[51] Mirallosa v. Carmel Development Inc. o Fun Fact: Marcos cited Proclamation 1081 and General Order No.
1
G.R. No. 194538 | November 27, 2013 | Sereno, C.J.
SUMMARY:
CDI owned Pangarap Village. In 1973, Marcos issued PD 923, which cancelled CDI’s titles
and opened the property for disposition to members of Malacañang Homeowners
Association, Inc. In 1988, SC declared PD 923 unconstitutional. In 1995, petitioner
occupied Lot 32 after a MHAI member issued an Affidavit in their favor. CDI demanded
they vacate as late as 2002, and filed a Complaint for Unlawful Detainer in 2003. Petitioner
argued that the action has prescribed, the unconstitutionality declaration does not apply
to him (operative fact doctrine), and that he is a builder in good faith. SC disagreed on all
arguments, ruling in CDI’s favor.
DOCTRINE:
 An action for unlawful detainer exists when a person unlawfully withholds
possession of any land or building against or from a lessor, vendor, vendee or
other persons, after the expiration or termination of the right to hold possession
by virtue of any contract, express or implied.
 The making of the demand is INCREDIBLY IMPORTANT. The one-year
prescriptive period for filing a case for unlawful detainer is tacked from the
date of the last demand because the other party has the right to waive the right
of action based on previous demands and to let the possessor remain on the
premises for the meantime.
 As a general rule, a law declared as unconstitutional produces no effect
whatsoever and confers no right on any person. It doesn’t matter whether a
person is a party to the original case, because “all persons are bound by the
declaration of unconstitutionality, which means that no one may thereafter
invoke it nor may the courts be permitted to apply it in subsequent cases.”
 A good builder is one who builds with the belief that the land he is building on is
his, or that by some title one has the right to build thereon, and is ignorant of
any defect or flaw in his title. No one is a builder in good faith when he acts
contrary to knowledge he should have (paraphrased).
RELEVANT PROVISIONS:
 Article 448, Civil Code
 Article 449, Civil Code
FACTS:
 LOCATION: Pangarap Village, Barrio Makatipo, North Caloocan.
 Carmel Development, Inc. (respondent) was the registered owner of the TCTs
for Pangarap Village at Barrio Makatipo, Caloocan City (156 hectares, 3 parcels
of land).
 September 14, 1973: President Marcos issued Presidential Decree 293, which
invalidated the titles and declared them open for disposition to members of
Malacañang Homeowners Association, Inc. (MHAI).
(issued Sept. 21 and 22, 1971 respectively) as his authority to do so.
 By virtue of PD 293, a Memorandum was inscribed on the last page of the
titles, certifying that they are “declared invalid and null and void ab initio and
considered cancelled xxx.”
 On the basis of PD 923, Pelagio Juan, a member of MHAI, occupied Lot 32 and
built houses there.
 January 29, 1988: SC promulgated Tuason v. Register of Deeds, which declared
PD 923 as unconstitutional and void ab initio.
 February 17: The Register of Deeds cancelled the Memorandum on the titles,
restoring respondent’s ownership.
 Sometime in 1995: Petitioner took over Lot 32 by virtue of an Affidavit
executed by Pelagio M. Juan in his favor.
o Respondent made several oral demands to asking them to vacate, to
no avail.
o April 2002: they sent a written demand to vacate the premises, but
they were unheeded.
 January 14, 2003: CDI.filed a Complaint for Unlawful Detainer before the
MeTC.
 November 9, 2007: MeTC decided in favor of respondent, ordering their
vacation and payment of attorney’s fees (P10K).
o Rationale: respondent was the registered owner until its title was
voided by PD 293. It had no alternative but to allow by mere tolerance
petitioner's occupancy. Petitioner was necessarily bound by an
implied promise that he would vacate the property upon demand.
 April 30, 2008: RTC reversed MTC’s findings, finding that respondent did not
make out a case for unlawful detainer.
o Rationale: Since the possession was sanctioned by P.D. 293, and
respondent's tolerance only came after the law was declared
unconstitutional, petitioner thus exercised possession under color of
title, which placed the Complaint outside the category of unlawful
detainer.
 September 24, 2008: CA reversed, reinstating the MTC decision.
o Since the Complaint specifically alleged that the possession of
respondent was by petitioner's tolerance, and that respondent's
dispossession had not lasted for more than one year, MeTC rightly
acquired jurisdiction over the Complaint.
o CDI had a better right to the property’s possession and enjoyment, so
petitioner had no right to the continued possession of the property.
o Petitioner is also not a builder in good faith who can claim benefits
under Art. 448, CC because when PD 923 was declared
unconstitutional and the property restored to respondent, no good
faith can be claimed.
 Art. 449, CC applies, petitioner losing what he would be
building, planting, or sowing without right of indemnity
from that time.

