property case digests part iii_edited

7/30/2019 Property Case Digests Part III_edited

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PROPERTY Case Digests

PART III Right of Accession Page 1

III. RIGHT OF ACCESSIONa. Bad faith as liability for damagesArt. 447- 456

Depra vs. Dumlao 136 SCRA 475

FACTS:Dumlao is the owner of a parcel of land in Iloilo, while Depraowns the lot adjoining his. Dumlao built his house on his ownland, but the kitchen encroached about 34 sq.m on Deprasproperty. Upon finding this, Depras mom ordered Dumlao to

move back from his encroachment, then subsequently filed anaction for unlawful detainer against Dumlao.

The lower court found that Dumlao was a builder in good faith,and ordered him to pay rent (PhP5.00/month) forced leasebetween the parties. Depra refused to accept the rentals soDumlao deposited this with the MTC. Neither party appealed

judgment so this became final and executory.

1 year later, though, Depra filed an complaint for Quieting ofTitle. Dumlao contested this, stating that the suit is barred byres judicata. But Depra averred that the lower court did nothave jurisdiction to rule on encumbrances of real property only the CFI has jurisdiction.

ISSUE:1. Whether or not res judicata would apply to the case at

bar?

2. Whether or not the land owner can be compelled toaccept rent payments by the court (with both LO andBPS being in good faith)?

HELD:In the first issue, res judicata would not apply should the firstcase be one for ejectment and the other for quieting of title.

Article 448 of the Civil Code provides that the land owner has 2options to buy the building or to sell/rent his land. This is so

because the rights of the owner of the land is older, and by theprinciple of accession, he also has a right to the accessories.

The Court remanded the case to the RTC to determine the fairprice of the land, the expenses incurred by the BPS (Dumlao),the increase in value of the land, and whether the value of theland is considerably more than the value of the kitchen built onit. The RTC shall then give Depra 15 days to exercise suchoption.

Del Campo vs. Abesia 160 SCRA 379When land is co-owned by two parties, but the co-ownership isterminated, Article 448 governs in case real property (like ahouse) encroaches the land of another. This is provided that

good faith exists.

FACTS:The case involves two friendly parties who are co-owners of acorner lot at Flores and Cavan Streets in Cebu City. Plaintiffowns 2/3 of the lot and Defendant owns 1/3 of the same. Thetotal size of the lot is 45 square meters (which is about the sizeof a typical Starbux caf)

Later on, the two parties decided to divide the co-ownedproperty into two lots. 30 square meters went to the plaintiffsand 15 square meters went to the defendants. From the sketchplan, both parties discovered that the house of the defendantsoccupied a portion of the plaintiffs adjacent lot, eating 5 sqm ofit. The parties then requested the trial court to adjudicate whoshould take possession of the encroached 5 sqm.

The trial court ruled that Art 448 does not apply. The owner ofthe land on which anything has been built, sown or planted ingood faith, shall have the right to appropriate as his own theworks, sowing or planting, after payment of the indemnityprovided for in Articles 546 and 548, or to oblige the one whobuilt or planted to pay the price of the land, and the one whosowed, the proper rent. However, the builder or planter cannot

be obliged to buy the land if its value is considerably more thanthat of the building or trees. In such case, he shall payreasonable rent, if the owner of the land does not choose toappropriate the building or trees after proper indemnity. Theparties shall agree upon the terms of the lease and in case ofdisagreement, the court shall fix the terms thereof. Since art448 does not apply, the Plaintiff cannot be obliged to pay forthe portion of defendants house that entered into the 30 sqmlot, AND Defendant cannot be obliged to pay for the price ofthe 5 sqm their house occupied. Why? The RTC believed the

rules of co-ownership should govern, and not that of accession.

RTC then assigned the full 30sqm to Plaintiff and orderedDefendants to demolish the 5sqm part of their houseencroaching the 30sqm lot of the Plaintiffs. Defendants whereaghast at having to axe the family home, hence they appealed.

CA affirmed the decision. So we have the SC coming to therescue.

ISSUE:w/n the rules of accession applies (and not coownership) onproperty that used to be co-owned, but was subdivided.

HELD:The rule of accession applies because co-ownership wasterminated upon the partitioning of the lot. Art 448 thereforegoverns. The house of Defendant overlapped that of Plaintiff,but this was built on good faith. Hence, the plaintiffs have theright to choose one of two options:> Appropriate the 5sqm portion of the house of Defendantsafter indemnifying the Defendants; or> Obliging the Defendants to pay a portion of the land onwhich their home rested. ( or they can rent it)

Mercado vs. CA June 10, 1988

FACTS:

Lolita C. Bulaong, FlorentinoAgulto, SeverinoSalaysay, SusanaBernardino (the Bulaong Group), from 1956 to 1972, have beenindividual lessees of stalls in the public market of Baliuag,Bulacan. The market was destroyed by fire on 17 February1956; the members of the Bulaong Group constructed newstalls therein at their expense; and they thereafter paid rentalsthereon to the Municipality of Baliuag.

