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G.R. No. 170923. January 20, 2009.*

SULO SA NAYON, INC. and/or PHILIPPINE VILLAGE

HOTEL, INC. and JOSE MARCEL E. PANLILIO,
petitioners, vs. NAYONG PILIPINO FOUNDATION,
respondent.
Lease; Ejectment; Unlawful Detainer; The word vacate is not
a talismanic word that must be employed in all notices to vacate
the tenants must pay rentals which are fixed and which became
payable in the past, failing which they must move out.
Petitioners argument that the demand letter is inadequate
because it contained no demand to vacate the leased premises
does not persuade. We have ruled that: . . . . The word vacate is
not a talismanic word that must be employed in all notices. The
alternatives in this case are clear cut. The tenants must pay
rentals which are fixed and which became payable in the past,
failing which they must move out. There can be no other
interpretation of the notice given to them. Hence, when the
petitioners demanded that either he pays P18,000 in five days or
a case of ejectment would be filed against him, he was placed on
notice to move out if he does not pay. There was, in effect, a notice
or demand to vacate.
Same; Builders in Good Faith; Introduction of valuable
improvements on the leased premises does not give the lessee the
right of retention and reimbursement which rightfully belongs to a
builder in good faiththe doctrine is that a lessee is neither a
builder in good faith nor in bad faith that would call for the
application of Articles 448 and 546 of the Civil Code since his
rights are governed by Article 1678.In the case at bar,
petitioners have no adverse claim or title to the land. In fact, as
lessees, they recognize that the respondent is the owner of the
land. What petitioners insist is that because of the improvements,
which are of substantial value, that they have introduced on the
leased premises with the permission of respondent, they should be
considered builders in good faith who have the right to retain
possession of the property until reimbursement by respondent.
We affirm the ruling of the CA that introduction of valuable

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improvements on the leased premises does not give the

petitioners the right of retention and reimbursement which
rightfully belongs to a builder in good faith. Otherwise, such a
situation would allow the lessee to easily improve the lessor out
of its property. We reiterate the doctrine that a lessee is neither a
builder in good faith nor in bad faith that would call for the
application of Articles 448 and 546 of the Civil Code. His rights
are governed by Article 1678 of the Civil Code.
_______________
*FIRST DIVISION.

656

Same; Same; Contracts; Basic is the doctrine that laws are

deemed incorporated in each and every contractexisting laws
always form part of any contract.Petitioners argue that to apply
Article 1678 to their case would result to sheer injustice, as it
would amount to giving away the hotel and its other structures at
virtually bargain prices. They allege that the value of the hotel
and its appurtenant facilities amounts to more than two billion
pesos, while the monetary claim of respondent against them only
amounts to a little more than twentysix million pesos. Thus, they
contend that it is the lease contract that governs the relationship
of the parties, and consequently, the parties may be considered to
have impliedly waived the application of Article 1678. We cannot
sustain this line of argument by petitioners. Basic is the doctrine
that laws are deemed incorporated in each and every contract.
Existing laws always form part of any contract. Further, the lease
contract in the case at bar shows no special kind of agreement
between the parties as to how to proceed in cases of default or
breach of the contract.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Linderbergh S. Villamil for petitioners.
The Government Corporate Counsel for respondent.
PUNO, C.J.:
On appeal are the Court of Appeals (CAs) October 4,
2005 Decision1 in CAG.R. SP No. 74631 and December 22,
2005 Resolution,2 reversing the November 29, 2002
Decision3 of the Regional Trial Court (RTC) of Pasay City
in Civil Case No. 020133. The RTC modified the Decision4

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of the Metropolitan Trial Court (MeTC) of Pasay City

which ruled against petitioners and ordered them to vacate
the premises and pay their arrears. The RTC declared
petitioners as builders in good faith and upheld their right
to indemnity.
The facts are as follows:
_______________
1Rollo, pp. 4353.
2Id., at pp. 5556.
3Id., at pp. 144159.
4Id., at pp. 138143.
657

