There is no serious dispute as  to the  basic  facts  in this case, at least  not as  regards those  for purposes of this decision Before  the last  (Pacific)  war the defendant corporation  Philippine & Eastern Trading  Co.,  Inc.,  as lessee was occupying  two doors  with mezzanine  of what is known as the  Lopez building in the City of Baguio, belonging to the plaintiff  corporation Lopez Inc. of which Atty.  Eugenio Lopez was then the President.   Defendant was paying P160  monthly rental and the lease was from month to  month.  Said two doors  were used as a store. During the bombing  of  the City of Baguio during the first months of 1945 by the American Air Forces in trying to liberate the city from the  Japanese occupation forces the Lopez  Building including the two  doors in question were burned and seriously damaged leaving only the concrete walls and framework.  After liberation, because the Lopez Inc. did not rehabilitate the building, the  defendant corporation desiring to resume the lease and use the premises for commercial purposes  as  it did before the war thought of rebuilding it.   One Mr. Macario Rebodos, Vice-President of the defendant, went to Manila to confer with Atty. Eugenio Lopez,  President  of the plaintiff,'about the rehabilitation of the premises but he failed to see him on three occasions that he  looked  for him in the  city.  So, according to Rebodos, he left  a  letter for Mr. Lopez with an inmate of the house.   Said letter was never answered by Attorney Lopez.  The  defendant proceeded to repair or rebuild the two doors spending  the amount of P14.583.45. Said improvements were introduced with the knowledge of Mr. Joseph K. Icard, agent for the plaintiff.  Later, an agreement was entered into between the plaintiff  and the defendant  whereby  the   latter  re-occupied  the  premises paying a  rental of P300  a month.

In 1947  the defendant  failed to pay the monthly rentals for the months of February  to September  of  said  year, amounting  to P2,200.  It seems that the defendant company although admitting  its delinquency was of the belief that inasmuch as it had  the right to be reimbursed in the sum of P14,583.45, value of the improvements introduced by it,  the  amount of its  delinquency (P2,200)  could well be charged against it and so it  (defendant)  need not pay the monthly rentals until the value of the improvements had been exhausted.   Because of defendant's refusal to pay the delinquency the plaintiff brought an action of ejectment in the Municipal Court  of Baguio to have the  defendant vacate  the premises pay the back rentals  with legal interest, plus P300 incurred by the plaintiff for the institution of the suit.

From the judgment rendered by the Municipal Court for the plaintiff ordering the defendant to vacate the premises, to pay P2,200  as  back  rentals and to pay the monthly rents of P300  from  October  1, 1947  until  the premises were vacated, the defendant appealed to the Court of First. Instance of Baguio.  After hearing, said court rendered judgment with the following dispositive part:

"For all  the  foregoing considerations,  the Court orders the defendant Philippine  & Eastern Trading Corporation to vacate the premises immediately.  It also orders it to pay the plaintiff the sum of P300 monthly rental of  the premises in question from  the date of this decision until the premises are completely vacated the defendant.  Said defendant,  however, is not obliged to pay the said P300 monthly in cash.  It has the right to set off against rental, part of the value  of the improvements. Regarding the P2,200, back rentals, the  court also declares that this sum is already by a  part of the amount of the value of the improvements, as stated above, so that the defendant is free from paying it in cash The right of the  defendant corporation to file a suit against plaintiff corporation to recover the remainder of the value of improvements of P14,583.45, after deducting all the back rentals due to plaintiff and the rentals which may become due later, is  hereby reserved to said defendant corporation.   No special pronouncement as t costs."'

From said judgment both parties appealed to  the Court of Appeals but said Tribunal  later certified the appeal to this Court  as involving only questions of law.

The theory of defendant-appellant, apparently sustained by the trial court is that under Article 453 of the old Civil Code defendant was a possessor in good faith and as  such introduced the  improvements  valued P14,583.45 and had the  right to  retain, the premises until  it  was  reimbursed the said amount by the owner of the property.

"Necessary expenditures  shall be  refunded to every possessor but only the possessor in good faith may retain the thing until they are repaid to him.

"Useful expenditures shall be paid the possessor in  good faith with the same  right of retention the person who has defeat him in his possession having the option of refunding the amount such expenditures or paying him the increase in value which the ,thing has acquired by reason thereof."  (Article  453, old Civil Code.)

