[G.R. No. L-57348.

May 16, 1985]

Depra vs. Dumlao
Facts:
> Francisco Depra (Dep) is the owner of a parcel of land known as Lot No. 685 while Agustin
Dumlao (Dum) owns an adjoining lot, Lot No. 683.
> When Dum constructed his house on his lot and his kitchen encroached on an area of thirty
four square meters of DEPRA's property. This was discovered in a relocation survey of Dep's lot
made on November 2,1972.
> Dep’s mother made a demand on Dum to move back from his encroachment and filed,
thereafter, an action for Unlawful Detainer on February 6, 1973 in the Municipal Court.

MTC: MTC found that Dum was a builder in good faith and applied Article 448 of the CC and ordered
a forced lease between the parties.

> There was no appeal to such judgment, but even then, Dep did not accept payment of
rentals so that Dum deposited such rentals with the Municipal Court.
> Years later, Dep filed a Complaint for Quieting of Title against Dum before the
then Court of First Instance involving the encroached area. Dum answered admitting the
encroachment but argued that that the suit is barred by res judicata by virtue of the Decision of the
MTC, which had become final and executory.

RTC: RTC decided in favour of Dep and declared his ownership of the area as covered under a TCT
and that Dep is entitled to possess the same.

> Dep rebutted Dum’s argument of res judicata, stating that the decision of the MTC was void
ab initio because its jurisdiction is limited to the sole issue of possession, and decisions affecting
lease, which is an encumbrance on real property, may only be rendered by CFIs.

*No mention of the CA*

Issue: (a) WON Dep is barred by prior judgment; (b) WON Dep is entitled to possession.

Rule:
a. No, the SC gave 4 reasons as to why, to wit:
> The MTC overstepped its bounds when it imposed upon the parties a situation of
"forced lease", which like “forced co-ownership” is not favored in law.
> A lease is an interest in real property, jurisdiction over which belongs to CFIs (Sec.
44(b), Judiciary Act of 1948; 2 Sec. 19 (2) Batas Pambansa Blg. 129), therefore void.
> Even if the Decision were valid, the rule on res judicata would not apply due to
difference in cause of action; i.e. In the MTC, the cause of action was the deprivation of possession,
while in the action to quiet title, the cause of action was based on ownership.
> Sec. 7, Rule 70 of the Rules of Court explicitly provides that judgment in a detainer
case “shall not bar an action between the same parties respecting title to the land.”
b. No, as conceded in the stipulation of facts between the parties, Dum was a builder in
good faith. Both parties acknowledged being both in good faith during the MTC trial and the CFI trial.
Despite the voidness of the MTC decision, this article should still be applied. Therefore, Art. 448 of
the CC applies and pursuant to the foregoing provision, Dep has the option either to pay for the
encroaching part of Dum's kitchen, or to sell the encroached 34 square meters of his lot to Dum. He
cannot refuse to pay for the encroaching part of the building, and to sell the encroached part of his
land.
>It was thus error for the CFI to have ruled that Dep is "entitled to possession," without
more, of the disputed portion implying thereby that he is entitled to have the kitchen removed. He is
entitled to such removal only when, after having chosen to sell his encroached land, Dum fails to pay
for the same. In this case, Dum had expressed his willingness to pay for the land, but Dep refused to
sell.

Order: Remanded to the CFI for further proceedings consistent with Articles 448 and 546 of the Civil
Code; I.e determination of the value and make the parties decide on their options under such
provisions.