VICENTE STO. DOMINGO BERNARDO vs.

CATALINO BATACLAN
66 Phil 598
G.R. No. L-44606 November 28, 1938
Facts:
1. Bernardo learned when he entered into the premises of the property purchased from
Pastor Samonte that the latter authorised Catalino Bataclan to make improvements
thereon. In a civil case to secure possession, the court ruled that Bataclan was a builder
and possessor in good faith and was entitled to reimbursement for the works and
improvements,
2. The court gave the plaintiff 30 days within which to choose between the sale of the land
or to buy the works. Bernardo decided to sell the land to the defendant but the latter
informed the court that he is unable to pay the sum required. The court then awarded the
respondent 30 days to purchase the land or else the property will be sold in a public
auction.
3. In the auction sale, Toribio Teodoro was the highest bidder for 8,000 Pesos. The
purchaser sought judicial remedy for the possession of the property.
Issue:
W/N the defendant lost his right to retain the property pending payment for indemnity.
Decision:
The Court ruled that the right to retain the property has already been lost. Due to the failure and
inability of the defendant to pay the purchase price the subject property was sold in a public
auction which Bernardo asked for, without any protest from Bataclan. Therefore, the court found
no reason to keep the property in the possession of the defendant.
the Court explained that Article 448 provides a just and equitable solution to the impracticability
of creating "forced co-ownership" by giving the owner of the land the option to acquire the
improvements after payment of the proper indemnity or to oblige the builder or planter to pay for
the land and the sower to pay the proper rent. The owner of the land is allowed to exercise the
said options because his right is older and because, by the principle of accession, he is entitled
to the ownership of the accessory thing.
DAMIAN IGNACIO vs ELIAS HILARIO

Sometime during the 1940s in Pangasinan, a civil suit arose between Damian Ignacio and Elias
Hilario. Hilario was the owner of a parcel of land. He later discovered that Ignacio built some
buildings therein (a granary and a house). After trial, Judge Antonio Felix of the Court of First
Instance of Pangasinan ruled that both were in good faith (Hilario was the owner in good faith
while Ignacio was the builder in good faith).

Judge Felix then spelled out the rights of the parties to wit:

a.) Ignacio can retain possession over the buildings he erected until after he is paid by Hilario for
the value of the buildings he erected;

b.) Hilario can choose to buy the said buildings or he can choose to sell Ignacio his land since the
value of his land was only P45.00 while the value of the buildings erected was P2,000.00.

However, Hilario refused to avail of his options. Instead, he filed a motion in court to have
Ignacio be ejected and have them destroy the buildings he erected. Judge Felipe Natividad (he
replaced Judge Felix), granted Hilario’s motion.

ISSUE: Whether or not Hilario, the owner in good faith, may eject a builder in good faith
without choosing either to appropriate the building for himself after payment of its value or to
sell his land to the builder in good faith.

HELD: No. The owner in good faith has to make a choice. He cannot dispense the options
under the law and then eject the builder in good faith. This is because both are in good faith.

But when can the owner in good faith compel the builder in good faith to remove the building he
erected?

This is only available if after the owner in good faith chose to sell his land to the builder in good
faith and the latter fails to pay the value of the land within the agree period. Only then can the
owner in good faith compel the builder in good faith to remove the building he erected.
 Sarmiento vs. Agana 129 scra 122

Facts:

ERNESTO was still courting his wife, the latter's mother had told him the couple could
build a RESIDENTIAL HOUSE whom Ernesto did construct a RESIDENTIAL HOUSE on the LAND at
a cost of P8,000.00 to P10,000.00 who probably assumed that the wife's mother was the owner
of the LAND and that, it would be transferred to the spouses. Subsequently turned out that the
LAND had been titled in the name of Mr. & Mrs. Jose C. Santo, Jr. who, sold the same to petitioner
SARMIENTO. SARMIENTO filed an Ejectment suit against them. In the evidentiary hearings before
the Municipal Court, SARMIENTO submitted the deed of sale of the LAND in her favor, which
showed the price to be P15,000.00. On the other hand, ERNESTO testified that the then cost of
the RESIDENTIAL HOUSE would be from P30,000.00 to P40,000.00.Sarmiento refuse to pay and
give option to buy the property.

Issue: 1.Whether or not Ernesto was in good faith.

2.Whether or not Sarmiento could exercise both refusal to pay the spouses and give
option to purchase.

Held:

1.Yes. We agree that ERNESTO and wife were builders in good faith in view of the peculiar
circumstances under which they had constructed the RESIDENTIAL HOUSE. As far as they knew,
the LAND was owned by ERNESTO's mother-in-law who, having stated they could build on the
property, could reasonably be expected to later on give them the LAND.

In regards to builders in good faith, Article 448 of the Code provides:têñ.£îhqwâ£

ART. 448. The owner of the land on which anything has been built, sown or planted in good
faith,shall have the rightto appropriate as his own the works, sowing or planting, after payment of
the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent.However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of the building or trees.
In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the terms thereof.

2.No. The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his building, under article
453 (now Article 546). The owner, of the land. upon, the other hand, has the option, under article
361 (now Article 448), either to pay for the building or to sell his land to the owner of the building.
But he cannot, as respondents here did, refuse both to pay for the building and to sell the land
and compel the owner of the building to remove it from the land where it is erected. He is entitled
to such remotion only when, after having chosen to sell his land, the other party fails to pay for
the same.

We hold, therefore, that the order of Judge Natividad compelling defendants-

petitioners to remove their buildings from the land belonging to plaintiffs-
respondents only because the latter chose neither to pay for such buildings nor to
sell the land, is null and void, for it amends substantially the judgment sought to
be executed and is, furthermore, offensive to articles 361 (now Article 448) and
453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608
[1946]).