In 1972, the members of the group sub-leased their individualstalls to other persons: Paz Mercado, Carolina S. Chico,nLucianaCabrera, Joaquin Ignacio, Elmer Flores, and Avelina C. Nucom(the Mercado Group). After the Mercado Group had been inpossession of the market stalls for some months, the municipalofficials of Baliuag cancelled the long standing leases of the

Bulaong Group and declared the persons comprising theMercado Group as the rightful lessees of the stalls in question,in substitution of the former. The municipal authorities justifiedthe cancellation of the leases of the Bulaong Group by invokingthe provisions of Municipal Ordinance 14, dated 14 December1964, which prohibited the sub-leasing stalls by the lesseesthereof, as well as a 29 May 1973 directive of the Office of thePresident requiring enforcement of said Ordinance 14.Recognition of the Mercado Groups rights over the stalls wassubsequently manifested in Municipal Ordinance 49, approvedon 5 July 1973.

The members of the Bulaong Group sued. They filed severalindividual complaints with the CFI seeking recovery of theirstalls from the Mercado Group as well as damages. Their theorywas anchored on their claimed ownership of the stallsconstructed by them at their own expense, and their resultingright, as such owners, to sub-lease the stalls, and necessary, torecover them from any person withholding possessionthereoffrom them. The Mercado Group thereafter filed motions forsummary judgment, asserting that in light of the admissionsmade at the pre-trial and in the pleadings, no issue remainedunder genuine controversion, to which the Bulaong Groupobjected. Assuming the indifference of the Court and the other


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group to its opposition, the former presented affidavits anddepositions to prove the value of the improvements, for whichthey were seeking reimbursement, to which the Mercado Groupdid not respond. On 24 October 1975, Judge Benigno Punorendered a summary judgment in all the cases. It rejected theclaim of the Municipality of Baliuag that it had automaticallyacquired ownership of the new stalls constructed after the oldstalls had been razed by fire, declaring the members of theBulaong Group to be builders in good faith, entitled to retainpossession of the stalls respectively put up by them until and

unless indemnified for the value thereof The decision alsodeclared that the Bulaong and Mercado Groups had executedthe sub-letting agreements with full awareness that they werethereby violating Ordinance 14; they were thus inpari delicto,and hence had no cause of action one against the other and noright to recover whatever had been given or demandperformance of anything undertaken. The Mercado Group andthe Municipality filed on 14 November 1975, motions forreconsideration of the summary judgment, notice of which hadbeen served on them on 3 November 1975. These were denied,and notice of the order of denial was received by them on 18December 1975. On 7 January 1976, the Mercado Group filed anotice of appeal, an appeal bond and a motion for extension oftime to file their record on appeal. But by Order dated 9

January 1976, the Trial Court directed inter alia the execution ofthe judgment, adjudging that its decision had become finalbecause the appeal documents hadnot been seasonably filed.The writ was issued, and the Mercado Groups motion to quashthe same and to re-open the case was denied.The Group wentto the Court of Appeals, instituting in that court a special civilaction of certiorari and prohibition to annul that portion of thesummary judgment awarding damages to the Bulaong Groupand to restrain the Judge and the Provincial Sheriff of Bulacanfrom enforcing the same. The appellate Court rendered

judgment on 14 May 1976 affirming the judgment of the lowercourt, holding that the judgment had become final andcertiorari or prohibition could not be availed of as a substitutefor the groups lost appeal. Once again, the Mercado Group

moved for reconsideration of an adverse judgment, and onceagain wererebuffed. An appeal by way of certiorari was filedbefore the Supreme Court. The Supreme Court dismissed thepetition and affirmed the appealed judgment, with costs againstthe Mercado Group.

Lessees cannot be considered builders in good faithThe members of the Bulaong group were admittedly lessees ofspace in the public market; they therefore could not, and intruth never did make the claim, that they were owners of anypart of the land occupied by the market so that in respect ofany new structure put up by them thereon, they could bedeemed builders in good faith (in accordance with Article 526 ofthe Civil Code). To be deemed a builder in good faith, it is

essential that a person assert title to the land on which hebuilds; i.e., that he be a possessor in concept of owner, andthat he be unaware that there exists in his title or mode ofacquisition any flaw which invalidates it. It is such a builder ingood faith who is given the right to retain the thing, even asagainst the real owner, until he has been reimbursed in full notonly for the necessary expenses but also for useful expenses.On the other hand, unlike the builder in good faith, a lesseewho makes in good faith useful improvements whicharesuitable to the use for which the lease is intended, withoutaltering the form or substance of the property leased, can onlyclaim payment of one-half of the value of the improvementsor, should the lessor refuse to reimburse said amount, removethe improvements, even though the principal thing may sufferdamage thereby.