The trial court held that  said  improvements  were introduced in good faith and so  the defendant had a right to reimbursement by the plaintiff-owner;  however, from the time that said defendant was  notified  by the plaintiff to  vacate the premises  for failure  to  pay  the  rent,  it ceased to be a possessor in good  faith,  and  inasmuch as said failure or delinquency justified the termination of the lease, said defendant having last  the right of retention, must vacate the premises but that it must be reimbursed the value of the improvements introduced  by it to be determined  in a  separate  action, for  the reason  that the defendant in its answer to the suit filed in the Municipal Court reserved its  right to file the  corresponding action for the recovery of said amount.

According to the record on appeal the defendant not only failed to  perfect its appeal from the judgment  of the Municipal Court because it did not file a  "sufficient bond to answer for the  rents,  damages, and  costs up to final judgment" but also neglected to pay the rent corresponding to  the  month of October,  1947  pending  appeal and so plaintiff filed a motion for execution  of the judgment and for the  dismissal of the  appeal.   The trial  court  in its order of November 14,  1947 refused  to grant the  motion and gave the defendant "until 9:00 o'clock in the morning of November 17, 1947 to deposit  all the  rentals due the plaintiff  to date in  accordance with the  decision of the lower court on  appeal to this Court."  This order of the trial court is now assigned as error by plaintiff-appellant.

As regards the failure of defendant-appellant to deposit with  the  court the  rents fixed and  ordered to  be paid, in the judgment on appeal as they  became due, thereby justifying the execution  of the judgment,  we agree with plaintiff-appellant.   The provisions of Rule  72, section 8, of the Rules of Court, are mandatory and the Court of First Instance has no discretion in the  matter and is  not warranted in  extending the  time for making such payment. We have a long line of decision on this point (Lapuz vs. Court of First Instance, 46 Phil., 77; Cunanan  vs. Rodas, 78 Phil., 800; Galewsky vs. De la Rama, 79 Phil., 583; and Pañgilinan vs. Peña, 89 Phil., 122).  For this  reason the trial court should have ordered the execution of the judgment of the  Municipal Court.

As regards  the introduction  of the improvements by the defendant, as already  stated,  Mr. Rebodos failing to see Atty. Lopez in Manila, according to him, left a letter for Atty. Lopez supposedly advising him of the introduction of said improvements.  Attorney Lopez in his  deposition said that he never received said letter.   On the other hand, he said that he had a conference with Mr. Leopoldo  Mabansag,  President of the defendant  corporation wherein Mabansag agreed that his company waived any right to reimbursement for the value of said improvements.   The trial court rejected this evidence or testimony  because it involved a supposed  admission made  by a  person  now dead, for Mabansag died before the filing of the suit.   The trial court further said that it was highly improbable  that anyone of sound mind would introduce valuable improvements just to renounce it  later in favor of the owner.  In rejecting this' testimony the  trial court must have had in mind Rule 123, section 26 (c) of the Rules of Court which reads as follows:

"Parties or  assignors of parties to a case, or persons in whose behalf a case is prosecuted, against an executor  or administrator or other representative of a deceased person  or against  a person  of unsound mind  upon  a  claim or demand against the  estate of such deceased  person  or  against such person of unsound mind, cannot testify as to any matter of fact occurring before the death of such deceased person or before such person became of unsound mind;"

However, the present action was not exactly brought against the exeeutir or administrator  or  other representative of Mr. Mabansag but rather against the corporation of which he was the President and so said Rule  123, section 26 (c), is not applicable.  On the other hand in the case of Fortiz vs. Gutierrez Hermanos, 6 Phil., 100, this court said:

"It appeared that Miguel Alonzo Gutierrez, with whom the plaintiff had made the contract, had died prior to  the trial of the action, and the defendants claim that  by reason of the provisions of section S83, paragraph 7, of the  Code of Civil Procedure  (equivalent to section 26[c], Rule  123  of the Rules of Court), plaintiff could not be a witness at the trial.  That  paragraph provides  that parties to an  action against an  executor or administrator upon a claim or demand against the  estate of a deceased person cannot testify as to any matter of fact occurring before  the death  of such deceased person.  This action was not  brought against the administrator of Miguel Alonzo nor was it brought  against a  partnership which was in existence at the time of the trial of the  action, and which was a juridical person. The  fact that Miguel Alonao  had  been a partner in this  company, and that his  interests therein might be affected by the result of this suit, is not sufficient to bring the case within the provisions of the section above-cited.