Respondent Nayong Pilipino Foundation, a government

owned and controlled corporation, is the owner of a parcel
of land in Pasay City, known as the Nayong Pilipino
Complex. Petitioner Philippine Village Hotel, Inc. (PVHI),
formerly called Sulo sa Nayon, Inc., is a domestic
corporation duly organized and existing under Philippine
laws. Petitioner Jose Marcel E. Panlilio is its Senior
Executive Vice President.
On June 1, 1975, respondent leased a portion of the
Nayong Pilipino Complex, consisting of 36,289 square
meters, to petitioner Sulo sa Nayon, Inc. for the
construction and operation of a hotel building, to be known
as the Philippine Village Hotel. The lease was for an initial
period of 21 years, or until May 1996. It is renewable for a
period of 25 years under the same terms and conditions
upon due notice in writing to respondent of the intention to
renew at least 6 months before its expiration. Thus, on
March 7, 1995, petitioners sent respondent a letter
notifying the latter of their intention to renew the contract
for another 25 years. On July 4, 1995, the parties executed
a Voluntary Addendum to the Lease Agreement. The
addendum was signed by petitioner Jose Marcel E. Panlilio
in his official capacity as Senior Executive Vice President of
the PVHI and by Chairman Alberto A. Lim of the Nayong
Pilipino Foundation. They agreed to the renewal of the
contract for another 25 years, or until 2021. Under the new
agreement, petitioner PVHI was bound to pay the monthly
rental on a per square meter basis at the rate of P20.00 per
square meter, which shall be subject to an increase of 20%
at the end of every 3year period. At the time of the

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renewal of the lease contract, the monthly rental amounted

to P725,780.00.
Beginning January 2001, petitioners defaulted in the
payment of their monthly rental. Respondent repeatedly
demanded petitioners to pay the arrears and vacate the
premises. The last demand letter was sent on March 26,
2001.
On September 5, 2001, respondent filed a complaint for
unlawful detainer before the MeTC of Pasay City. The
complaint was docketed as Civil Case No. 70801.
Respondent computed the arrears of petitioners in the
amount of twentysix million one hundred eightythree
thousand two hundred twentyfive pesos and fourteen
centavos (P26,183,225.14), as of July 31, 2001.
658

On February 26, 2002, the MeTC rendered its decision

in favor of respondent. It ruled, thus:
. . . . The court is convinced by the evidence that indeed,
defendants defaulted in the payment of their rentals. It is basic
that the lessee is obliged to pay the price of the lease according to
the terms stipulated (Art. 1657, Civil Code). Upon the failure of
the lessee to pay the stipulated rentals, the lessor may eject (sic)
and treat the lease as rescinded and sue to eject the lessee (C.
Vda[.] De Pamintuan v. Tiglao, 53 Phil. 1). For nonpayment of
rentals, the lessor may rescind the lease, recover the back rentals
and recover possession of the leased premises. . .
xxx
. . . . Improvements made by a lessee such as the defendants
herein on leased premises are not valid reasons for their retention
thereof. The Supreme Court has occasion to address a similar
issue in which it ruled that: The fact that petitioners allegedly
made repairs on the premises in question is not a reason for them
to retain the possession of the premises. There is no provision of
law which grants the lessee a right of retention over the leased
premises on that ground. Article 448 of the Civil Code, in relation
to Article 546, which provides for full reimbursement of useful
improvements and retention of the premises until reimbursement
is made, applies only to a possessor in good faith, i.e., one who
builds on a land in the belief that he is the owner thereof. This
right of retention does not apply to a mere lessee, like the
petitioners, otherwise, it would always be in his power to improve
his landlord out of the latters property (Jose L. Chua and Co Sio
Eng vs. Court of Appeals and Ramon Ibarra, G.R. No. 109840,
January 21, 1999).

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Although the Contract of Lease stipulates that the building

and all the improvements in the leased premises belong to the
defendants herein, such will not defeat the right of the plaintiff to
its property as the defendants failed to pay their rentals in
violation of the terms of the contract. At most, defendants can
only invoke [their] right under Article 1678 of the New Civil Code
which grants them the right to be reimbursed onehalf of the
value of the building upon the termination of the lease, or, in the
alternative, to remove the improvements if the lessor refuses to
make reimbursement.