ISSUES:
1. W/N MTC had jurisdiction over the case. YES.
2. W/N the Tuason ruling applies, even though petitioner is not a party to the case.
YES.
3. W/N petitioner is a builder in good faith. NO.
HOLDING/RATIONALE:
1. YES, MeTC rightly exercised jurisdiction, this case being one of unlawful
detainer.
 Petitioner’s Argument: MeTC had no jurisdiction over the subject matter since
respondent filed the Complaint beyond the one-year prescriptive period for
ejectment cases. Respondent lost ownership as early as Sept. 14, 1973, but they
took no action against it. Tolerance had not also been present from the start of
his possession as respondent only extended it after PD 293 was declared
unconstitutional, placing it outside the category of an unlawful detainer. The
case should’ve been accion publiciana or an accion reivindicatoria.
 An action for unlawful detainer exists when a person unlawfully withholds
possession of any land or building against or from a lessor, vendor, vendee or
other persons, after the expiration or termination of the right to hold
possession by virtue of any contract, express or implied.
 Here, possession by a party was originally legal, as it was permitted by the
other party on account of an express or implied contract between them.
o However, the possession became illegal when the other (1) party
demanded that the possessor vacate the subject property because
of the expiration or termination of the right to possess under the
contract, and the (2) possessor refused to heed the demand.
 The making of the demand is INCREDIBLY IMPORTANT. The one-year
prescriptive period for filing a case for unlawful detainer is tacked from the
date of the last demand, the reason being that the other party has the right to
waive the right of action based on previous demands and to let the possessor
remain on the premises for the meantime.
 The once legal possession because of PD 923 became illegal because of
Tuason.
 The tolerance can only be properly tacked after PD 293 was invalidated
because respondent had no option but to allow petitioner and his predecessor-
in-interest to enter the property.
o Petitioner’s contention is not “tolerance” envisioned by the law. The
decree "was not as claimed a licit instance of the application of social
justice principles or the exercise of police power. It was a disguised,
vile stratagem deliberately resorted to favor a few individuals, in
callous and disdainful disregard of the rights of others.
1lit. “matters adjudged in the lawsuits of others do not prejudice those who were not parties to
them.”
o It was in reality a taking of private property without due process
and without compensation whatever, from persons relying on the
indefeasibility of their titles in accordance with and as explicitly
guaranteed by law.
 Respondent sent a demand letter in 2002 and filed the Complaint in 2003
well within the one-year prescriptive period.
 It doesn’t matter whether there was an ownership issue that had to be solved
during the demand because determining that would only be provisional and
would not bar or prejudice an action between the same parties involving title to
the property.
2. YES, Tuason may be applied despite petitioner not being a party to that case,
because an unconstitutional law produces no effect and confers no right
upon any person.
 Petitioner’s Argument: respondent has no cause of action against him under the
doctrine of (1) operative fact and (2) res inter alios judicatae nullum aliis
praejudicium faciun 1 , so the unconstitutionality of PD 293 should not affect
non-parties.
 On res inter alios xxx:
o As a general rule, a law declared as unconstitutional produces no
effect whatsoever and confers no right on any person. It doesn’t
matter whether a person is a party to the original case, because “all
persons are bound by the declaration of unconstitutionality, which
means that no one may thereafter invoke it nor may the courts be
permitted to apply it in subsequent cases.”
o The res inter alios xxx doctrine does not apply. In fact, in Dar
Adventure Farm Corp. v. CA, they specifically held that this doctrine
does not apply “when the party concerned is a successor in interest by
title subsequent to the commencement of the action.”
 On operative fact:
o The operative fact doctrine is a rule of equity. As such, it must be
applied as an exception to the general rule that an unconstitutional
law produces no effects.
o The doctrine is applicable when an unconstitutionality declaration
will impose an undue burden on those who have relied on the invalid
law, but it cannot be invoked to validate as constitutional an
unconstitutional act.
o Petitioner cannot be said to be unduly burdened by reliance on an
invalid law since he anchored his right to an Affidavit from a
member of the MHIA, authorizing petitioner to occupy the property.
 However, this was issued only in 1995, seven years after the
Tuason case was promulgated.
  He ought to have been aware of the case’s binding effects problem affecting over 40,000 families in Pangarap Village in north Caloocan
and PD 293’s unconstitutionality. City due to a looming demolition.