A. Kinds of accession:

1. Accesion DiscretaArt. 440a. Natural

b. Industrial

Gaboya vs. Cui -28 SCRA 85

FACTS:Don Mariano sold his three lots prodiviso to his three children.One of his children, due to lack of funds, wasnt able topurchase part of the land. This reverted back to the father. Aspart of the sale, the father reserved for himself the usufruct ofthe property. He co-owned the land with his children then. A

building was then constructed in a portion of the land, whereinrentals was given to the father. Thereafter, the two childrenwho were co-owners obtained a loan, secured by a mortgage,with authority of the father, to construct a commercial building.The father alleges that since he has usufruct over the land, hehas usufruct or share in the rentals earned through theconstructed building.

HELD:The reserved right of vendor on a parcel of land doesnt includerentals from the buildings subsequently constructed on thevacant lots, but that it did entitle the usufructuary to areasonable rental for the portion of the land being occupied bythe building.

b. CivilMary McDonald Bachrach v. Sophie Seifert

FACTS:The deceased E. M. Bachrach, who left no forced heir excepthis widow Mary McDonald Bachrach, in his last will andtestament made various legacies in cash and willed theremainder of his estate. The estate of E. M. Bachrach, as ownerof 108,000 shares of stock of the Atok-Big Wedge Mining Co.,Inc., received from the latter 54,000 shares representing 50 percent stock dividend on the said 108,000 shares. On June 10,1948, Mary McDonald Bachrach, as usufructuary or life tenant

of the estate, petitioned the lower court to authorize thePeoples Bank and Trust Company, as administrator of theestate of E. M. Bachrach, to transfer to her the said 54,000shares of stock dividend by indorsing and delivering to her thecorresponding certificate of stock, claiming that said dividend,although paid out in the form of stock, is fruit or income andtherefore belonged to her as usufructuary or life tenant. SophieSiefert and Elisa Elianoff, legal heirs of the deceased, opposedsaid petition on the ground that the stock dividend in questionwas not income but formed part of the capital and thereforebelonged not to the usufructuary but to the remainderman.While appellants admit that a cash dividend is an income, theycontend that a stock dividend is not, but merely represents anaddition to the invested capital.

ISSUE:Whether or not a dividend is an income and whether it shouldgo to the usufructuary.

HELD:The usufructuary shall be entitled to receive all the natural,industrial, and civil fruits of the property in usufruct. The108,000 shares of stock are part of the property in usufruct.The 54,000 shares of stock dividend are civil fruits of theoriginal investment. They represent profits, and the delivery ofthe certificate of stock covering said dividend is equivalent tothe payment of said profits. Said shares may be soldindependently of the original shares, just as the offspring of adomestic animal may be sold independently of its mother. If thedividend be in fact a profit, although declared in stock, it shouldbe held to be income. A dividend, whether in the form of cashor stock, is income and, consequently, should go to theusufructuary, taking into consideration that a stock dividend aswell as a cash dividend can be declared only out of profits ofthe corporation, for if it were declared out of the capital itwould be a serious violation of the law.


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Under the Massachusetts rule, a stock dividend is consideredpart of the capital and belongs to the remainderman; whileunder the Pennsylvania rule, all earnings of a corporation, whendeclared as dividends in whatever form, made during thelifetime of the usufructuary, belong to the latter. ThePennsylvania rule is more in accord with our statutory laws thanthe Massachusetts rule.

Bachrach vs. Talisay Silay 56 PHIL 117

FACTS:Talisay obtained a loan from PNB with a REM provided by oneof its planters, Ledesma. To compensateLedesma for theaccommodation, Talisaygranted him a bonus whose value wascomputed as a percentage of the balance of the loan. Bachrach,as a creditor of Ledesma, laid a claim to the bonus received bythe latter. On the other hand, PNB claims that it owns the fruits,because under Article 2127, the mortgage extends to the civilfruits of the property.

ISSUE:Whether the bonus is a civil fruit, thereby giving PNB apreferential right over it.

HELD:The bonus is not a civil fruit. Civil fruits are the rents of thebuildings, leases of lands, and income from life annuities, orother similar sources of income. Though it is possible toconsider the bonus as income, it is not similar income to theitems in the preceding enumeration. The common denominator,which is absent in the bonus, is derivation of the income fromthe land itself. In this case, the bonus is not based on the valueof the land but rather on the amount of the outstandingobligation of Talisay. It is clearly meant to becompensation forthe risk assumed by the owner, Ledesma.

2. Accession Continuaa. Over Immovables

1. Artificial or industrial

building, planting,sowing (bps)Art. 448a. Owner is bps with material of another

In good faithSps. Benitez vs. CA 77 SCAD 793

FACTS:Petitioners Rafael and Avelina Benitez purchased a 303-square-meter parcel of land with improvement from the CaviteDevelopment Bank, covered by Transfer Certificate of Title No.41961 (now, TCT No. 55864).

