refundin the a&ount of the e6penses or of payin the increase in value which the
thin &ay have ac9uired )y reason thereof-
>urispruden"e is repete *it! "ases
2+
*!i"! "ate-ori"a) de"are t!at Arti"e ##6
"o'ers on) "ases in *!i"! t!e (uiders, so*ers or panters (eie'e t!emse'es to
(e o*ners o$ t!e and or, at east, !a'e a "aim o$ tite t!ereto, (ut not *!en t!e
interest is mere) t!at o$ a !oder, su"! as a mere tenant, a-ent or usu$ru"tuar). A
tenant "annot (e said to (e a (uider in -ood $ait! as !e !as no pretension to (e
o*ner.
22
+n a plethora of cases,
2:
t!is Court !as !ed t!at Arti"es ##6 o$ t!e Ci'i Code, in
reation to Arti"e .#4 o$ t!e same Code, *!i"! ao*s $u reim(ursement o$
use$u impro'ements and retention o$ t!e premises unti reim(ursement is made,
appies on) to a possessor in -ood $ait!, i.e., one *!o (uids on and *it! t!e
(eie$ t!at !e is t!e o*ner t!ereo$. It does not app) *!ere one<s on) interest is
t!at o$ a essee under a renta "ontra"t? ot!er*ise, it *oud a*a)s (e in t!e
po*er o$ t!e tenant to @impro'e@ !is andord out o$ !is propert).
2#
"Underscoring
supplied#
Sia v. Court of Appeals,
25
which cites Cabangis v. Court of Appeals,
24
e6haustively
e6plains the applica)ility of Article 14BC on disputes relatin to useful i&prove&ents
introduced )y a lessee on leased pre&ises, viz:
6 6 6 6
,econd- Petitioner stu))ornly insists that he &ay not )e eEected fro& private
respondent1s land )ecause he has the riht, under Articles 33C and 534 of the 5ew Civil
Code, to retain possession of the leased pre&ises until he is paid the full fair &arDet
value of the )uildin constructed thereon )y his parents- Petitioner is wron, of course-
!he Reional !rial Court and the Court of Appeals correctly held that it is Article 14BC of
the 5ew Civil Code that overns petitioner1s riht visFaFvis the i&prove&ents )uilt )y his
parents on private respondent1s land-
+n the 1991 case of Cabangis v. Court of Appeals where the su)Eect of the lease
contract was also a parcel of land and the lessee1s father constructed a fa&ily
residential house thereon, and the lessee su)se9uently de&anded inde&nity for the
i&prove&ents )uilt on the lessor1s land )ased on Articles 33C and 534 of the 5ew Civil
Code, we pointed out that reliance on said leal provisions was &isplaced-
<!he reliance )y the respondent Court of Appeals on Articles 33C and 534 of the Civil
Code of the Philippines is &isplaced- !hese provisions have no application to a contract
of lease which is the su)Eect &atter of this controversy- +nstead, Article 14BC of the Civil
Code applies- - - -
6 6 6 6
>n the other hand, Article 33C overns the riht of accession while Article 534 pertains
to effects of possession- !he very lanuae of these two provisions clearly &anifest
their inapplica)ility to lease contracts- - - -
6 6 6 6
!hus, the i&prove&ents that the private respondent1s father had introduced in the
leased pre&ises were done at his own risD as lessee- !he riht to inde&nity e9uivalent
to oneFhalf of the value of the said i&prove&ents 1 the house, the fillin &aterials, and
the hollow )locD fence or wall F is overned, as earlier adverted to, )y the provisions of
Art- 14BC, first pararaph of the Civil Code a)ove 9uoted- %ut this riht to inde&nity
e6ists only if the lessor opts to appropriate the i&prove&ents "Al)uro v- $illanueva,
supra, note 10 at 2B9F2C07 $alencia v- Ayala de Ro6as, supra, note 10 at 34#-
!herefusal of the lessor to pay the lessee oneFhalf of the value of the useful
i&prove&ents ives rise to the riht of re&oval- >n this score, the co&&entary of
Justice Paras is enlihtenin-
15ote that under the 1st pararaph of Art- 14BC, the law on the riht of R/*>$A. says
that 1should the lessor refuse to rei&)urse said a&ount, the lessee &ay re&ove the
i&prove&ents, even thouh the principal thin &ay suffer there)y-1 =hile the phrase
1even thouh1 i&plies that Art- 14BC always applies reardless of whether or not the
i&prove&ents can )e re&oved without inEury to the leased pre&ises, it is )elieved that
application of the Article cannot always )e done- !he rule is evidently intended for cases
where a true accession taDes place as when part of the land leased is, say, converted
into a fishpond7 and certainly not where as easily re&ova)le thin "such as a wooden
fence# has )een introduced- !here is no dou)t that in a case involvin such a
detacha)le fence, the lessee can taDe the sa&e away with hi& when the lease e6pires
"5 /- Paras, Civil Code of the Philippines Annotated '35 :11th ed-, 19C4;#-1
6 6 6 6
Clearly, it is Article 14BC of the 5ew Civil Code which applies to the present case-
Petitioners1 clai& for rei&)urse&ent of the alleed entire value of the i&prove&ents
does not thus lie under Article 14BC- 5ot even for oneFhalf of such alleed value, there
)ein no su)stantial evidence, e.g., receipts or other docu&entary evidence detailin
costs of construction- %esides, )y petitioners1 ad&ission, of the structures they oriinally
)uilt F the )illiard hall, restaurant, sarisari store and a parDin lot, only the <bodegaF
liDe< sarisari store and the parDin lot now e6ist-
2B
At a e'ents, under Arti"e +456, it is t!e essor *!o is -i'en t!e option, upon
termination o$ t!e ease "ontra"t, eit!er to appropriate t!e use$u impro'ements
() pa)in- one-!a$ o$ t!eir 'aue at t!at time, or to ao* t!e essee to remo'e t!e
impro'ements. T!is option soe) (eon-s to t!e essor as t!e a* is e1pi"it t!at
@AsB!oud t!e essor re$use to reim(urse said amount, t!e essee ma) remo'e t!e
impro'ements, e'en t!ou-! t!e prin"ipa t!in- ma) su$$er dama-e t!ere().@ It
appears t!at t!e essor !as opted not to reim(urse.
0HERE8ORE, the petition is DENIED- !he Court of Appeals Decision of January 19,
2005 is A88IRMED in liht of the foreoin discussions-
Costs aainst petitioners-
SO ORDERED.