- Petitioner
- Serafin Cheng
- Respondent
- Spouses Vittorio
- Citation
- G.R. No. 167017
- Court
- Supreme Court
- Division
- First Division
- Ponente
- Corona, J.
- Decided
- June 22, 2009
Summary
The Supreme Court resolved a lease dispute involving reimbursement for property improvements. Cheng leased property to Donini spouses who made improvements worth P513,301.90 under an interim authority, but the lease was terminated due to disagreements. The RTC favored Cheng, the CA ordered full reimbursement under equity principles, but the SC applied Civil Code Article 1678, ruling that lessees are not possessors in good faith and are only entitled to 50% reimbursement for useful improvements if the lessor chooses to retain them. The SC ordered Cheng to pay P171,650.95 (50% of improvements less unpaid rent) and awarded him reduced damages. The decision clarified that lease relationships are governed by specific Civil Code provisions, not general equity principles.