The dispositive portion of the decision reads as follows:

WHEREFORE, premises considered, judgment is hereby
rendered in favor of Nayong Pilipino Foundation, and
against the defendant Philippine Village Hotel, Inc[.], and
all persons claiming rights under it, ordering the latter to:
659

1. VACATE the subject premises and surrender

possession thereof to plaintiff;
2. PAY plaintiff its rental arrearages in the sum of
TWENTY SIX MILLION ONE HUNDRED EIGHTY
THREE THOUSAND TWO HUNDRED TWENTY FIVE
PESOS AND 14/100 (P26,183,225.14) incurred as of July
31, 2001;
3. PAY plaintiff the sum of SEVEN HUNDRED
TWENTY FIVE THOUSAND SEVEN HUNDRED EIGHTY
PESOS (P725,780.00) per month starting from August 2001
and every month thereafter by way of reasonable
compensation for the use and occupation of the premises;
4. PAY plaintiff the sum of FIFTY THOUSAND PESOS
(P50,000.00) by way of attorneys fees[; and]
5. PAY the costs of suit.
The complaint against defendant Jose Marcel E. Panlilio is
hereby dismissed for lack of cause of action. The said defendants
counterclaim however is likewise dismissed as the complaint does
not appear to be frivolous or maliciously instituted.
SO ORDERED.5

Petitioners appealed to the RTC which modified the

ruling of the MeTC. It held that:
. . . it is clear and undisputed that appellantslessees were
expressly required to construct a firstclass hotel with complete
facilities. The appellants were also unequivocally declared in the
Lease Agreement as the owner of the improvements so

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constructed. They were even explicitly allowed to use the

improvements and building as security or collateral on loans and
credit accommodations that the Lessee may secure for the
purpose of financing the construction of the building and other
improvements (Section 2; pars. A to B, Lease Agreement).
Moreover, a time frame was setforth (sic) with respect to the
duration of the lease initially for 21 years and renewable for
another 25 years in order to enable the appellantslessees to
recoup their huge money investments relative to the construction
and maintenance of the improvements.
xxx
Considering therefore, the elements of permanency of the
construction and substantial value of the improvements as well as
the undispute[d] own
_______________
5Id., at pp. 142143.
660

ership over the land improvements, these, immensely engender

the application of Art. 448 of the Civil Code. The only remaining
and most crucial issue to be resolved is whether or not the
appellants as builders have acted in good faith in order for Art.
448 in relation to Art. 546 of the Civil Code may apply with
respect to their rights over improvements.
xxx
. . . it is undeniable that the improvement of the hotel building
of appellants (sic) PVHI was constructed with the written consent
and knowledge of appellee. In fact, it was precisely the primary
purpose for which they entered into an agreement. Thus, it could
not be denied that appellants were builders in good faith.
Accordingly, and pursuant to Article 448 in relation to Art. 546
of the Civil Code, plaintiffappellee has the sole option or choice,
either to appropriate the building, upon payment of proper
indemnity consonant to Art. 546 or compel the appellants to
purchase the land whereon the building was erected. Until such
time that plaintiffappellee has elected an option or choice, it has
no right of removal or demolition against appellants unless after
having selected a compulsory sale, appellants fail to pay for the
land (Ignacio vs. Hilario, 76 Phil. 605). This, however, is without
prejudice from the parties agreeing to adjust their rights in some
other way as they may mutually deem fit and proper.

The dispositive portion of the decision of the RTC reads

as follows:

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WHEREFORE, and in view of the foregoing, judgment is

hereby rendered modifying the decision of [the] MTC, Branch 45
of Pasay City rendered on February 26, 2002 as follows:
1. Ordering plaintiffappellee to submit within thirty
(30) days from receipt of a copy of this decision a written
manifestation of the option or choice it selected, i.e., to
appropriate the improvements upon payment of proper
indemnity or compulsory sale of the land whereon the hotel
building of PVHI and related improvements or facilities
were erected;
2. Directing the plaintiffappellee to desist and/or
refrain from doing acts in the furtherance or exercise of its
rights and demolition against appellants unless and after
having selected the option of compulsory sale and
appellants failed to pay [and] purchase the land within a
reasonable time or at such time as this court will direct;
661

3. Ordering defendantsappellants to pay plaintiff

appellee [their] arrears in rent incurred as of July 31, 2001
in the amount of P26,183,225.14;
4. Ordering defendantsappellants to pay to plaintiff
appellee the unpaid monthly rentals for the use and
occupation of the premises pending this appeal from July to
November 2002 only at P725,780.00 per month;
5. The fourth and fifth directives in the dispositive
portion of the trial courts decision including that the last
paragraph thereof JME Panlilios complaint is hereby
affirmed;
6. The parties are directed to adjust their respective
rights in the interest of justice as they may deem fit and
proper if necessary.
SO ORDERED.6