Disposition: WHEREFORE, the Petition for Certiorari is hereby ordered dismissed, without
pronouncement as to costs.
Pershing Tan Queto v. Court of Appeals| G.R. No. L-35648, March 27, 1987, 148 SCRA 54
FACTS: Herein private respondent Restituta Tacalinar Guangco de Pombuena received the questioned lot from her mother
Basilides Tacalinar either as a purported donation or by way of purchase with P50 as the alleged consideration thereof. The
donation or sale was consummated while Restituta was already married to her husband Juan Pombuena. Juan then filed for
himself and his supposed co-owner Resitituta an application for a Torrens Title over the land which was later on granted
pronouncing him (‘married to Resitiuta’) as the owner of the land.

A contract of lease over the lot was entered into between petitioner, Pershing Tan Queto and Restituta with the consent of her
husband for a period of 10 years. The lease of contract having expired, Restituta filed for unlawful detainer against Tan Queto.
The unlawful detainer case was won by the spouses in the Municipal Court but on appeal in the CFI the entire case was dismissed
because of a barter agreement whereby Tan Queto became the owner of the disputed lot and the spouses became the owners
of a parcel of land with the house thereon previously owned before the barter by Tan Queto. After the barter agreement, Tan
Queto constructed on the disputed land a concrete building without any objection from Restituta. Afterwards Restituta sued both
Juan and Tan Queto for reconveyance of the title over the registered but disputed lot, for annulment of the barter, and for
recovery of the land with damages.

The respondent court’s decision which later on was affirmed by the Supreme court led to the reformation of the Contract of Sale
of the disputed lot from Basilides to Restituta from a sale to a conveyance of the share of Restituta in the future hereditary estate
of her parents. Hence, this petition for a motion for reconsideration.

ISSUE: Whether or not the conveyance of the share of Restituta in the future hereditary estate of her parents was valid hence a
paraphernal property.

HELD: No. The court ruled that the land is conjugal, not paraphernal. The oral donation of the lot cannot be a valid donation
intervivos because it was not executed in a public instrument (Art. 749, Civil Code), nor as a valid donation mortis causa for the
formalities of a will were not complied with. The allegation that the transfer was a conveyance to RESTITUTA of her hereditary
share in the estate of her mother (or parents) cannot be sustained for the contractual transmission of future inheritance is
generally prohibited.