Subsequently, private respondents Renato and Elizabeth

Macapagal bought a 361-square-meter lot covered by TCT No.40155. On September 18, 1986, a case was filed againstpetitioners for the recovery of possession of an encroachedportion of the lot they purchased. The parties were able toreach a compromise in which private respondents sold theencroached portion to petitioners at the acquisition cost ofP1,000 per square meter.

On July 17, 1989, private respondents purchased still anotherproperty, adjacent to that of petitioners. After a relocationsurvey was conducted, private respondents discovered thatsome 46.5 square meters of their property was occupied bypetitioners' house. Despite verbal and written demands,petitioners refused to vacate. A last notice to vacate was sentto petitioners on October 26, 1989.

On January 18, 1990, private respondents filed an ejectmentcase against petitioners. The MeTC of San Juan decided in favorof the petitioners.

On appeal, the RTC affirmed the decision of the MeTC.

CA upheld the decision of the lower courts. Petitioners werefully aware that part of their house encroached on their

neighbor's property, while respondents became aware of it onlyafter purchasing said property. Petitioners cannot claim goodfaith as against the respondents. Since petitioners are notbuilders in good faith, they cannot demand that respondentssell the disputed portion; what the law provides is that thebuilders in bad faith can be ordered to dismantle said structureat their own expense. In the interim period that petitioners'structure remains, they should pay reasonable rent until theyremove the structure.

In this petition for review on certiorari, petitioners pray, interalia, for a review of the factual finding of bad faith. Due to theiralleged good faith, they claim the pre-emptive right to purchasethe litigated portion as a matter of course.

ISSUE:W/N the petitioners, as builders in good faith, have the pre-emptive right to purchase the litigated portion of the property?

RULING:Option To Sell Belongs To Owner

Article 448 of the Civil Code is unequivocal that the option tosell the land on which another in good faith builds, plants orsows on, belongs to the landowner.

The option is to sell, not to buy, and it is the landowner'schoice. Not even a declaration of the builder, planter, or sower'sbad faith shifts this option to him per Article 450 of the CivilCode. This advantage in Article 448 is accorded the landownerbecause "his right is older, and because, by the principle ofaccession, he is entitled to the ownership of the accessorything." There can be no pre-emptive right to buy even as acompromise, as this prerogative belongs solely to thelandowner. No compulsion can be legally forced on him,contrary to what petitioners asks from the Court. Such an orderwould certainly be invalid and illegal. Thus, the lower courtswere correct in rejecting the petitioners' offer to buy theencroached land.

The SC found it unwarranted to review the lower courts factualfinding of bad faith.

The assailed resolution was AFFIRMED.

In bad faith ( Art. 447)3. Bps in good faithArt. 448

Filipinas College Inc. vs Garcia Timbang 106 PHIL 247

This is an appeal taken from an order of the CFI of Manila (a)declaring the Sheriff's certificate of sale covering a school

building sold at public auction null and void unless within 15days from notice of said order the successful bidders,defendants-appellants spouses Maria Garcia Timbang andMarcelino Timbang, shall pay to, appellee Maria Gervacio Blasthe sum of P5,750.00 that the spouses Timbang had bid for thebuilding at the Sheriff's sale; (b) declaring the other appelleeFilipinas Colleges, Inc. owner of 24,500/3,285,934 undividedinterest in Lot No. 2-a covered by certificate of tile No 45970,on which the building sold in the auction sale is situated; and(c) ordering the sale in public auction of the said undividedinterest of the Filipinas Colleges, Inc., in lot No. 2-aaforementioned to satisfy the unpaid portion of the judgment infavor of appellee Blas and against Filipinas Colleges, Inc. in theamount of P8,200.00 minus the sum of P5,750.00 mentioned in(a) above.

In the judgment of the Court of Appeals, the respective rightsof the litigants have been adjudicated as follows: (1) FilipinasColleges, Inc. was declared to have acquired the rights of thespouses Timbang in and to lot No. 2-a mentioned above and inconsideration thereof, Filipinas Colleges, Inc., was ordered topay the spouses Timbang the amount of P15,807.90 plus suchother amounts which said spouses might have paid or had topay after February, 1953, to Hoskins and Co. Inc., agent of the


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Urban Estates, Inc., original vendor of the lot. Filipinas Colleges,Inc. original vendor of the total amount with the court within 90days after the decision shall have become final. (2) MariaGervacio Blas was declared to be a builder in good faith of theschool building constructed on the lot in question and entitledto be paid the amount of P19,000.00 for the same. FilipinasColleges, Inc., purchaser of the said building was ordered todeliver to Blas stock certificate (Exh. C) for 108 shares ofFilipinas Colleges, Inc. with a par value of P10,800.00 and topay Blas the sum of P8,200.00 of the house. (3) In case

Filipinas Colleges, Inc. failed to deposit the value of the land,which after liquidation was fixed at P32,859.34, within the 90-day period set by the court, Filipinas Colleges would lose all itsrights to the land and the spouses Timbang would then becomethe owners thereof. In that eventuality, the Timbangs wouldmake known to the court their option under Art. 448 of the CivilCode whether they would appropriate the building in question,in which even they would have to pay Filipinas Colleges, Inc.the sum of P19,000.00, or would compel the latter to acquirethe land and pay the price thereof.