Respondent appealed to the CA which held that the RTC

erroneously applied the rules on accession, as found in
Articles 448 and 546 of the Civil Code when it held that
petitioners were builders in good faith and, thus, have the
right to indemnity. The CA held:
By and large, respondents are admittedly mere lessees of the
subject premises and as such, cannot validly claim that they are
builders in good faith in order to solicit the application of Articles
448 and 546 of the Civil Code in their favor. As it is, it is glaring
error on the part of the RTC to apply the aforesaid legal
provisions on the supposition that the improvements, which are of

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substantial value, had been introduced on the leased premises

with the permission of the petitioner. To grant the respondents
the right of retention and reimbursement as builders in good faith
merely because of the valuable and substantial improvements
that they introduced to the leased premises plainly contravenes
the law and settled jurisprudential doctrines and would, as
stated, allow the lessee to easily improve the lessor out of its
property.
. . . . Introduction of valuable improvements on the leased
premises does not strip the petitioner of its right to avail of
recourses under the law and the lease contract itself in case of
breach thereof. Neither does it deprive the petitioner of its right
under Article 1678 to exercise its option to acquire the
improvements or to let the respondents remove the same.
_______________
6Id., at pp. 158159.
662

Petitioners Motion for Reconsideration was denied.

Hence, this appeal.7
Petitioners assign the following errors:
I
THE HONORABLE COURT OF APPEALS COMMITTED A
GRAVE REVERSIBLE ERROR IN NOT HOLDING THAT
PETITIONERS WERE BUILDERS IN GOOD FAITH OVER THE
SUBSTANTIAL AND VALUABLE IMPROVEMENTS WHICH
THEY HAD INTRODUCED ON THE SUBJECT PROPERTY,
THUS COMPELLING THE APPLICATION OF ARTICLE 448
OF THE CIVIL CODE IN RELATION TO ARTICLE 546 OF THE
SAME CODE, INSTEAD OF ARTICLE 1678 OF THE CIVIL
CODE.
II
THE HONORABLE COURT OF APPEALS COMMITTED A
SERIOUS REVERSIBLE ERROR WHEN IT DISREGARDED
THE FACT THAT THE LEASE CONTRACT GOVERNS THE
RELATIONSHIP OF THE PARTIES AND CONSEQUENTLY
THE PARTIES MAY BE CONSIDERED TO HAVE IMPLIEDLY
WAIVED THE APPLICATION OF ARTICLE 1678 OF THE
CIVIL CODE TO THE INSTANT CASE.
III
ASSUMING ARGUENDO THAT THE PETITIONERS ARE
NOT BUILDERS IN GOOD FAITH, THE HONORABLE COURT
OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR

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WHEN IT OVERLOOKED THE FACT THAT RESPONDENT

ALSO ACTED IN BAD FAITH WHEN IT DID NOT HONOR
AND INSTEAD BREACHED THE LEASE CONTRACT
BETWEEN THE PARTIES, THUS BOTH PARTIES ACTED AS
IF THEY ARE IN GOOD FAITH.
IV
TO SANCTION THE APPLICATION OF ARTICLE 1678 OF THE
CIVIL CODE INSTEAD OF ARTICLE 448 OF THE CIVIL CODE
IN RELATION TO ARTICLE 546 OF THE SAME CODE WOULD
NOT ONLY WREAK HAVOC AND CAUSE SUBSTANTIAL
INJURY TO THE RIGHTS AND INTERESTS OF PETITIONER
PHILIPPINE VILLAGE HOTEL, INC. WHILE RESPONDENT
NAYONG PILIPINO FOUNDATION, IN COMPARISON
THERETO, WOULD SUFFER ONLY SLIGHT OR INCONSE
_______________
7Id., at pp. 1041.
663

QUENTIAL INJURY OR LOSS, BUT ALSO WOULD

CONSTITUTE UNJUST ENRICHMENT ON THE PART OF
RESPONDENT AT GREAT EXPENSE AND GRAVE
PREJUDICE OF PETITIONERS.
V
THE HONORABLE COURT OF APPEALS COMMITTED A
GRAVE REVERSIBLE ERROR IN NOT HOLDING THAT THE
COURTS A QUO DID NOT ACQUIRE JURISDICTION OVER
THE UNLAWFUL DETAINER CASE FOR NONCOMPLIANCE
WITH JURISDICTIONAL REQUIREMENTS DUE TO THE
ABSENCE OF A NOTICE TO VACATE UPON PETITIONERS.8

