**Facts:**
1. **Ownership History:**
Maria Villaflores was the owner of Lot 2-A, with an area of 277 square meters in Poblacion, Meycauayan, Bulacan, covered by Transfer Certificate of Title (TCT) No. T-84.761 (M).
2. **First Sale (1980):**
In 1980, Maria sold a portion of Lot 2-A to her nephew, Antonio Villaflores, who subsequently took possession and constructed a house there.
3. **Kasulatan ng Bilihang Tuluyan (1992):**
On August 15, 1992, Maria executed a Kasulatan ng Bilihang Tuluyan (Deed of Absolute Sale) in favor of Antonio for the entire Lot 2-A, but Antonio did not register this sale or pay the associated real property taxes.
4. **Second Sale (1994):**
On August 31, 1994, Maria sold the same Lot 2-A to Filomena R. Benedicto, evidenced by another Kasulatan ng Bilihang Tuluyan. Filomena registered this sale with the Registry of Deeds of Meycauayan on September 6, 1994.
5. **Post-Purchase Disputes:**
– Filomena began paying real property taxes for the land.
– Filomena alleges she was unaware of Antonio’s claims or interest upon purchasing the property.
– Antonio allegedly agreed to vacate within five years, then requested extensions and offered to pay rental fees, which Filomena accepted initially.
– In 2000, Antonio refused to vacate and claimed absolute ownership.
**Procedural Posture:**
1. **RTC Case:**
Filomena filed an Accion Publiciana case (Civil Case No. 674-M-2000) seeking the cancellation of Antonio’s claim, damages, and attorney’s fees.
2. **RTC Decision (2002):**
The RTC ruled in favor of Filomena’s ownership and recognized Antonio as a builder in good faith but did not order reimbursement for improvements.
3. **CA Appeals:**
Both parties appealed. Filomena challenged the good faith finding and denial of damages, while Antonio challenged Filomena’s ownership being upheld.
4. **CA Decision (2008):**
The CA affirmed Filomena’s ownership and Antonio’s status as a builder in good faith. It remanded the case to the RTC to determine rights under Articles 448 and 546 of the Civil Code regarding reimbursement for improvements.
**Issues:**
1. **Whether Antonio was a builder in good faith.**
2. **Whether Antonio is entitled to reimbursement and retention rights under Articles 448 and 546 of the Civil Code.**
3. **Whether Filomena is entitled to damages and attorney’s fees.**
**Court’s Decision:**
1. **Good Faith Builder:**
– The Supreme Court upheld that Antonio was a builder in good faith given he constructed his house prior to the sale to Filomena and believed he had a valid title, albeit unregistered.
2. **Reimbursement and Retention:**
– Under Articles 448 and 546, the Court affirmed that Antonio, as a builder in good faith, is entitled to reimbursement of necessary and useful expenses with right of retention until full reimbursement.
– The case was remanded to the RTC for determination of the amount due to Antonio.
3. **Attorney’s Fees:**
– The Court denied Filomena’s claim for attorney’s fees, emphasizing that such awards are exceptions requiring specific factual and legal basis, and are not warranted merely because Filomena had to litigate to vindicate her rights.
**Doctrine:**
1. **Good Faith Builder Doctrine:**
– Under Article 448 of the Civil Code, a builder in good faith must be indemnified for improvements made before the landowner can recover possession.
2. **Reimbursement and Retention Rights:**
– Article 546 of the Civil Code grants a builder in good faith reimbursement for necessary and useful expenses and the right to retain possession until reimbursed.
**Class Notes:**
1. **Accion Publiciana:**
– Legal remedy to recover possession of real property when dispossession is more than a year old.
2. **Builder in Good Faith:**
– Defined under Article 448 of the Civil Code, they have rights to indemnity and retention until reimbursed for improvements.
3. **Articles 448 and 546 (Civil Code):**
– Article 448: The landowner has options to indemnify the builder or require the builder to buy the land.
– Article 546: Entitles the builder in good faith to reimbursement and retention for necessary and useful improvements.
**Historical Background:**
This case demonstrates the complexities arising from multiple sales of the same property, the need for proper registration of deeds, and the legal protections for parties acting in good faith. It reflects the judicial efforts in the Philippines to balance equitable interests between landowners and possessors with perceived ownership rights.
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