Appellant contended that because the builder in good faith hasfailed to pay the price of the land after the owners thereofexercised their option under Article 448 of the Civil Code, the

builder lost his right of retention provided in Article 546 and byoperation of Article 445, the appellants as owners of the landautomatically became the owners ipso facto, the execution saleof the house in their favor was superfluous. Consequently, theyare not bound to make good their bid of P5,750.00 as thatwould be to make goods to pay for their own property. By thesame token, Blas claim for preference on account of the unpaidbalance of the purchase price of the house does not applybecause preference applies only with respect to the property ofthe debtor, and the Timbangs, owners of the house, are not thedebtors of Blas.

ISSUES/RULING:(1) Suppose that the owner of the land should avail himself of

the 2nd remedy provided for in Art 448- compelling thebuilder in good faith to pay the value of the land- but suchbuilder fails to pay, does he become automatically theowner of the building?

Under Arts 448 and 546, the owner of the land has theright to choose between appropriating the building byreimbursing the builder of the value thereof or compellingthe builder in good faith to pay for his land. Even thissecond right cannot be exercised if the value of the land isconsiderably more than that of the building. In addition tothe right of the builder to be paid the value of hisimprovement, Article 546 gives him the corollary right ofretention of the property until he is indemnified by the

owner of the land. There is nothing in the language ofthese two article, 448 and 546, which would justify theconclusion of appellants that, upon the failure of thebuilder zo pay the value of the land, when such isdemanded by the land-owner, the latter becomesautomatically the owner of the improvement under Article445.

(2) What then is the remedy left to the owner of the land if thebuilder fails to pay?

Where the builder in good faith fails to pay the value of theland when such is demanded by the landowner, the partiesmay resort to: (a) Parties may decide to leave things asthey are and assume the relation of lessor and lessee, andshould they disagree as to the amount of rental then theycan go to the court to fix that amount. (b) Should theparties not agree to leave things as they are and to assumethe relation of lessor and lessee, the owner of the land inentitled to have the improvement removed when afterhaving chosen to sell his land to the other party, i.e., thebuilder in good faith fails to pay for the same. (c) The landand the improvement may be sold at public auctionapplying the proceeds thereof first to the payment of the

value of the land and the excess, if any, to be delivered tothe owner of the house in payment thereof.

(3) The appellants , owners o the land, instead of electing anyof the alternative above indicated chose to seek recovery ofthe value of their land by asking for a writ of execution;levying on the house of the builder; and selling the same inpublic auction with the owner as highest bidder, what isthe effect upon the rights of the parties?

When there is a claim by a third-party, to the proceeds ofthe sale superior to his judgment credit, the executioncreditor, as successful bidder, must pay in cash the amountof his bid as a condition precedent to the issuance to himof the certificate of sale. In the instant case, the Court of

Appeals has already adjudged that appellee Blas is entitledto the payment of the unpaid balance of the purchase priceof the school building. Blas is actually a lien on the schoolbuilding are concerned. The order of the lower courtdirecting the Timbang spouses, as successful bidders, topay in cash the amount of their bid in the sum ofP5,750.00 is therefore correct. With respect to the orderof the court declaring appellee Filipinas Colleges, Inc. partowner of the land to the extent of the value of its personal

properties sold at public auction in favor of the Timbang,this Court Likewise finds the same as justified, for suchamount represents, in effect, a partial payment of thevalue of the land. If this resulted in the continuation of theso-called involuntary partnership questioned by thedifference between P8,200.00 the unpaid balance of thepurchase price of the building and the sum of P5,750.00 amount to be paid by the Timbangs, the order of the courtdirecting the sale of such undivided interest of the FilipinasColleges, Inc. is likewise justified to satisfy the claim of theappellee Blas.

The first part of the dispositive portion of the order appealedfrom is modified in the sense that upon failure of the Timbang

spouses to pay to the Sheriff or to Manila Gervacio Blas saidsum of P5,750.00 within fifteen (15) days from notice of thefinal judgment, an order of execution shall issue in favor ofMaria Gervasio Blas to be levied upon all properties of theTimbang spouses not exempt from execution for thesatisfaction of the said amoun In all other respects, theappealed order of the court a quo is hereby affirmed, with costsagainst the appellants.