The fact is ownership was acquired by both JUAN and RESTITUTA by tradition (delivery) as a consequence of the contract of sale
(See Art. 712, Civil Code) with P50.00 (then a considerable amount) as the cause or consideration of the transaction. The lot is
therefore conjugal, having been acquired by the spouses thru onerous title (the money used being presumably conjugal there
being no proof that RESTITUTA had paraphernal funds of her own).
PECSON vs. CA
!
FACTS:
!
-
Pedro Pecson was the owner of a commercial lot located in Kamias Street,
Quezon Cit on which he built a 4-door-2-storey apartment building. He
failed to pay realty taxes amounting to P12k so the lot was sold at public
auction to Mamerto Nepomuceno who later on sold it to the Sps. Nuguid on
12 October 1983 for 103,000 php.
-
Pecson challenged the validity of the auction before the RTC but was
dismissed but the RTC held that the apartment bldg was not subject of the
litigation. On appeal, the CA affirmed in toto the decision of the RTC that
the apartment bldg was not included in the auction sale - Evincing that it
was only the land without the apartment building which was sold at the
auction sale. Furthermore, Property subject of the auction sale at which
Mamerto Nepomuceno was the purchaser is referred to as Lot No. 21-A,
Block No. K-34, at Kamias, Barangay Piñahan, with an area of 256.3 sq.
m., with no mention whatsoever, of the building thereon.
-
After an entry of judgment was made, the Sps. Nuguid filed a motion with
the RTC for a motion for delivery of possession of the lot and the
apartment building citing Art. 546 of the CC. The RTC issued an order
declaring that the owner of the lot and apartment bldg were the Sps.
Nuguid and to pay the construction cost of the apartment before a writ of
possession would be issued and to pay rent to the spouses. Pecson
moved for reconsideration but the Trial court did not act on it, instead it
issued a writ of possession. The CA affirmed in part the decision declaring
the cost of construction can be offset from the amount of rents to be
collected and that since Sps. Nuguid opted to appropriate the
improvement, Pecson is entitled to be reimbursed the cost of construction
at the time it was built in 1965 which is at P53k and the right to retain the
improvement until full indemnity is paid.
-
Thus the case at bar.
!
ISSUE
Whether or not Art. 448 and 546 applies in the case at bar
!
HELD - YES
!
-
Article 448 refers to a land whose ownership is claimed by two or more
parties, one of whom has built some works, or sown or planted something.
The building, sowing or planting may have been made in good faith or in
bad faith. The rule on good faith laid down in Article 526 of the Civil Code
shall be applied in determining whether a builder, sower or planter had
acted in good faith.
-
Article 448 does not apply to a case where the owner of the land is the
builder, sower, or planter who then later loses ownership of the land by sale
or donation
-
Provision therein on indemnity may be applied by analogy considering that
the primary intent of Article 448 is to avoid a state of forced co-ownership
and that the parties, including the two courts below, in the main agree that
Articles 448 and 546 of the Civil Code are applicable and indemnity for the
improvements may be paid although they differ as to the basis of the
indemnity
-
Art. 546 refers to the necessary and useful expenses which shall be
refunded to the possessor in good faith with right of retention. However, it
does not state how to determine the value of the useful improvement.
-
The respondents court ruled as sufficient reimbursement the cost of
construction in 1965. However, this is contrary to previous rulings which
declares that the value to the reimbursed should be the present market
value of said improvements.
-
Citing Rivera vs. Roman Catholic Archbishop of Manila - it is therefore the
current market value of the improvements which should be made the basis
of reimbursement. A contrary ruling would unjustly enrich the private
respondents who would otherwise be allowed to acquire a highly valued
income-yielding four-unit apartment building for a measly amount. - SO
ADDUCE EVIDENCE.
-
Trial court also erred in ordering the petitioner to pay monthly rentals equal
to the aggregate rentals paid by the lessees of the apartment building.
-
Pprivate respondents have opted to appropriate the apartment building, the
petitioner is thus entitled to the possession and enjoyment of the apartment
building, until he is paid the proper indemnity, as well as of the portion of
the lot where the building has been constructed. This is so because the
right to retain the improvements while the corresponding indemnity is not
paid implies the tenancy or possession in fact of the land on which it is
built, planted or sown.
-
Remanded to the trial court for it to determine the current market value of
the apartment building on the lot.
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Pecson vs. CA
 PECSON vs. CA ! FACTS: ! - Pedro Pecson was the owner of a commercial lot located
in Kamias Street, Quezon Cit on which he built a 4-door-2-storey apartment building. He
failed to pay realty taxes amounting to P12k so the lot was sold at public auction to
Mamerto Nepomuceno who later on sold it to the Sps. Nuguid on 12 October 1983 for
103,000 php. - Pecson challenged the validity of the auction before the RTC but was
dismissed but the RTC held that the apartment bldg was not subject of the litigation. On
appeal, the CA affirmed in toto the decision of the RTC that the apartment bldg was not
included in the auction sale - Evincing that it was only the land without the apartment
building which was sold at the auction sale. Furthermore, Property subject of the auction
sale at which Mamerto Nepomuceno was the purchaser is referred to as Lot No. 21-A,
Block No. K-34, at Kamias, Barangay Piñahan, with an area of 256.3 sq. m., with no
mention whatsoever, of the building thereon. - After an entry of judgment was made, the
Sps. Nuguid filed a motion with the RTC for a motion for delivery of possession of the
lot and the apartment building citing Art. 546 of the CC. The RTC issued an order
declaring that the owner of the lot and apartment bldg were the Sps. Nuguid and to pay
the construction cost of the apartment before a writ of possession would be issued and to
pay rent to the spouses. Pecson moved for reconsideration but the Trial court did not act
on it, instead it issued a writ of possession. The CA affirmed in part the decision
declaring the cost of construction can be offset from the amount of rents to be collected
and that since Sps. Nuguid opted to appropriate the improvement, Pecson is entitled to be
reimbursed the cost of construction at the time it was built in 1965 which is at P53k and
the right to retain the improvement until full indemnity is paid. - Thus the case at bar. !
ISSUE Whether or not Art. 448 and 546 applies in the case at bar ! HELD - YES ! -
Article 448 refers to a land whose ownership is claimed by two or more parties, one of
whom has built some works, or sown or planted something. The building, sowing or
planting may have been made in good faith or in bad faith. The rule on good faith laid
down in Article 526 of the Civil Code shall be applied in determining whether a builder,
sower or planter had acted in good faith.
 - Article 448 does not apply to a case where the owner of the land is the builder, sower,
or planter who then later loses ownership of the land by sale or donation - Provision
therein on indemnity may be applied by analogy considering that the primary intent of
Article 448 is to avoid a state of forced co-ownership and that the parties, including the
two courts below, in the main agree that Articles 448 and 546 of the Civil Code are
applicable and indemnity for the improvements may be paid although they differ as to the
basis of the indemnity - Art. 546 refers to the necessary and useful expenses which shall
be refunded to the possessor in good faith with right of retention. However, it does not
state how to determine the value of the useful improvement. - The respondents court
ruled as sufficient reimbursement the cost of construction in 1965. However, this is
contrary to previous rulings which declares that the value to the reimbursed should be the
present market value of said improvements. - Citing Rivera vs. Roman Catholic
Archbishop of Manila - it is therefore the current market value of the improvements
which should be made the basis of reimbursement. A contrary ruling would unjustly
enrich the private respondents who would otherwise be allowed to acquire a highly
valued income-yielding four-unit apartment building for a measly amount. - SO
ADDUCE EVIDENCE. - Trial court also erred in ordering the petitioner to pay monthly
rentals equal to the aggregate rentals paid by the lessees of the apartment building. -
Pprivate respondents have opted to appropriate the apartment building, the petitioner is
thus entitled to the possession and enjoyment of the apartment building, until he is paid
the proper indemnity, as well as of the portion of the lot where the building has been
constructed. This is so because the right to retain the improvements while the
corresponding indemnity is not paid implies the tenancy or possession in fact of the land
on which it is built, planted or sown. - Remanded to the trial court for it to determine the
current market value of the apartment building on the lot.
Depra v Dumlao

The properties of Francisco Depra and Agustin Dumlao were adjoining each other. In 1972,
Dumlao built his house however, he unwittingly built the kitchen portion of his house on Depra’s
land. Depra then sued Dumlao for unlawful detainer. During pre-trial, the parties agreed that
Dumlao was a builder in good faith.

Eventually, the trial court ruled that both parties were in good faith but then a forced lease was
ordered whereby Dumlao retains the kitchen but he shall pay a rental to Depra at P5.00 per
month. But Depra refused to receive the rental payments from Dumlao, instead, Depra filed an
action for quieting of title against Dumlao. In his defense, Dumlao raised the defense of res
judicata considering that the nature and purpose of the initial unlawful detainer case and that of
the subsequent quieting of title case is ejectment.

ISSUES:

1. Whether or not the order of forced lease decreed in the unlawful detainer case is valid.

2. Whether or not the subsequent case of res judicata is barred by prescription due to the prior
case of unlawful detainer.

HELD:

1. No. The judgment of forced lease is improper. A forced lease, just like co-ownership is not
favored. It should be considered that the parties themselves stipulated that Dumlao, the builder,
was in good faith and it was later found that Depra, the owner, was also in good faith. Hence,
what applies is the provisions of Article 448 of the Civil Code, which provides in sum that:

a. Builder in good faith – entitled to retain the possession of the land on which he built in good
faith until he is paid the value of the building he built in good faith;

b. Owner in good faith – has the option to either (i) pay for the building OR (ii) sell his land to
the builder in good faith but builder cannot be forced to buy said land if the same is considerably
more than the value of the building.

Forced rent only comes in if the owner exercises his right to sell the land but the builder rejects it
by reason of the price thereof being considerably more than the value of the building – in such
case, the parties shall agree to the terms of the lease, if they can’t agree then they may bring the
issue to court.