3. NO, petitioner may not be deemed to be a builder in good faith.

 Petitioner’s Argument: he is a builder in good faith for want of knowledge of any
infirmity in the promulgation of P.D. 293, so he is entitled to the reimbursement
of his useful expenses and has a right to retain possession of the premises (Art.
545, CC).
 However, a builder in good faith is "one who builds with the belief that the
land he is building on is his, or that by some title one has the right to build
thereon, and is ignorant of any defect or flaw in his title."
 Since petitioner only started occupying the property sometime in 1995 (when
his predecessor-in-interest executed an Affidavit in his favor), or about seven
years after Tuason was promulgated, he should have been aware of the
binding effect of that ruling.
 All judicial decisions form part of the law of the land, and ignorantia legis non
excusat. He thus loses whatever he has built on the property, without right to
indemnity, in accordance with Article 449 of the Civil Code.

RULING:
The appeal is dismissed. CA decision is affirmed.

NOTES:
 The following property has also been recently the subject of litigation. Specifically, it was
Mayor Oca Malapitan v. CDI.
 Summary: some 40,000 residents now occupy Pangarap Village, a “relocation or
retirement area to many government and military personnel and urban poor for over 30
years now” (Manila Today, 2016). CDI, an Araneta firm, “strengthened” its claim after the
announcement of the MRT Line 7 project and restricted the entrance of residents at the
gates of Pangarap Village by Araneta security personnel.
o CDI disallowed MERALCO and Maynilad to enter the village. Electricity and
water has been cut. Hospital and funeral service vehicles are also barred entry.
o A school library burned down. Two people died after an allegedly drunk
security guard of CDI opened fire at residents protesting an impending
demolition.
 According to this article from the city website, Mayor Oca won in a preliminary injunction
suit filed in the RTC to allow MERALCO, Maynilad, other utility companies and
government agencies to enter Pangarap Village.
o Text of the article referencing this case: “Ang Pangarap Village ay isang
malawak na 156-hectare na lupain sa Brgy 181 at 182 sa North Caloocan, na
idineklarang resettlement area noong 1973 ni Pangulong Ferdinand Marcos
(Presidential Decree 293), subalit pinawalang-bisa at hinatulang
unconstitutional ito (PD 293) ng Supreme Court noong 1988.”
 Some news that happened THIS YEAR:
o March 10: 4 bonnet-wearing men doused garments in gasoline and burned a
bakery shop and a funeral parlor, the 5th time fire broke out in Pangarap Village.
o July 30: Presidential Commission on Urban Poor on Tuesday urged Philippine
National Police Chief Oscar Albayalde to step into the peace and order