4. Good faith does not include negligenceArt. 456Bernardo vs. Bataclan 66 PHIL 598

G.R. No. L-44606, November 28, 1938

FACTS:By a contract of sale executed from Pastor Samonte and othersownership of a parcel of land of about 90 hectares. To securepossession of the land from the vendors the said plaintiff, onJuly 20, 1929, instituted a civil case. The trial court found forthe plaintiff in a decision which was affirmed by this SupremeCourt on appeal (G.R. No. 33017). When plaintiff entered uponthe premises, however, he found the defendant herein,CatalinoBataclan, who appears to have been authorized byformer owners, as far back as 1922, to clear the land and makeimprovements thereon. As Bataclanwas not a party in the civilcase, plaintiff, on June 11, 1931, instituted against him a civilcase. In this case, plaintiff was declared owner but thedefendant was held to be a possessor in good faith, entitled forreimbursement in the total sum of P1,642, for work done andimprovements made.The defendant states that he is a possessor in good faith andthat the amount of P2,212 to which he is entitled has not yetbeen paid to him. Therefore, he says, he has a right to retainthe land in accordance with the provisions of article 453 of theCivil Code. In obedience to the decision of this court in G.R. No.37319, the plaintiff expressed his desire to require thedefendant to pay for the value of the land. The said defendantcould have become owner of both land and improvements and


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continued in possession thereof. But he said he could not payand the land was sold at public auction to ToribioTeodoro.When he failed to pay for the land, the defendant herein losthis right of retention.

ISSUE:Whether or not there is good faith.

HELD:The judgment of the lower court is accordingly modified by

eliminating therefrom the reservation made in favor of thedefendant-appellant to recover from the plaintiff the sum ofP2,212. In all the respects, the same is affirmed, withoutpronouncement regarding costs. So ordered

The sale at public auction having been asked by the plaintiffhimself (p. 22, bill of exceptions) and the purchase price ofP8,000 received by him from ToribioTeodoro, we find no reasonto justify a rapture of the situation thus created between them,the defendant-appellant not being entitled, after all, to recoverfrom the plaintiff the sum of P2,212.

Sarmiento vs. Agana 129 SCRA 122

FACTS:Before Ernesto Valentino and Rebecca Lorenzo wed, Rebeccasmother offered a lot in Paranaque that they could build theirhouse on. In 1967, they finally built their home which costabout PhP8,000-10,000, thinking that someday, the lot wouldbe transferred to them in their name. It turns out, though, thatthe lot was owned by the Spouses Santos who , in turn, soldthe same to Leonila Sarmiento in 1974. A year later, Sarmientoordered the Valentinos to vacate their lot, then eventually filedand Ejection Suit against them.The lower court ruled in Sarmientos favor and ordered her topay 20,000 as the value of the house. But the case was thenelevated to the CFI of Pasay (w/ Agana as Judge), andpursuant to Art.448 of the CC (March 1979), the Court ordered

Sarmiento to exercise the option in 60 days to pay Ernesto40,000 as the value of the house or to let them purchase theland for 25,000. Sarmiento was not able to exercise this option,and the CFI allowed Ernesto to deposit the 25,000 purchaseprice with the Court.

ISSUE:Whether or not the land owner is compelled to exercise eitheroption: to buy the building or to sell the land?

HELD:Ernesto and his wife (BPS) were clearly in good faith as theybelieved that Rebeccas mother has the capacity to eventuallytransfer the title of the land to them. In line with this,

Sarmiento (LO) was required to exercise only 2 options: Topurchase the house or to sell the land to them, in this case,based on the value decided by the courts. Since Sarmientofailed to exercise the option within the allotted period, andbased on Art. 448, the LO is compelled by law to exercise eitheroption. Not choosing either is a violation of the law.

Laureano vs. Adil 72 SCRA 148

FACTS:Mrs. Laureano is the registered owner of Lots 996 and 1004-Bwith a total area of 3,107 square meters in Iloilo City. The lotswere leased to Ong Cu for a fifteen year period which allegedlyexpired on August 31, 1974.

In view of Ong Cu's failure to vacate the lots after theexpiration of the lease and to remove his improvementsthereon, Mrs. Laureano filed against him an ejectment suitwhere the court rendered a judgment ordering Ong Cu tovacate the lots, to restore their possession to Mrs. Laureano, toremove his buildings and other improvements thereon and topay P12,428 monthly as compensation for the use andoccupation of the lots from September 1, 1974 up to the timehe vacates them, with interest at twelve percent per annumfrom the date of accrual plus P10,000 as moral and exemplary

damages and attorney's fees.

On appeal, the court granted Ong Cu s ex parte motion for theapproval of his supersedeas bond in the sum of P22,000 and tofix the rental value of the two lots at P1,200 a month.

Laureano filed a motion for a preliminary mandatory injunctionto restore her to the possession of the said lots. She also askedfor immediate execution of the city court's judgment on theground that Ong Cu's supersedeas bond was inadequate andthat he had failed to deposit the sum of P12,428 monthly asreasonable value of the use and occupation of the lots adjudgedby the city court.