2. No. The action for quieting of title is not barred by reason of res judicata. The cause of action
in the unlawful detainer case involves possession while the cause of action in the quieting of title
case involves ownership. Furthermore, the Rules of Court explicitly provides that judgment in a
detainer case shall not bar an action between the same parties respecting title to the land
TECHNOGAS PHILIPPINES vs. CA

G.R. No. 108894 February 10, 1997

PANGANIBAN, J.:

FACTS:

 The parties in this case are owners of adjoining lots in Parañaque, Metro Manila. It was discovered in a
survey, that a portion of a building of Technogas, which was presumably constructed by its predecessor-in-
interest, encroached on a portion of the lot owned by private respondent Edward Uy.
 Upon learning of the encroachment or occupation by its buildings and wall of a portion of private
respondent’s land, the petitioner offered to buy from defendant that particular portion of Uy’s land occupied
by portions of its buildings and wall with an area of 770 square meters, more or less, but the latter, however,
refused the offer
 The parties entered into a private agreement before a certain Col. Rosales in Malacañang, wherein petitioner
agreed to demolish the wall at the back portion of its land thus giving to the private respondent possession
of a portion of his land previously enclosed by petitioner's wall.
 Uy later filed a complaint before the office of Municipal Engineer of Parañaque, Metro Manila as well as
before the Office of the Provincial Fiscal of Rizal against Technogas in connection with the encroachment or
occupation by plaintiff's buildings and walls of a portion of its land but said complaint did not prosper; so Uy
dug or caused to be dug a canal along Technogas’ wall, a portion of which collapsed in June, 1980, and led
to the filing by the petitioner of the supplemental complaint in the above-entitled case and a separate
criminal complaint for malicious mischief against Uy and his wife which ultimately resulted into the conviction
in court Uy's wife for the crime of malicious mischief;

ISSUE: WON the petitioner is builder in good faith.

HELD: YES.

 We disagree with Respondent Court’s reliance on the cases of J.M. Tuason & Co., Inc. vs. Vda. de Lumanlan
and J.M. Tuason & Co., Inc. vs. Macalindong, in ruling that the petitioner "cannot be considered in good
faith" because as a land owner, it is "presumed to know the metes and bounds of his own property, specially
if the same are reflected in a properly issued certificate of title. One who erroneously builds on the adjoining
lot should be considered a builder in (b)ad (f)aith, there being presumptive knowledge of the Torrens title,
the area, and the extent of the boundaries." There is nothing in those cases which would suggest that bad
faith is imputable to a registered owner of land when a part of his building encroaches upon a neighbor's
land, simply because he is supposedly presumed to know the boundaries of his land as described in his
certificate of title,

 Article 527 of the Civil Code presumes good faith, and since no proof exists to show that the encroachment
over a narrow, needle-shaped portion of private respondent's land was done in bad faith by the builder of
the encroaching structures, the latter should be presumed to have built them in good faith. It is presumed
that possession continues to be enjoyed in the same character in which it was acquired, until the contrary
is proved.

 Good faith consists in the belief of the builder that the land he is building on is his, and his ignorance of any
defect or flaw in his title. Hence, such good faith, by law, passed on to Pariz's successor, petitioner in this
case. The good faith ceases from the moment defects in the title are made known to the possessor, by
extraneous evidence or by suit for recovery of the property by the true owner.
 Consequently, the builder, if sued by the aggrieved landowner for recovery of possession, could have
invoked the provisions of Art. 448 of the Civil Code, which reads:

The owner of the land on which anything has been built, sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of
the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
 building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

The obvious benefit to the builder under this article is that, instead of being outrightly ejected from the land,
he can compel the landowner to make a choice between the two options: (1) to appropriate the building by
paying the indemnity required by law, or (2) sell the land to the builder. The landowner cannot refuse to
exercise either option and compel instead the owner of the building to remove it from the land

 In view of the good faith of both petitioner and private respondent, their rights and obligations are to be
governed by Art. 448. Hence, his options are limited to: (1) appropriating the encroaching portion of
petitioner's building after payment of proper indemnity, or (2) obliging the latter to buy the lot occupied by
the structure. He cannot exercise a remedy of his own liking
Ortiz v. Kayanan

FACTS: Plaintiff used to be the legal guardian of Martin Dolorico II. When his ward died, plaintiff continued
to cultivate and possess the latter’s property, which was formerly a subject of homestead application. In the
said application, the ward’s uncle was named as his heir and successor in interest. Thus, the uncle executed
an affidavit relinquishing his rights over the property in favor of Comintan and Zamora, his grandson and
son-in-law and requested the Director of Lands to cancel the homestead application. The homestead
application was cancelled to the protest of Ortiz saying that he should be given preference to purchase the
lot inasmuch as he is the actual occupant and has been in continuous possession of the same. Still, the lot
in question was sold at a public auction wherein defendant Comintan was the only bidder.

The plaintiff’s protest was investigated upon but his claim was not given due course. On appeal, respondent
court rules that half of the portion of land should be given to the defendant, being the successful bidder.
The other half should be awarded to Zamora without prejudice to the right of Ortiz to participate in the public
bidding of the lot. If Ortiz is to be not declared the successful bidder, defendants should reimburse jointly
said plaintiff for the improvements introduced on the land, with him, having the right to retain the property
until after he has been paid for.

Plaintiff appealed the judgment. It was later found out that Ortiz collected tolls on a portion of the property
wherein he has not introduced any improvement.

The judgment became final and executory. Private respondents filed a motion for its execution requesting
that they file a bond in lieu of the amount that should be paid to Ortiz, on the condition that after the
accounting of the tolls collected by plaintiff, there is still and amount due and payable to the said plaintiff,
the bond shall be held answerable.

Petitioner thus filed the instant petition, contending that in having issued the Order and Writ of Execution,
respondent Court "acted without or in excess of jurisdiction, and/or with grave abuse of discretion, because
the said order and writ in effect vary the terms of the judgment they purportedly seek to enforce." He argued
that since said judgment declared the petitioner a possessor in good faith, he is entitled to the payment of
the value of the improvements introduced by him on the whole property, with right to retain the land until he
has been fully paid such value. He likewise averred that no payment for improvements has been made and,
instead, a bond therefor had been filed by defendants (private respondents), which, according to petitioner,
is not the payment envisaged in the decision which would entitle private respondents to the possession of
the property. Furthermore, with respect to portion "B", petitioner alleges that, under the decision, he has
the right to retain the same until after he has participated and lost in the public bidding of the land to be
conducted by the Bureau of Lands. It is claimed that it is only in the event that he loses in the bidding that
he can be legally dispossessed thereof.

