LUCIANO BRIONES and NELLY BRIONES vs. JOSE MACABAGDAL, FE D. MACABAGDAL and VERGON REALTY INVESTMENTS CORPORATION, G.R.

No. 15 !!! A"#"s$ %, & 1 However, the conclusiveness of the factual findings notwithstanding, we find that the trial court nonetheless erred in outrightly ordering petitioners to vacate the subject property or to pay respondent spouses the prevailing price of the land as compensation. Article 527 of the Civil Code presumes good faith, and since no proof e ists to show that the mista!e was done by petitioners in bad faith, the latter should be presumed to have built the house in good faith. "hen a person builds in good faith on the land of another, Article ##$ of the Civil Code governs. %aid article provides, A&'. ##$. 'he owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the wor!s, sowing or planting, after payment of the indemnity provided for in Articles 5#( and 5#$, 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. )n 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. 'he parties shall agree upon the terms of the lease and in case of disagreement, the court shall fi the terms thereof. *+mphasis ours., 'he above-cited article covers cases in which the builders, sowers or planters believe themselves to be owners of the land or, at least, to have a claim of title thereto. 'he builder in good faith can compel the landowner to ma!e a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. 'he choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around. However, even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to remove the building from the land without first e ercising either option. )t is only if the owner chooses

to sell his land, and the builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may remove the improvements from the land. 'he owner is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same. .oreover, petitioners have the right to be indemnified for the necessary and useful e penses they may have made on the subject property. Articles 5#( and 5#$ of the Civil Code provide, A&'. 5#(. /ecessary e penses shall be refunded to every possessor0 but only the possessor in good faith may retain the thing until he has been reimbursed therefor. 1seful e penses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the e penses or of paying the increase in value which the thing may have ac2uired by reason thereof. A&'. 5#$. + penses for pure lu ury or mere pleasure shall not be refunded to the possessor in good faith0 but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount e pended. Conse2uently, the respondent-spouses have the option to appropriate the house on the subject land after payment to petitioners of the appropriate indemnity or to oblige petitioners to pay the price of the land, unless its value is considerably more than the value of the structures, in which case petitioners shall pay reasonable rent. )n accordance with 3epra v. 3umlao, this case must be remanded to the &'C which shall conduct the appropriate proceedings to assess the respective values of the improvement and of the land, as well as the amounts of reasonable rentals and indemnity, fi the terms of the lease if the parties so agree, and to determine other matters necessary for the proper application of Article ##$, in relation to Articles 5#( and 5#$, of the Civil Code. 4 .

"H+&+56&+, the 3ecision dated 3ecember 77, 2888 of the Court of Appeals in CA-9.&. C: /o. #$78; is A55)&.+3 ")'H .63)5)CA')6/. 'he award of moral damages in favor of respondent-spouses <ose and 5e .acabagdal and the award of compensatory damages and attorney=s fees to respondent :ergon &ealty )nvestments Corporation are 3+>+'+3. 'he case is &+.A/3+3 to the &egional 'rial Court of .a!ati City, ?ranch 7@5, for further proceedings consistent with the proper application of Articles ##$, 5#( and 5#$ of the Civil Code, as followsA 7. 'he trial court shall determineA a. the present fair price of the respondent-spouses= lot0 b. the amount of the e penses spent by petitioners for the building of their house0 c. the increase in value *Bplus valueC, which the said lot may have ac2uired by reason thereof0 and d. whether the value of said land is considerably more than that of the house built thereon. 2. After said amounts shall have been determined by competent evidence, the &egional 'rial Court shall render judgment, as followsA a. 'he trial court shall grant the respondent-spouses a period of fifteen *75, days within which to e ercise their option under Article ##$ of the Civil Code, whether to appropriate the house as their own by paying to petitioners either the amount of the e penses spent by petitioners for the building of the house, or the increase in value *Bplus valueC, which the said lot may have ac2uired by reason thereof, or to oblige petitioners to pay the price of said land. 'he amounts to be respectively paid by the respondent-spouses and petitioners, in accordance with the option thus e ercised by written notice of the other party and to the Court, shall be paid by the obligor within fifteen *75, days from such notice of the option by tendering the amount to the Court in favor of the party entitled to receive it0 b. 'he trial court shall further order that if the respondentspouses e ercises the option to oblige petitioners to pay the price of the land but the latter rejects such purchase because, as found by the trial court, the value of the land is

considerably more than that of the house, petitioners shall give written notice of such rejection to the respondentspouses and to the Court within fifteen *75, days from notice of the respondent-spouses= option to sell the land. )n that event, the parties shall be given a period of fifteen *75, days from such notice of rejection within which to agree upon the terms of the lease, and give the Court formal written notice of such agreement and its provisos. )f no agreement is reached by the parties, the trial court, within fifteen *75, days from and after the termination of the said period fi ed for negotiation, shall then fi the terms of the lease, payable within the first five *5, days of each calendar month. 'he period for the forced lease shall not be more than two *2, years, counted from the finality of the judgment, considering the long period of time since petitioners have occupied the subject area. 'he rental thus fi ed shall be increased by ten percent *78D, for the second year of the forced lease. Eetitioners shall not ma!e any further constructions or improvements on the house. 1pon e piration of the two *2,year period, or upon default by petitioners in the payment of rentals for two *2, consecutive months, the respondentspouses shall be entitled to terminate the forced lease, to recover their land, and to have the house removed by petitioners or at the latter=s e pense. 'he rentals herein provided shall be tendered by petitioners to the Court for payment to the respondent-spouses, and such tender shall constitute evidence of whether or not compliance was made within the period fi ed by the Court. c. )n any event, petitioners shall pay the respondent-spouses reasonable compensation for the occupancy of the respondent-spouses= land for the period counted from the year petitioners occupied the subject area, up to the commencement date of the forced lease referred to in the preceding paragraph0 d. 'he periods to be fi ed by the trial court in its 3ecision shall be ine tendible, and upon failure of the party obliged to tender to the trial court the amount due to the obligee, the party entitled to such payment shall be entitled to an order of e ecution for the enforcement of payment of the amount due and for compliance with such other acts as may be re2uired by the prestation due the obligee. /o costs. %6 6&3+&+3.

E'ECUTIVE ORDER NO. & ( J")* !, 1(+, 'itle 7 Chap. @ %ec. @; Amended by &A $5@@ Art. $7. +very donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, e cept moderate gifts which the spouses may give each other on the occasion of any family rejoicing. 'he prohibition shall also apply to persons living together as husband and wife without a valid marriage. *7@@a,