G.R. No. 266145 , August 19, 2024
MA. DULCE C. FERNANDEZ, AS REPRESENTED BY HER ATTORNEYS-IN-FACT JAIME C. FERNANDEZ, ROBERTO C. FERNANDEZ, AND MA. ELENA C. FERNANDEZ, PETITIONER, VS. ENRIQUE C. FERNANDEZ, RESPONDENT.

FACTS

The subject property is located at 1381 Palm Avenue, Dasmariñas Village, Makati City, covered by TCT No. 217361. It was originally owned by petitioner Ma. Dulce C. Fernandez (Dulce) and her late husband Jose B. Fernandez. During his lifetime, Jose executed a Deed of Absolute Sale dated May 28, 1993, conveying his 50% share to their children: respondent Enrique C. Fernandez (Enrique) and his siblings Roberto, Jaime, and Ma. Elena. After Jose’s death in 1994, Enrique sought and obtained Dulce’s permission to stay in the property with his family, with her assistance.
On October 14, 1999, the siblings executed a Contract of Usufruct in favor of Dulce, granting her the lifetime usufructuary right to the property, with obligations to pay annual charges and taxes. The usufruct would extinguish upon her death. Subsequently, on September 18, 2000, Dulce executed a Deed of Absolute Sale transferring her remaining 50% share to all four children, making each a 25% owner.
Thereafter, on December 18, 2000, the siblings executed a Memorandum of Agreement (MOA) in Dulce’s favor. The MOA granted Dulce full control and possession of the property during her lifetime. It stipulated that none of the siblings or their family members could stay in the property for more than 24 months after Dulce leaves, unless consented to in writing by a majority of three siblings, and under terms including payment of monthly rental at prevailing market rate, advance payment, security deposit, and bearing all maintenance costs. Dulce tolerated Enrique’s continued stay. However, Enrique allegedly refused to respect the contracts, contributed a negligible amount for property expenses, and failed to pay rent. Dulce, through her attorneys-in-fact (her other three children), sent a demand letter to vacate. Upon Enrique’s refusal, she filed a complaint for unlawful detainer.

ISSUE

Whether the Court of Appeals erred in reversing the grant of the complaint for unlawful detainer and ruling that respondent Enrique C. Fernandez is not a builder in bad faith.

RULING

The Supreme Court GRANTED the petition, REVERSED the Decision of the Court of Appeals, and REINSTATED the Decision of the Regional Trial Court which affirmed the Metropolitan Trial Court’s judgment in favor of the petitioner.
The Court held that the essential elements for an unlawful detainer case were present: (1) initially, possession of the property by the defendant was by contract with or tolerance of the plaintiff; (2) eventually, such possession became illegal upon the plaintiff’s termination of the defendant’s right of possession; (3) the defendant remained in possession and deprived the plaintiff of enjoyment; and (4) the action was filed within one year from the last demand to vacate.
First, Enrique’s possession was by mere tolerance of Dulce, the usufructuary with the right to possess and enjoy the property under the Contract of Usufruct and the MOA. His status was that of a mere occupant at Dulce’s sufferance. Second, Dulce validly terminated that tolerance through the demand letter. Third, Enrique’s refusal to vacate after demand unlawfully deprived Dulce of her possessory right. Fourth, the action was filed within one year from the final demand.
The Court rejected the Court of Appeals’ finding that Enrique was a builder in good faith. A builder in good faith is one who builds on land believing himself to be the owner. Here, Enrique was fully aware he was not the sole owner but merely one of four co-owners. His knowledge of the MOA’s terms, which required written consent and rental payments for occupancy, precluded good faith. His continued occupation without complying with the MOA constituted detainer, not a builder’s rights issue. The MOA was the law between the parties, and Enrique violated its terms. Consequently, he was a possessor in bad faith, and the principle of accession (builders in good faith) did not apply. The case was a simple ejectment suit where the plaintiff’s better right of possession, derived from the usufruct and the MOA, was established.