It is the position of petitioner that all the fruits of the property, including the tolls collected by him from the
passing vehicles, which according to the trial court amounts to P25,000.00, belongs to petitioner and not to
defendant/private respondent Quirino Comintan, in accordance with the decision itself, which decreed that
the fruits of the property shall be in lieu of interest on the amount to be paid to petitioner as reimbursement
for improvements. Any contrary opinion, in his view, would be tantamount to an amendment of a decision
which has long become final and executory and, therefore, cannot be lawfully done.

The issue decisive of the controvery is—after the rendition by the trial court of its judgment in Civil Case
No. C-90 on March 22, 1966 confirming the award of one-half of the property to Quirino Comintan—whether
or not petitioner is still entitled to retain for his own exclusive benefit all the fruits of the property, such as
the tolls collected by him from March 1967 to December 1968, and September 1969 to March 31, 1970,
amounting to about P25,000.00.

HELD: Negative

1. No contention that the possessor in good faith is entitled to the fruits received before the possession
is legally interrupted. Possession in good faith ceases or is legally interrupted from the moment
defects in the title are made known to the possessor, by extraneous evidence or by the filing of an
action in court by the true owner for the recovery of the property. Hence, all the fruits that the
possessor may receive from the time he is summoned in court, or when he answers the complaint,
must be delivered and paid by him to the owner or lawful possessor.

2. However, even after his good faith ceases, the possessor can still retain the property (Art 546) until
he has been fully reimbursed for all the necessary and useful expenses made by him on the
property. he principal characteristic of the right of retention is its accessory character. It is accessory
to a principal obligation. Considering that the right of the possessor to receive the fruits terminates
when his good faith ceases, it is necessary, in order that this right to retain may be useful, to
concede to the creditor the right to secure reimbursement from the fruits of the property by utilizing
its proceeds for the payment of the interest as well as the principal of the debt while he remains in
possession.

3. Petitioner cannot appropriate for his own exclusive benefit the tolls which he collected from the
property retained by him. It was his duty under the law, after deducting the necessary expenses for
his administration, to apply such amount collected to the payment of the interest, and the balance
to the payment of the obligation.

We hold, therefore, that the disputed tolls, after deducting petitioner's expenses for administration,
belong to Quirino Comintan, owner of the land through which the toll road passed, further
considering that the same was on portions of the property on which petitioner had not introduced
any improvement. The trial court itself clarified this matter when it placed the toll road under
receivership. The omission of any mention of the tolls in the decision itself may be attributed to the
fact that the tolls appear to have been collected after the rendition of the judgment of the trial court.

4. As to the other lot, it appears that no public sale has yet been conducted by the Bureau of Lands
and, therefore, petitioner is entitled to remain in possession thereof. This is not disputed by
respondent Eleuterio Zamora. After public sale is had and in the event that Ortiz is not declared the
successful bidder, then he should be reimbursed by respondent Zamora in the corresponding
amount for the improvements on Lot 5785-B.
 GEMINIANO v. COURT OF APPEALS, et al.

G.R. No. 120303. July 24, 1996

FACTS:

A lot containing an area of 314 square meters was originally owned by the petitioners' mother, Paulina Amado
vda. de Geminiano. On a 12-square-meter portion of that lot stood the petitioners' unfinished bungalow, which the
petitioners (Geminianos) sold in November 1978 to the private respondents (Nicolas) for the sum of P6,000.00, with
an alleged promise to sell to the latter that portion of the lot occupied by the house. Subsequently, Paulina executed a
contract of lease over a 126 square-meter portion of the lot, including that portion on which the house stood, in favor of
the Nicolas for P40.00 per month for a period of seven years commencing on 15 November 1978. The Nicolas then
introduced additional improvements and registered the house in their names. After the expiration of the lease contract
in November 1985, however, the petitioners' mother refused to accept the monthly rentals.

It turned out that the lot in question was the subject of a suit, which resulted in its acquisition by one Maria Lee
in 1972. In 1982, Lee sold the lot to Lily Salcedo, who in turn sold it in 1984 to the Dionisio spouses. In 1992, the
Dionisio spouses executed a Deed of Quitclaim over the said property in favor of the Geminianos, and the lot was
registered in the latter's names.

Later, the Geminianos sent a letter to the Nicolas demanding that they vacate the property. Since the Nicolas
did not heed to their demand, the Geminianos filed with the MTCC of Dagupan a complaint for unlawful detainer with
damages. The MTCC ordered the Nicolas to vacate the property and held that Art. 448 of the Civil Code does not apply
to this case because the Nicolas were mere lessees, not possessors in good faith.On appeal, the RTC of Dagupan
reversed the MTCC. On appeal to the CA, the appellate court affirmed the RTC decision. Hence, this petition.

ISSUE: Whether the Nicolas are builders in good faith or mere lessees.

HELD:

The Nicolas are mere lessees.

It is undisputed that the Nicolas came into possession of a 126 square-meter portion of the said lot by virtue of
a contract of lease executed by Paulina in their favor. The juridical relation between Paulina as lessor, and the Nicolas
as lessees, is therefore well-established, and carries with it a recognition of the lessor's title. The Nicolas, as lessees
who had undisturbed possession for the entire term under the lease, are then estopped to deny their landlord's title, or
to assert a better title not only in themselves, but also in some third person while they remain in possession of the
leased premises and until they surrender possession to the landlord. This estoppel applies even though the lessor had
no title at the time the relation of lessor and lessee was created,and may be asserted not only by the original lessor,
but also by those who succeed to his title.

Being mere lessees, the Nicolas knew that their occupation of the premises would continue only for the life of
the lease. Plainly, they cannot be considered as possessors nor builders in good faith.