Respondent judge upheld the city court's order fixing thesupersedeas bond and the amount to be deposited by Ong Cu.Laureano's motion for a mandatory injunction was deniedbecause it had already sanctioned Ong Cu's supersedeas bond,the purpose of which was to stay execution pending appeal.The lower court reasoned out that it would be absurd to stayexecution and at the same time restore possession to theplaintiff by granting the mandatory injunction. It regarded OngCu as a possessor in good faith with right of retention and rightto reimbursement of his necessary and useful expenses.

Laureano in this special civil action of certiorari assailed theinterlocutory orders denying her motions for execution and for apreliminary mandatory injunction.

ISSUE:W/N Ong Cu is a possessor in good faith?

RULING:NO. The lower court erred in assuming that Ong Cu inconstructing his building on the leased lots is a possessor ingood faith entitled to reimbursement of the necessary anduseful expenses incurred by him and with a right of retention,as contemplated in articles 546 and 547 of the Civil Code.

The expiration of lease and Mrs. Laureano's refusal to renew itmade Ong Cu an unlawful withholder of the possession of thelots. He has become a possessor in bad faith.

The Civil Code provides:ART. 1669. If the lease was made for a determinate time, itceases upon the day fixed, without the need of a demand.(1565)

ART. 1671. If the lessee continues enjoying the thing after theexpiration of the contract over the lessor's objection, the formershall be subject to the responsibilities of a possessor in badfaith. (n)

ART. 1673. The lessor may judicially eject the lessee for any ofthe following causes:(1) When the period agreed upon, ... has expired.xxx xxx xxx(1569a)

The rule is that if after the termination of the lease contract thelessee prolongs his occupation of the premises, there isunlawful detainer. It is enough that the plaintiff is the owner ofthe land and that the defendant is in temporary occupationthereof whether under a lease contract or on mere tolerance orunder a temporary permit.


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Under Article 448 of the Civil Code, where the owner of the landon which anything has been built in good faith may appropriatethe building after payment of the indemnity provided in articles546 and 548 of the Civil Code, only applies to a case where onebuilds on land of which he honestly claims to be the owner andnot to lands wherein one's only interest is that of a lessee undera rental contract. A contrary rule would place it within thepower of the lessee "to improve his landlord out of hisproperty". The lessee knows at the outset that he is not theowner of the land.

The interlocutory orders of the lower court were set aside.

Balucanag vs. Francisco 122 SCRA 265

FACTS:The petitioner bought a lot owned by Mrs.Charvet which wasthen previously leased by the latter to one Richard Stohner. Thesaid lease contract provided that the lessee may erectstructures and improvements which shall remain as lessee'sproperty and he may remove them at any time. It furtherprovided that should the lessee fail to remove the samestructures or improvements withing two months after the

expiration of the lease, the lessor may remove them or causethem to be removed at the expense of the lessee. Stohnermade fillings on the land and constructed a house. When hefailed to pay the rent, the petitioner, through counsel, sentStohner a demand letter ordering him to vacate the lot. Thelessee contended that he is a 'builder in good faith.'

ISSUE:Is the lessee a builder in good faith?

RULING:No, the lessee cannot be considered a builder in good faith. Theprovision under Art. 448 of the New Civil Code (Philippine) on abuilder of good faith applies only to the owner of the land who

believes he is the rightful owner thereof, but not to a lesseewho's interest in the land is derived only from a rental contract.Neither can Stohner be considered a 'possessor in good faith'. Apossessor in good faith is a party who possesses propertybelieving that he is its rightful owner but discovers later on aflaw in his title that could indicate that he might not be its legalowner. It cannot apply to a lessee because he knows right fromthe start that he is merely a lessee and not the owner of thepremises.

As a mere lessee, he introduces improvements to the propertyat his own risk such that he cannot recover from the owner thereimbursements nor he has any right to retain the premisesuntil reimbursements. What applies in this case is Art. 1678

(NCC) which provides that, " if the lessee, makes, in good faith,useful improvements which are suitable to the use for which thelease is intended, without altering the form or substance of theproperty leased, the lessor upon the termination of the leaseshall pay the lessee 1/2 of the value of the improvements at thetime. Should the lessor refuse to reimburse said amount, thelessee may remove the improvements even though the principalthing may suffer damage thereby. He shall not. however, causeany more impairment upon the property leased than isnecessary."

Tan Queto vs. CA 122 SCRA 206G.R. No.L-35648, February 27, 1987

FACTS:Restituta Tagalinar Guangco de Pombuena received thequestioned lot (Lot 304-B of the Cadastre Survey of theMunicipality of Centro, Misamis Occidental) either as apurported donation or by way of purchase on 11 February 1927for P50.00 as the alleged consideration thereof. The transactiontook place during her mothers lifetime (her father having

predeceased the mother) and consummated while Restitutawasalready married to her husband Juan Pombuena. On 22 January1935, Juan filed an application of Torrens title over the land forhimself and his supposed co-owner Restituta. On 22 November1938, a decision waspromulgated (GLRC 1638, Cadastral Case12) pronouncing Juan (married toRestituto) as the owner of theland. On 22 September 1949 a contract of lease over the lotwas entered into between Pershing Tan Queto and Restituta(with the consent of her husband) for a period of 10 years.

