Baclayon v. Bacalso
REITERATIONFacts
The Antecedents: This case originated from a complaint filed in 1969 by the Baclayon heirs and others against spouses Marciano and Gregoria Bacalso for the recovery of ownership and possession of Lot No. 5528 of the Cebu Cadastre. The trial court initially ruled in favor of the Bacalso spouses, declaring them owners of the lot. Procedural History: The Baclayon heirs appealed the trial court's decision to the Court of Appeals, which reversed the ruling and declared the Baclayon heirs as the owners of Lot No. 5528. This decision was elevated to the Supreme Court via a petition for review, which was denied. Consequently, the Court of Appeals' decision became final and executory. The Baclayon heirs then sought execution of the judgment and possession of the lot. The Bacalso spouses opposed this, arguing they were builders in good faith and entitled to reimbursement for improvements, citing Article 546 of the Civil Code. The Regional Trial Court (RTC) initially denied the opposition and ordered the issuance of a writ of execution. However, the RTC later issued an order allowing the Bacalso spouses fifteen (15) days to voluntarily remove their improvements. The Bacalso spouses then filed a petition for certiorari, mandamus, and prohibition with the Court of Appeals, challenging the RTC's orders. The Petition: The Court of Appeals granted the petition, setting aside the RTC's orders and directing the RTC to receive evidence from the Bacalso spouses to prove their status as builders in good faith and the value of their improvements. The present petition for review on certiorari seeks to set aside the Court of Appeals' decision, arguing that the RTC's orders were legitimate and that the Bacalso spouses should not be allowed to present evidence on their claims in a hearing supplementary to execution, as these claims should have been raised during the original proceedings. The Supreme Court is asked to determine if the Bacalso spouses should be allowed to present evidence of being builders in good faith during a supplementary execution hearing.
Issue(s)
Whether the private respondents should be allowed, in a hearing supplementary to execution, to present evidence to prove that they are builders in good faith of the improvements and the value of said improvements. Whether a claim for reimbursement of improvements by builders in good faith, which presupposes they are not the owners of the land, can be set up after a judgment has become final and executory.
Ruling
The petition is GRANTED. The decision of the Court of Appeals dated April 28, 1989, and its resolution dated June 20, 1989, are SET ASIDE and ANNULLED. The orders dated March 8, 1988, and August 19, 1988, of the Regional Trial Court of Cebu City, Branch 15, are REINSTATED.
Ratio Decidendi
On the issue of allowing reception of evidence supplementary to execution for builders in good faith: The Supreme Court ruled that the Court of Appeals erred in allowing the reception of evidence to prove the status of builders in good faith and the value of improvements after the judgment had become final and executory. The Court emphasized that once a decision is final and executory, the trial court's jurisdiction is limited to ordering its execution. Allowing such evidence would disturb and substantially amend a final executory decision. The Court distinguished the present case from Naga Development Corporation v. Court of Appeals and Vda. de Chi v. Tanada because, in those cases, the claims or defenses were either raised or litigated before the trial court, which is not true in the present case where the defense of builders in good faith was not presented. On the ability to set up a counterclaim for reimbursement after judgment: The Court held that the defense of being builders in good faith, which presupposes they are not the owners of the land, could have been set up as an alternative or hypothetical defense or as a compulsory counterclaim in the original action, pursuant to Rule 8, Section 2 and Rule 9, Section 4 of the Rules of Court. The case of Camara, et al. v. Aguilar, et al. was cited, which allowed inconsistent defenses to be pleaded alternatively. Failure to set up such a claim as a compulsory counterclaim bars its subsequent litigation, as it would lead to multiplicity of suits and violate the principle of res judicata. The Court noted that the private respondents' opposition was their 'last straw to prevent the satisfaction of the judgment.'
Main Doctrine
A claim for reimbursement of improvements by builders in good faith, which presupposes they are not the owners of the land, must be set up as a compulsory counterclaim in the original action; failure to do so bars its subsequent litigation, as it would disturb a final and executory decision.