In a plethora of cases, this Court has held that Article 448 of the Civil Code, in relation to Article 546 of the same
Code, which allows full reimbursement of useful improvements and retention of the premises until reimbursement is
made, applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof.
It does not apply where one's only interest is that of a lessee under a rental contract; otherwise, it would always be in
the power of the tenant to "improve" his landlord out of his property.

Anent the alleged promise of the Geminianos to sell the lot occupied by the Nicolas house, the same was not
substantiated by convincing evidence. And even if the petitioners indeed promised to sell, it would not make the private
respondents possessors or builders in good faith so as to be covered by the provisions of Article 448 of the Civil Code.
PLEASANTVILLE DEVELOPMENT CORPORATION VS. COURT OF APPEALS
G.R. NO. 79688 253 SCRA 10 FEBRUARY 1, 1996
PONENTE: PANGANIBAN, J.

Doctrine: Good faith consists in the belief of the builder that he land he is building on is his and his
ignorance of any defect or flaw in his title. The burden of proving bad faith belongs to the one asserting it.

Facts: Edith Robillo purchased from Pleasantville Development Corporation, herein petitioner a parcel of
land at Pleasantville Subdivision, Bacolod City. The property was designated as Lot 9, Phase II. In 1975,
herein respondent Eldred Jardinico bought the said subject lot from the former purchaser. Eldred later
discovered that the property he purchased had improvements introduced therein by respondent Wilson
Kee.
Kee on the other hand bought on installments Lot 8 of the same subdivision from C.T. Torres
Enterprises, Inc. (CTTEI) which is the exclusive real estate agent of the petitioner. Under the contract Kee
was allowed to take possession of the property even before full payment of the price. CTTEI through an
employee, Zenaida Octaviano accompanied Kee’s wife Donabelle to inspect Lot No. 8. Octaviano however
mistakenly pointed towards Lot 9. Hence spouses Kee had their residence, an auto repair shop, a store
and other improvements constructed on the wrong lot.

Upon discovery of the blunder both Kee and Jardinico tried to reach an amicable settlement but
they failed. Jardinico demanded that the improvements be removed but as Kee refused, Jardinico filed a
complaint for ejectment with damages against Kee at the Municipal Trial Court in Cities (MTCC) of Bacolod
City. Kee filed a third-party complaint against herein petitioner and CTTEI.

The MTCC found that the error was attributable to CTTEI also since at present the contract with
Kee has rescinded for Kee’s failure to pay installments. Kee no longer had any right over the subject
property and must pay rentals for its use. The Regional Trial Court (RTC) of Bacolod City ruled that
petitioner and CTTEI were not at fault or were not negligent. It argued that Kee was a builder in bad faith.
Even if assuming that he was in good faith, he was no longer so and must pay rentals from the time that he
was given notice to vacate the lot. The Court of Appeals ruled that Kee was a builder in good faith as he
was unaware of the mix-up when he constructed the improvements. It was in fact due to the negligence
and wrongful delivery of CTTEI which included its principal the herein petitioner. It further ruled that the
award of rental was without basis.

Pending the resolution of the case at the Court of Appeals Jardinico and Kee entered into a deed
of sale, wherein Lot 9 was sold to Kee. In the said deed a provision stating that regardless of the outcome
of the decision, such shall not be pursued by the parties and shall be considered dismissed and without
effect. The appellate court was not informed of this deal.

Issue: Whether or not a lot buyer who constructs improvements on the wrong property erroneously
delivered by the owner’s agent, a builder in good faith?

Held: Yes. Article 527 of the Civil Code provides the presumption that petitioner has the burden of proving
that Kee was a builder in bad faith. Kee may be made liable for the violation of the contract with CTTEI but
this may not be used as a basis of bad faith and as a sufficient ground to negate the presumption of good
faith. Jardinico is presently only allowed to file a complaint for unlawful detainer. Good faith is based on the
belief of the builder that the land he is building on is his and his ignorance of any flaw or defect in is title.
Since at the time when Kee constructed his improvements on Lot 8, he was not aware that it was actually
Lot 9 that was delivered to him. Petitioner further contends that Kee was negligent as a provision in the
Contract of Sale on Installment stated that the vendee must have personally examined the property and
shall bear on his own the consequential expenses in the changes that may happen thereon. The court held
that such provision cannot be interpreted as a waiver of the vendee’s right to recover damages resulting
from petitioner’s negligence. Such interpretation of the waiver is contrary to law and public policy and cannot
be allowed. Petitioner cannot claim and excuse itself from liability by claiming that it was not directly involved
in the delivery of the property. The principal must be responsible for the acts of the agent done within the
scope of his authority. CTTEI was the sole real estate representative of the petitioner when the delivery
was made. Wilson Kee is therefore declared a builder in good faith. Petitioner and respondent CTTEI are
declared solidarily liable for damages due to negligence. The award of rentals to Jardinico is dispensed
with.
Baltazar v. Caridad [G.R. No. L-23509. June 23, 1966.]
En Banc, Reyes JBL (J): 8 concurring