First, we settle the issue of jurisdiction. Petitioners

argue that the MeTC did not acquire jurisdiction to hear
and decide the ejectment case because they never received
any demand from respondent to pay rentals and vacate the
premises, since such demand is a jurisdictional requisite.
We reiterate the ruling of the MeTC, RTC and CA.
Contrary to the claim of petitioners, documentary evidence
proved that a demand letter dated March 26, 2001 was sent
by respondent through registered mail to petitioners,
requesting them to pay the rental arrears or else it will be
constrained to file the appropriate legal action and possess
the leased premises.
Further, petitioners argument that the demand letter is
inadequate because it contained no demand to vacate the

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leased premises does not persuade. We have ruled that:

. . . . The word vacate is not a talismanic word that must be
employed in all notices. The alternatives in this case are clear cut.
The tenants must pay rentals which are fixed and which became
payable in the past, failing which they must move out. There can
be no other interpretation of the notice given to them. Hence,
when the petitioners demanded that either he pays P18,000 in
five days or a case of ejectment would be filed against him, he was
placed on notice to move out if he does not pay. There was, in
effect, a notice or demand to vacate.9
_______________
8Id., at pp. 2223.
9 MeTC

Decision,

citing

Golden

Gate

Realty

Corporation

v.

Intermediate Appellate Court, No. L74289, July 31, 1987, 152 SCRA 684.
664

In the case at bar, the language of the demand letter is

plain and simple: respondent demanded payment of the
rental arrears amounting to P26,183,225.14 within ten
days from receipt by petitioners, or respondent will be
constrained to file an appropriate legal action against
petitioners to recover the said amount. The demand letter
further stated that respondent will possess the leased
premises in case of petitioners failure to pay the rental
arrears within ten days. Thus, it is clear that the demand
letter is intended as a notice to petitioners to pay the rental
arrears, and a notice to vacate the premises in case of
failure of petitioners to perform their obligation to pay.
Second, we resolve the main issue of whether the rules
on accession, as found in Articles 448 and 546 of the Civil
Code, apply to the instant case.
Article 448 and Article 546 provide:
Art. 448. The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in Articles 546 and 548, or
to oblige the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent. However, the builder or
planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case,
he shall pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper indemnity.

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The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
Art. 546. Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith may retain the
thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good
faith with the same right of retention, the person who has
defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which
the thing may have acquired by reason thereof.

We uphold the ruling of the CA.

The late Senator Arturo M. Tolentino, a leading expert
in Civil Law, explains:
665

This article [Article 448] is manifestly intended to apply only

to a case where one builds, plants, or sows on land in which he
believes himself to have a claim of title,10 and not to lands where
the only interest of the builder, planter or sower is that of a
holder, such as a tenant.11

In the case at bar, petitioners have no adverse claim or

title to the land. In fact, as lessees, they recognize that the
respondent is the owner of the land. What petitioners insist
is that because of the improvements, which are of
substantial value, that they have introduced on the leased
premises with the permission of respondent, they should be
considered builders in good faith who have the right to
retain possession of the property until reimbursement by
respondent.
We affirm the ruling of the CA that introduction of
valuable improvements on the leased premises does not
give the petitioners the right of retention and
reimbursement which rightfully belongs to a builder in
good faith. Otherwise, such a situation would allow the
lessee to easily improve the lessor out of its property. We
reiterate the doctrine that a lessee is neither a builder in
good faith nor in bad faith12 that would call for the
application of Articles 448 and 546 of the Civil Code. His
rights are governed by Article 1678 of the Civil Code, which
reads:
Art. 1678. If the lessee makes, in good faith, useful
improvements which are suitable to the use for which the lease is

