G.R. No. L-11406. April 26, 1961. MARIANO J. SANTOS, petitioner-appellant, vs. ALEJANDRO DE GUZMAN, respondent-appellee.
FACTS

Petitioner Mariano J. Santos sought the ejectment of his tenant, respondent Alejandro de Guzman, from a landholding in Angono, Rizal, on the ground that the land was included in a homesite subdivision approved by the National Planning Commission. In his answer, De Guzman did not refuse to surrender the land but alleged that Santos was requiring him to waive his claim for indemnity. By way of counterclaim, De Guzman sought reimbursement for various expenses he incurred in developing the land, including sums for constructing rice paddies, filling mud puddles, and leveling portions of the field, which he claimed were done at his own cost and sometimes without his consent when portions were later taken for subdivision or a road.
The Court of Agrarian Relations authorized the ejectment for the subdivision purpose. However, it also awarded De Guzman indemnity for improvements, specifically P276.00 for wages paid to farmhands hired to level stony land and construct dikes, based on Articles 446 and 546 of the New Civil Code. A supplemental decision later awarded additional damages. Santos appealed, contesting only the awards for damages, not the ejectment order itself.

ISSUE

The primary issue is whether the tenant, Alejandro de Guzman, is entitled to indemnity from the landowner, Mariano J. Santos, for the expenses he incurred in leveling the land and constructing dikes, which the lower court classified as necessary improvements.

RULING

The Supreme Court modified the lower court’s decision, ruling that De Guzman was not entitled to indemnity for the expenses in question. The legal logic centers on the proper classification of the expenses under the Civil Code and the tenant’s status as a possessor.
The Court held that the expenses for leveling and dike construction were not “necessary expenses” as defined by law. Necessary expenses are those made for the preservation of the property. These development costs did not preserve the land but were incurred to make it fit for cultivation, thus falling under the category of “useful expenses.” Under Article 546 of the Civil Code, useful expenses are refundable only to a possessor in good faith. The Court reiterated settled doctrine that an agricultural tenant’s possession is precarious and by tolerance of the owner; therefore, a tenant cannot be considered a possessor in good faith vis-à-vis the landlord. Consequently, De Guzman, as a mere tenant, had no right to recover the cost of these useful improvements. His right was limited to removing the improvements if possible without damage to the property, which was not feasible here.
Regarding procedural finality, the Court held that the period to appeal should be computed from notice of the supplemental decision, not the initial incomplete decision, as both formed part of a single case, thus Santos’s appeal was timely. The awards for damages were deleted, but the ejectment authorization and other aspects of the lower court’s rulings were affirmed.