Facts:
In the cadastral proceeding (Cadastral Case 54, GLRO Cadastral Case 1222),
the trial court rendered
decision, dated 23 January 1941, awarding Lot 8864 of the Laoag (Ilocos Norte)
cadastre to the spouses Julio
Baltazar and Constancia Valencia as their conjugal partnership property. Said
decision having become final,
the corresponding decree was issued on 12 July 1941, and pursuant thereto,
said lot was registered in the
names of applicant spouses under OCT O-1445, which was later transcribed, on
5 November 1959, in the
office of the Register of Deeds of Ilocos Norte.
In the meanwhile, Julio Baltazar, the registered owner of Lot 8864, died. On 6
December 1961, his surviving
Property, 2003 (
19
)
Haystacks (Berne Guerrero)
wife and children filed a motion, in the cadastral case praying for writ of
possession against Silvina Caridad
and her daughter, Eduarda Caridad, who had been in possession of the southern
portion of said Lot 8864 since
1939, while the cadastral case involving said lot was pending before the trial
court, and before the decision
was rendered and the corresponding decree issued in 1941. No writ having
theretofore been issued in
Baltazar’s favor, the trial court issued an order, on 11 December 1961, granting
Baltazar’s motion, and
overruled Caridad’s opposition but directed the sheriff not to remove or destroy
the permanent improvements
on the lot without an express command. On 2 January 1962, the order having
become final, the sheriff
enforced the writ and placed Baltazar in possession of the southern portion of the
lot.
On 23 January 1962, Baltazar presented a motion to compel Eduarda and Silvina
Caridad to remove their
respective houses which they built in 1958 and 1959, respectively, in the
southern portion of the disputed lot,
and, in the event of their failure to do so, to order the sheriff to demolish the
same. On 20 March 1962, the
trial court, after due hearing, granted Baltazar’s motion, ordering the Caridads to
remove their respective
houses from the southern portion of said lot 8864 within 30 days from receipt of
said order. Not satisfied, the
Caridads appealed (CA-GR 31289-R). The appellate court, however, certified the
appeal to the Supreme
Court for raising only questions of law.
The Supreme Court affirmed the appealed order; with costs against the
Caridads.
1.
Order compelling Caridads to remove their respective houses from the disputed
lot; Lack of
opposition in previous proceedings
The order, dated 20 March 1962, of the cadastral court, granting Baltazar’s
motion to compel the
Caridads to remove their respective houses from the disputed lot, is valid and
enforceable against the latter.
This may be concluded based on the circumstances that (1) that the Caridads do
not dispute that during the
pendency of the cadastral proceeding (to which judgment was rendered
awarding said lot 8864, and
consequent issuance of the final decree of registration of the same, in favor of
Julio Baltazar), the late Andres
Caridad, his surviving spouse Silvina Caridad, and their children, one of whom is
Eduarda Caridad, were in
possession of the southern portion of the disputed lot ; (2) that Eduarda Caridad
claims right and title thereto
as a mere heir and successor-in-interest of said Andres Caridad; and (3) that the
Caridads do not dispute the
propriety and validity of the order of the cadastral court, granting the writ of
possession in favor of Baltazar as
well as its enforcement.
2.
Jurisdiction of the CFI, sitting as a land registration court, to issue writ of
possession and order
demolition of improvements
In
Marcelo vs. Mencias, etc., et al.
(L-15609, 29 April 1960, 58 OG 3349), the Court had already
upheld the jurisdiction or authority of the CFI, sitting as a land registration court,
to order, as a consequence
of the writ of possession issued by it, the demolition of improvements introduced
by the successor-in-interest
of a defeated oppositor in the land registration case.
3.
Section 13, Rule 39 of the Rules of Court
Section 13, Rule 39 of the Rules of Court (How execution for the delivery or
restitution of property
enforced), provides that “the officer must enforce an execution for the delivery or
restitution of property by
placing the plaintiff in possession of such property, and by levying as hereinafter
provided upon so much of
the property of the judgment debtor as will satisfy the amount of costs, damages,
rents, and profits included in
the execution. However, the officer shall not destroy, demolish or remove the
improvements made by the
defendant or his agent on the property, except by special order of the court,
which order may only issue upon
petition of the plaintiff after due hearing and upon the defendant’s failure to
remove the improvements within
a reasonable time to be fixed by the court.”
4.
Rule applies to land registration cases in a suppletory character and not only to
ordinary
actions involving the delivery or restitution of property
Property, 2003 (
20
)
Haystacks (Berne Guerrero)
The provision of the Rules of Court applies not only to ordinary actions involving
the delivery or
restitution of property, but also to proceedings under the land registration law.
The provisions of the Rules of
Court are applicable to land registration cases in a suppletory character (Rule
132). Thus, if the writ of
possession issued in a land registration proceeding implies the delivery of
possession of the land to the
successful litigant therein
(Demorar vs. Ibañez, 51 OG 2872, Pasay Estate Company vs. Del Rosario, et
al.,
11 Phil. 391; Manlapas vs. Llorente, 48 Phil. 298)
, a writ of demolition must, likewise, issue, especially
considering that the latter writ is but a complement of the former which without
said writ of demolition would
be ineffective. To require a successful litigant in a land registration case to
institute another action for the
purpose of obtaining possession of the land adjudged to him, or for the purpose
of securing fruits of his
victory, would be a cumbersome process. It would foster unnecessary and
expensive litigations and result in
multiplicity of suits, which the judicial system abhors.
5.
Power of a judge to issue all auxiliary writs to carry into effect the jurisdiction
conferred upon
the court by law
Section 6, Rule 124, of the Rules of Court provides that “when by law jurisdiction
is conferred on a
court or judicial officer, all auxiliary writs, processes and other means necessary
to carry it into effect may be
employed by such court or officer; and if the procedure to be followed in the
exercise of such jurisdiction is
not specifically pointed out by these rules, any suitable process or mode of
proceeding may be adopted which
appears most conformable to the spirit of said rules.” In the present case, the
Judge has the power to issue all
auxiliary writs, including the writ of demolition, processes and other means
necessary to carry into effect the
jurisdiction conferred upon it by law in land registration cases to issue a writ of
possession to the successful
litigant.
6.
Every court has inherent power to do necessary thing s for the administration of
justice
In
Shioji vs. Harvey
, 43 Phil 333, it was pointed out that “independent of any statutory provision,
every court has inherent power to do all things reasonably necessary for the
administration of justice within
the scope of its jurisdiction.” In line with this doctrine, the Judge has the inherent
power to issue the writ of
demolition. Its issuance is reasonably necessary to do justice to petitioner who is
being deprived of the
possession of the lots in question, by reason of the continued refusal of the
respondent to remove his house
thereon and restore possession of the premises to petitioner.
7.
Builders in bad faith; Rights of registered owner cannot be defeated by an
unsuccessful
opponent through the subterfuge of replacing his old house with a new one from
time to time
The Caridads cannot be regarded as builders in good faith because they are
bound by the 1941 decree
of registration that obligated their parents and predecessors-in-interest. Good
faith must rest on a colorable
right in the builder, beyond a mere stubborn belief in one’s title despite judicial
adjudication. The fact that in
1959 the Caridads demolished and replaced their old house with new and bigger
ones cannot enervate the
rights of the registered owners. Otherwise, the rights of the latter to enjoy full
possession of their registered
property could be indefinitely defeated by an unsuccessful opponent through the
simple subterfuge of
replacing his old house with a new one from time to time
Spouses Del Campo vs Bernarda Abesia

Gr L-49219

April 15, 1988

Facts:

Spouses Del Campo, Estanislao Del Canto, and Barnarda Abesia filed for the partition of the
property co-owned by them. The commissioner who surveyed the property recommended that
the land be divided into two, 30 sq. meters for Spouses Del Campo and Del Canto and 15 sq.
meters for Abesia. However, it was found that the house built by Abesia encroached upon the
part given to the plaintiffs.

