Cea v Villanueva HOW THE CASE STARTED
 Cea obtained a loan from Villanueva wherein a Real Estate  WON Villanueva’s possession of Parcel No. 2 was in good faith
Possessor in Mortgage was executed by Cea as security
good faith is not  Having failed to settle his obligation, Villanueva brought an
liable for any action to foreclose the mortgage.
fortuitous event  With this, the parcels of land covered by the mortgage were
offered for public sale and were sold to Villanueva as highest
bidder
 However, upon delivering possession of said parcel No. 2 to
Villanueva, the sheriff found that there was a house built upon
said lot, which house was not specifically mentioned in the
description of parcel No. 2, although the land upon which it
stood was clearly within the description of said parcel as
presented by the documents
 Fearing that by reason of the failure of such description
specifically to mention the house in question, the sheriff is
doubtful that his power did not extend to the delivery of the
possession of said house.
- With this, the sheriff informed the Villanueva that, in the
event that the court should determine that said house was
not property embraced within the mortgage and legally
conveyed under the mortgage sale, Villanueva must not
only deliver possession but also pay to Cea a proper sum
for its occupancy
 To fully transfer the possession of the property to Villanueva,
the sheriff advised the caretaker of Cea to leave the property.
- However, the caretaker refused to leave as there are
certain articles that he needs to take care of so he asked
permission to the sheriff if he can stay on the subject
property
- The sheriff informed the caretaker that he has no power to
grant such request so he referred such request to
Villanueva
- Villanueva, in turn, allowed the caretaker to stay on the
property. Also, Villanueva placed his own caretaker to
protect it from any injury or destruction
 On October 1906, the house located on parcel No. 2 was
destroyed by fire. The cause of fire or through whose fault or
negligence, if any, was not found in the records of the case
ARGUMENTS OF CEA
 That Villanueva entered into the possession of a house and lot
belonging to Cea by gross negligence and carelessness, caused
it to be burned to the damage of Cea
ISSUE
YES. VILLANUEVA IS A POSSESSOR IN GOOD FAITH
 Since it was settled that Parcel No. 2 was included in the mortgage
executed by Cea, it is clear that Villanueva has acquired it in good
faith by virtue of public sale
 The SC applied the case of Bischoff v Pomar when it ruled that “in
a mortgage of real estate, the improvements on the same are
included; therefore, all objects permanently attached to a
mortgaged building or land, although they may have been placed
there after the mortgage was constituted, are also included”
PARCEL No. 2 WAS ACQUIRED BY VILLANUEVA UNDER A MORTGAGE
SALE
 When Villanueva entered into possession of the property after he
had purchased it at the foreclosure sale, thus, it is presumed that
he entered into possession honestly and in good faith
 No direct evidence is given anywhere attacking his motives or his
intentions
 When Villanueva took possession he did so as owner of the
property and, even if the mortgage sale had been absolutely void,
he would still have been a holder in good faith, being a mortgagee
in possession under direction of the court
 Villanueva having entered into possession of the property
lawfully, he was obligated to exercise only reasonable diligence
and care in the management of the property.
VILLANUEVA, BEING A POSSESSOR IN GOOD FAITH, IS NOT LIABLE
FOR THE FIRE ACCIDENT
 As provided in Art. 457 possessor in good faith is not liable for the
deterioration or loss of the thing possessed, with the exception of
the cases in which it is proved that he has acted with fraudulent
intent. A possessor in bad faith is liable for the deterioration or
loss in any case, even in those caused by force majeure, when he
has maliciously delayed the delivery of the thing to its legitimate
possessor
 In this case, since Villanueva is not a holder in bad faith, he is
responsible only for losses which are shown to have caused by his
negligence
 Since no negligence having been shown in this case, Villanueva is
not liable for any damages incurred in the property.
 Villanueva entered into the subject property knowing that they
were not entitled to the possession thereof, and acting,
therefore, in bad faith, they were responsible to Cea for the
destruction of the house by fire.