However, because the evidence sought to be introduced by plaintiff was only in  the form of  deposition and Attorney Lopez did  not  testify  as  a witness in  the  hearing and , subjected to cross-examination by defendant's counsel and also by the court,  we can well disregard this evidence and consider that there was no definite understanding or agreement  between plaintiff and defendant as to  who  should eventually pay  for said improvements.

Before we conclude, we  believe it not only advisable but necessary to clear and resolve  the misconception about the scope and extent of the rule or law on  a possessor in good faith,  under which the defendant  and  in  a way even the trial court had labored.   As  we  have already said,  they both thought that a lessee may be considered a possessor in good  faith and that improvements  introduced by him on the leased premises are to be regarded as made in good faith.  This rule  or  principle contained in the civil law refers only to  party who  occupies or possess property in the belief that he is the owner thereof and said good faith ends only when he discovers a flaw in his title so as to reasonably  advise or,inform him that  after all he may not be the legal owner of said property.  This  principle of possessor  in good faith naturally cannot apply  to a lessee  because as such lessee he knows that he is not the owner of the  leased property.   Neither can he deny the the ownership or title  of his  lessor.  Knowing  that his occupation of  the premises continues only during the life of the lease contract and that he must vacate the  property upon termination of  the lease or upon  the violation  by him of any of its terms, he. introduces improvements  on said property  at his  own  risk in the  sense that he cannot recoVer their value  from  the  lessor, much less retain the. premises  until  such  reimbursement.   His  right to  improvements introduced by him is expressly  governed  by Articles 1573  and 487 of the old Civil Code which reads as follows:

"Article  1573. A lessee shall  have,  with respect to useful and voluntary improvements, the same  rights which  are. granted to usufructuaries."

"Article 487. The usufructuary may make on the property held in usufruct any improvements, useful, or recreative, which he deem proper, provided he does not change its form or substance; but he shall have no right to  be indemnified therefor.  He may, however, remove such improvements  should it be possible to do  so without injury to the property."

In  the case  of Fojas vs. Velasco,  51 Phil.,  520, this Court  said:

"The case is  governed not by articles  361 and  453 of Civil Code as contended by appellants but by articles 1573 and 48 of  the same Code, as  indicated by appellees. In  this connection need only be recalled  that the lessees have been holding the la under a rental contract.  Accordingly, upon termination of the le the right of the lessees with respect to improvements placed by then on the  leased property  is determined by article 487, which entitles them to remove the improvements,  provided they leave the property in substantially  the same condition as when  they entered it. (Alburo vs. Villanueva, 7 Phil., 277;  Cortes vs. Ramos,  46 Phil., 184; Rivera vs. Trinidad, 48 Phil., 396.)"

Then in  the case of  Rivera vs.  Trinidad, 48 Phil., 896 this Court  ruled:

"While a tenant was in possession of property under a verbal agreement  for occupation for an indefinite time upon' payment  of a fixed compensation per month  the property was  sold and the purchaser  filed an action for unlawful detainer. Held: That the defendant  must  be considered as tenant from month-to-month and upon a lease terminable without the necessity of special notice upon the expiration of any month and that the plaintiff was entitled  to recover possession.

"The rights of the defendant with respect to the improvements made on the property by him must be  governed by Article 487  in relation with Article  157S of the Civil Code.  Under Article 487 the defendant is entitled to remove improvements made by himself so far as it is possible to do so .without injury to the property; and this means that he may remove the improvements provided he leaves the property in substantially the same condition as  when  he entered upon it. Articles 361 and 463 of  the Civil Code, which  define the rights between the owner of land and builders  of  improvements thereon in good faith, are not applicable as between landlord and tenant, since the Code supplies specific provisions designed to cover their rights.  Besides the tenant cannot be said to be a  builder  in good faith as he has no pretension to  be owner.  (Manresa Com, ed., Vol. 4, p. 445)."

In view of the foregoing, the decision appealed  from  is hereby modified to the effect that defendant-appellant  is not entitled to reimbursement for the value of  the improvements introduced by it; that it is ordered  to pay to plaintiff-appellant the amount of P2,200,  with interest at the legal  rate from the date of the filing of the complaint; and to pay the amount of P300 per month until it actually vacates  the  premises.  Defendant-appellant is  however given  the right to remove the  improvements introduced by it without injury to the  property, under the provisions of Article 487 of the old Civil Code.   No costs.

Parás,  C. J., Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Endencia, JJ., concur.