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intended, without altering the form or substance of the property

leased, the lessor upon the termination
_______________
10Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of
the Philippines, vol. II, 2004, citing Floreza v. Evangelista, 96 SCRA 130 (1980);
Applied to coowner: Del Campo v. Abesia, No. L49219, April 15, 1988, 160 SCRA
379.
11Alburo v. Villanueva, 7 Phil. 277 (1907); De Laureano v. Adil, No. L43345,
July 29, 1976, 72 SCRA 148; Floreza v. Evangelista, No. L25462, February 21,
1980, 96 SCRA 130; Balucanag v. Francisco, No. L33422, May 30, 1983, 122
SCRA 498; Southwestern University v. Salvador, No. L45013, May 28, 1979, 90
SCRA 318; Castillo v. Court of Appeals, No. L48290, September 29, 1983, 124
SCRA 808.
12Southwestern University v. Salvador, No. L45013, May 28, 1979, 90 SCRA
318, Concurring Opinion of J. MelencioHerrera, citing Alburo v. Villanueva, 7
Phil. 277 (1907).
666

of the lease shall pay the lessee onehalf of the value of the
improvements at that time. Should the lessor refuse to reimburse
said amount, the lessee may remove the improvements, even
though the principal thing may suffer damage thereby. He shall
not, however, cause any more impairment upon the property
leased than is necessary.
With regard to ornamental expenses, the lessee shall not be
entitled to any reimbursement, but he may remove the
ornamental objects, provided no damage is caused to the principal
thing, and the lessor does not choose to retain them by paying
their value at the time the lease is extinguished.

Under Article 1678, the lessor has the option of paying one
half of the value of the improvements which the lessee
made in good faith, which are suitable for the use for which
the lease is intended, and which have not altered the form
and substance of the land. On the other hand, the lessee
may remove the improvements should the lessor refuse to
reimburse.
Petitioners argue that to apply Article 1678 to their case
would result to sheer injustice, as it would amount to
giving away the hotel and its other structures at virtually
bargain prices. They allege that the value of the hotel and
its appurtenant facilities amounts to more than two billion
pesos, while the monetary claim of respondent against
them only amounts to a little more than twentysix million

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pesos. Thus, they contend that it is the lease contract that

governs the relationship of the parties, and consequently,
the parties may be considered to have impliedly waived the
application of Article 1678.
We cannot sustain this line of argument by petitioners.
Basic is the doctrine that laws are deemed incorporated in
each and every contract. Existing laws always form part of
any contract. Further, the lease contract in the case at bar
shows no special kind of agreement between the parties as
to how to proceed in cases of default or breach of the
contract. Petitioners maintain that the lease contract
contains a default provision which does not give respondent
the right to appropriate the improvements nor evict
petitioners in cases of cancellation or termination of the
contract due to default or breach of its terms. They cite
paragraph 10 of the lease contract, which provides that:
667

10. DEFAULT.. . . Default shall automatically take place

upon the failure of the LESSEE to pay or perform its obligation
during the time fixed herein for such obligations without
necessity of demand, or, if no time is fixed, after 90 days from the
receipt of notice or demand from the LESSOR. . .
In case of cancellation or termination of this contract due to the
default or breach of its terms, the LESSEE will pay all reasonable
attorneys fees, costs and expenses of litigation that may be
incurred by the LESSOR in enforcing its rights under this
contract or any of its provisions, as well as all unpaid rents, fees,
charges, taxes, assessment and others which the LESSOR may be
entitled to.

Petitioners assert that respondent committed a breach

of the lease contract when it filed the ejectment suit
against them. However, we find nothing in the above
quoted provision that prohibits respondent to proceed the
way it did in enforcing its rights as lessor. It can rightfully
file for ejectment to evict petitioners, as it did before the
court a quo.
IN VIEW WHEREOF, petitioners appeal is DENIED.
The October 4, 2005 Decision of the Court of Appeals in
CAG.R. SP No. 74631 and its December 22, 2005
Resolution are AFFIRMED. Costs against petitioners.
SO ORDERED.
Carpio, Corona, Azcuna and LeonardoDe Castro, JJ.,
concur.

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9/2/2016

SUPREME COURT REPORTS ANNOTATED VOLUME 576

Petition denied, judgment and resolution affirmed.

Notes.Good faith is an intangible and abstract quality
with no technical meaning or statutory definition, and it
encompasses, among other things, an honest belief, the
absence of malice and the absence of design to defraud or to
seek an unconscionable advantage. (Philippine National
Bank vs. De Jesus, 411 SCRA 557 [2003])
Article 448 of the Civil Code covers only cases in which
the builders, sowers or planters believe themselves to be
owners of the land or, at least, to have a claim of title
theretoit does not apply when the interest is that of a
mere tenant. (Quevada vs. Court of Appeals, 502 SCRA 233
[2006])
o0o

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