G.R. No. 83722 ; August 9, 1991
MARITA CABANGIS and RODOLFO CABANGIS, petitioners, vs. HON. COURT OF APPEALS and ELVIRA DEVIS NICANDRO, respondents.

FACTS

The petitioners, the Cabangises, are owners of a parcel of land in Tondo, Manila, which was leased to Gaspar Devis, father of private respondent Elvira Devis Nicandro. For non-payment of rents, the Cabangises filed an ejectment case against Devis in 1968. The case culminated in a final and executory decision in 1980 ordering Devis and all persons claiming under him to vacate the premises and to remove his construction thereon. In 1984, the Metropolitan Trial Court granted the petitioners’ motion for a writ of execution.
Before the writ could be implemented, Nicandro filed a complaint in the Regional Trial Court for indemnity of improvements with injunction against the petitioners. She sought reimbursement for the value of improvements allegedly made in good faith by her father on the leased property, claiming the lot was swampy and was filled and developed at great cost. The trial court dismissed her complaint, ruling it was an attempt to alter a final judgment. The Court of Appeals reversed the dismissal, holding that her action for indemnity was separate from the ejectment case and had not prescribed.

ISSUE

Whether the private respondent’s action for indemnity of improvements is barred by prescription and/or constitutes a waived compulsory counterclaim.

RULING

The Supreme Court granted the petition, reversing the Court of Appeals and reinstating the trial court’s order of dismissal. The Court held that the action for indemnity had indeed prescribed. The obligation of a lessor to indemnify a lessee for useful improvements under Article 1678 of the Civil Code is an obligation created by law. Pursuant to Article 1144(2) of the Civil Code, such an action must be brought within ten years from the time the right of action accrues.
The right of action accrued, at the latest, when the ejectment case was filed on October 19, 1968, as this constituted a demand for the lessee to vacate and effectively an act of appropriation of the improvements by the lessor. Nicandro’s complaint filed on November 27, 1984, was clearly beyond the ten-year prescriptive period. Furthermore, the Court ruled that a claim for reimbursement of useful expenses is in the nature of a compulsory counterclaim that must be set up in the ejectment suit. Nicandro’s failure to raise it in the long-concluded ejectment proceedings bars its assertion in a subsequent independent action. Her remedy was to have asserted the claim in the original case, not to file a separate action years after the judgment became final.