The court ruled that Article 448 of the civil code is inapplicable and the rules on co-ownership
are more relevant over the encroaching strutrure and the land on which it was built.

Issue:

Whether or not Article 448 should be applied.

Decision:

The court ruled that Article 448 is inapplicable over constructions made by a co-owner on a land
co-owned. However, the co-ownership was terminated by the partition of the property.
Petitioners has the right to exercise the option provided in Article 448 as the builder in the case at
bar is no longer the landowner.
 G.R. NO. 144635 JUNE 26, 2006
PROGRAMME INCORPORATED, V. PROVINCE OF BATAAN

FACTS:
BASECO is the owner of Piazza Hotel and Mariveles Lodge, both located in Mariveles, Bataan.
In 1986, BASECO granted petitioner a contract of lease over Piazza Hotel at a monthly rental of P6,500 for
three years, subject to renewal by mutual agreement of the parties. After the expiration of the three-year lease period,
petitioner was allowed to continue operating the hotel on monthly extensions of the lease.
In 1989, however, the Presidential Commission on Good Government (PCGG) issued a sequestration order
against BASECO pursuant to Executive Order No. 1 of former President Corazon C. Aquino. Among the properties
provisionally seized and taken over was the lot on which Piazza Hotel stood.
On July, 1989, however, Piazza Hotel was sold at a public auction for non-payment of taxes to respondent
Province of Bataan. The title of the property was transferred to respondent. BASECO’s Transfer Certificate of Title was
cancelled and a new one, was issued to the Province of Bataan.
The trial court rendered judgment in favor of respondent.
CA affirmed the trial court’s ruling.

ISSUE:
WON the petitioner is a possessor in good faith of the Piazza Hotel and Mariveles Lodge

HELD:
The benefits granted to a possessor in good faith cannot be maintained by the lessee against the lessor
because, such benefits are intended to apply only to a case where one builds or sows or plants on land which he
believes himself to have a claim of title and not to lands wherein one’s only interest is that of a tenant under a rental
contract, otherwise, it would always be in the power of a tenant to improve his landlord out of his property. Besides, as
between lessor and lessee, the Code applies specific provisions designed to cover their rights.
Hence, the lessee cannot claim reimbursement, as a matter of right, for useful improvements he has made
on the property, nor can he assert a right of retention until reimbursed. His only remedy is to remove the improvement
if the lessor does not choose to pay its value; but the court cannot give him the right to buy the land.
Petitioner’s assertion that Piazza Hotel was constructed "at (its) expense" found no support in the records.
Neither did any document or testimony prove this claim. At best, what was confirmed was that petitioner managed and
operated the hotel. There was no evidence that petitioner was the one which spent for the construction or renovation
of the property. And since petitioner’s alleged expenditures were never proven, it could not even seek reimbursement
of one-half of the value of the improvements upon termination of the lease under Article 1678 of the Civil Code.
 G.R. NO. 170923 JANUARY 20, 2009
SULO SA NAYON, INC. VS NAYONG PILIPINO FOUNDATION

FACTS:
In 1975, respondent leased a portion of the Nayong Pilipino Complex, to petitioner Sulo sa Nayon, Inc. for the
construction and operation of a hotel building, to be known as the Philippine Village Hotel. The lease was for an initial
period of 21 years, or until May 1996. It is renewable for a period of 25 years under the same terms and conditions
upon due notice in writing to respondent of the intention to renew.
In 1995, petitioners sent respondent a letter notifying the latter of their intention to renew the contract for
another. July of the same year, parties agreed to the renewal of the contract for another 25 years, or until 2021. Under
the new agreement, petitioner PVHI was bound to pay the monthly rentals
Beginning January 2001, petitioners defaulted in the payment of their monthly rental. Respondent repeatedly
demanded petitioners to pay the arrears and vacate the premises.
MeTC rendered its decision in favor of respondent
RTC which modified the ruling of the MeTC.
CA which held that the RTC erroneously applied the rules on accession, as found in Articles 448 and 546 of
the Civil Code

ISSUE:
WON Sulo sa Nayon as builders have acted in good faith in order for Art. 448 in relation to Art. 546 of the Civil
Code may apply with respect to their rights over improvements.

HELD:
Article 448 is manifestly intended to apply only to a case where one builds, plants, or sows on land in which
he believes himself to have a claim of title, and not to lands where the only interest of the builder, planter or sower is
that of a holder, such as a tenant.
In the case at bar, petitioners have no adverse claim or title to the land. In fact, as lessees, they recognize
that the respondent is the owner of the land. What petitioners insist is that because of the improvements, which are of
substantial value, that they have introduced on the leased premises with the permission of respondent, they should be
considered builders in good faith who have the right to retain possession of the property until reimbursement by
respondent.
We affirm the ruling of the CA that introduction of valuable improvements on the leased premises does not
give the petitioners the right of retention and reimbursement which rightfully belongs to a builder in good faith.
Otherwise, such a situation would allow the lessee to easily "improve" the lessor out of its property. We reiterate the
doctrine that a lessee is neither a builder in good faith nor in bad faith that would call for the application of Articles 448
and 546 of the Civil Code. His rights are governed by Article 1678 of the Civil Code.