G.R. No. 239727 , July 24, 2019.
Sps. Julian Belvis, Sr., and Cecilia Belvis, Sps. Julian E. Belvis, Jr., and Jocelyn Belvis, Sps. Julian E. Belvis III and Elsa Belvis, and Jouan E. Belvis, Petitioners, vs. Sps. Conrado V. Erola and Marilyn Erola, as represented by Maureen Frias, Respondents.

FACTS

Respondents, owners of Lot No. 597 covered by TCT No. T-26108 in the name of Conrado V. Erola, filed a complaint for unlawful detainer and damages against petitioners. Respondents alleged they allowed petitioners, who are close relatives (petitioner Cecilia being Conrado’s sister), to possess the lot by mere tolerance, subject to vacating upon demand. After a demand letter dated July 2, 2012, and unsuccessful barangay conciliation (where respondents were represented by their attorney-in-fact, Maureen Frias, not personally), respondents filed the complaint. Petitioners claimed the property was purchased by their mother, Rosario V. Erola, in 1979, but was registered solely in Conrado’s name, creating an implied trust over Cecilia’s hereditary share. They asserted possession in good faith as co-owners for over 34 years, introducing improvements like bamboos, nipa palms, coconut trees, and fishponds. The MCTC granted the complaint, ordering petitioners to vacate, pay monthly rental, and pay litigation expenses and attorney’s fees. The RTC and CA affirmed the MCTC decision.

ISSUE

1. Whether respondents complied with the mandatory barangay conciliation proceedings under R.A. 7160.
2. Whether petitioners are builders in good faith under Article 448 of the Civil Code, entitling them to retain the lot until reimbursement for necessary and useful expenses.

RULING

1. Yes, respondents substantially complied with the mandatory barangay conciliation proceedings. Although Section 415 of R.A. 7160 requires personal appearance, and respondents were represented by their attorney-in-fact, the Court found substantial compliance. The parties underwent conciliation, failed to settle, and a Certification to File Action was issued. They also underwent mediation before the Philippine Mediation Center and Judicial Dispute Resolution. The purposes of the law—to encourage amicable settlement and prevent indiscriminate filing—were met. Given the six-year pendency of this summary action, the Court relaxed technical rules in the interest of speedy and substantial justice.
2. Yes, petitioners are builders in good faith with the right to retain possession under Article 448 of the Civil Code. The Court found that petitioners introduced improvements on the lot with the knowledge and consent of respondents, who tolerated their possession for over 34 years. As builders in good faith, petitioners have the right to retain the land until reimbursed for necessary and useful expenses under Articles 546 and 548 of the Civil Code. The case was remanded to the MCTC to determine the proper amount of reimbursement for the improvements. However, petitioners are not exempt from paying reasonable compensation for their use of the property, which the MCTC set at ₱1,000.00 per month from the date of demand. The award of attorney’s fees and litigation expenses was deleted for lack of basis.