Meanwhile, On 27 December 1960 Restituta sued Tan Queto forunlawful detainer (the lease contract having expired) before theMunicipal Court of Ozamis City.

On 22 April 1962, as a consequence of the cadastral case, anOCT was issued in Juans name. On 10 October 1962, TanQueto and Juan entered into a barter agreement whereby TanQueto became the owner of the disputed lot, and the spousesin turn became the owners of a parcel of land with the houseconstructed thereon previously owned (that is, before thebarter) by Tan Queto. Thereafter, Tan Queto constructed onthe disputed land a concrete building, without any objection onthe part of Restituta. The Municipal court ruled in favor of thespouses in the unlawful detainer case; but on appeal in the CFI,

the entire case was dismissed because of an understanding(barter) entered into by Juan and Tan Queto. Restituta suedboth Juan and Tan Queto for reconveyance of the title over theregistered but disputed lot, for annulment of the barter, and forrecovery of the land with damages. The CFI and the Court of

Appeals found the disputed lot as paraphernal and that TanQueto was a builder in bad faith. These findings were regardedby the Supreme Court as findings of facts and thus ordinarilyconclusive upon the Court. Tan Queto filed for amotion forreconsideration of the Supreme Court decision dated 16 May1983.The Supreme Court set aside its decision promulgated on 16May 1983, and rendered a new one declaring the questioned lottogether with the building thereon, as Tan Quetos exclusive

property; without costs.

Important Ruling:Tan Queto recognized Restituta as an owner, not the owner.The Chapter on Possession (jus possessionis, not juspossidendi)in the Civil Code refers to a possessor other than the owner.The difference between a builder (or possessor) in good faithand one in bad faith is that the former is not aware of thedefect or flaw in his title or mode of acquisition while the latteris aware of such defect or flaw (Art. 526, Civil Code). But ineither case there is a flaw or defect. In the present case, thereis no such flaw or defect because it is Tan Queto himself (notsomebody else) who is the owner of the property.

Manotok Realty vs. CA 134 SCRA 325(?)

Manotok Realty v. Tecson164 SCRA 587

FACTS:After a denial of its motion for reconsideration, the petitionerfiled the present petition for mandamus alleging that therespondent judge committed grave abuse of discretion indenying his motion to exercise option and for execution of

judgment on the grounds that under Articles 448 and 546 of


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the Civil Code, the exercise of option belongs to the owner ofthe property, who is the petitioner herein, and that upon finalityof judgment, the prevailing party is entitled, as a matter ofright, to its execution which is only a ministerial act on the partof the respondent judge.

On April 15, 1978, the private respondent filed his comment onthe petition alleging that the same has already become mootand academic for two reasons: first, fire gutted not only thehouse of the private respondent but the majority of the houses

in Tambunting Estate; and second, as a result of the said fire,the then First Lady and Metro Manila Governor Imelda R.Marcos has placed the disputed area under her ZonalImprovement Project, thereby allowing the victims of the fire toput up new structures on the premises, so that the willingnessand readiness of the petitioner to exercise the alleged optioncan no longer be exercised since the subject-matter thereof hasbeen extinguished by the fire. Furthermore, the President of thePhilippines has already issued a Presidential Decree for theexpropriation of certain estates in Metro Manila including theTambunting Estate. Therefore, the beneficient andhumanitarian purpose of the Zonal Improvement Project andthe expropriation proceeding would be defeated if petitioner isallowed to exercise an option which would result in the

ejectment of the private respondent.

As stated earlier, the petitioner argues that since the judgmentof the trial court has already become final, it is entitled to theexecution of the same and that moreover, since the house ofthe private respondent was gutted by fire, the execution of thedecision would now involve the delivery of possession of thedisputed area by the private respondent to the petitioner.

ISSUE:Whether or not the respondent has the right of retention?

HELD:The respondent judge is hereby ordered to immediately issue a

writ of execution ordering the private respondent to vacate thedisputed premises and deliver possession of the same to thepetitioner.

Thus, the repairs and improvements introduced by the saidrespondents after the complaint was filed cannot be consideredto have been built in good faith, much less, justify the denial ofthe petitioners fai-rn of option. Since the improvements havebeen gutted by fire, and therefore, the basis for privaterespondents right to retain the premises has already beenextinguished without the fault of the petitioner, there is noother recourse for the private respondent but to vacate thepremises and deliver the same to herein petitioner.

property case digests part iii_edited

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