PROPERTYCASEDIGESTS(ATTY.
AMPIL)4thweek|BeduralBlezaSexyLexyCimagalaDelosSantosImperialNoelPlazoSia
2D2012|
PEDRO P. PECSON v. COURT OF APPEALS, SPS. NUGUID
FACTS:
Pedro Pecson was the owner of a commercial lot 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.
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 appealed
in toto the decision of the RTC that the apartment bldg was
not included in the auction sale.
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 bldg 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 the retain the improvement until full indemnity
is paid.
Thus the case at bar.
ISSUE: W/N Art. 448 and 546 applies in the case at bar
HELD: YES
With regard to Art. 448, the provision on indemnity may be
applied in analogy. Whoever is the owner of the land may
appropriate whatever has been built, planted or sown after
paying indemnity. However, it does not apply when the
owner of the land is also the builder of the works on his own
land who later on loses ownership by sale or donation.
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 and
private respondents alike] espouses 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 so as not to unjustly enrich either of
the parties.
[the trial court erred in ordering Pecson to pay rent since the
Sps. Nuguid has yet to pay the indemnity therefore Pecson
has the right to retain the improvements and the income
thereof. The case was remanded to the trial court for
determination of the current market value of the apartment
bldg and ordered the Sps to pay Pecson otherwise it shall be
restored to Pecson until payment of indemnity.]
BENITEZ v. COURT OF APPEALS
FACTS:
Both pairs of spouses, Sps. Benitez and Macapagal bought
parcels of land wherein the latter found that the Sps. Benitez
encroached on a portion of their land. The Sps. Macapagal
filed an action to recover possession of said portion and after
which a compromise was reached wherein the Sps. Macapagal
would sell the encroached portion to the Benitez. The Sps.
Macapagal bought another lot adjacent to that of the Sps.
Benitez and found that the Sps. Benitezs house encroached a
portion of their lot [again]. After refusing to vacate despite
verbal and written demands, the Sps. Macapagal filed an
action for ejectment against the Sps. Benitez [within 1 year
from the last demand]. The Metropolitan Trial Court (MeTC)
decided in favor of Sps. Macapagal. On appeal the RTC and
the CA affirmed in toto said decision. Thus the case at bar.
ISSUE: (1) W/N an action for ejectment is the proper remedy
to recover possession of the encroached portion
(2) W/N Sps. Benitez can be made to pay rent
(3) W/N the option to sell exclusively belongs to the owner
HELD:
(1) YES, Sec. 1 Rule 70 of the Revised Rules of Court allows any
person unlawfully deprived of possession by FISTS or after
expiration of right to hold possession within 1 year from
unlawful deprivation to bring an action to recover possession.
Forcible entry requires prior physical possession but unlawful
detainer does not require prior physical possession. Actual or
physical possession is not always necessary. And possession is
not only acquired through material occupation but also when
a thing is subject to the action of ones will or by the proper
acts and legal formalities established for acquiring such right,
through execution of deed of sale.
[since it is a proper remedy, the MeTC has jurisdiction to
hear the matter]
(2) YES, The rent to be paid arises from the loss of the use and
occupation of the property and is technically damages.
Therefore since petitioners benefited from the occupation of
the property it is only just that they be made to pay damages
in the form of rent.
(3) YES, Art. 448 of the CC mandates that the option to sell the
land on which another in good faith builds, plants or sown on,
belongs to the owner. The reason for this is because the
owners right is older and by principle of accession, he is
entitled to the ownership of the accessory thing.
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TECHNOGAS PHIL. v. CA
In cases where both parties are in good, the LO can only
exercise two options, either to buy the improvement or
to sell the land to the builder.
FACTS
Petitioner bought a lot together with the building and
improvements including the wall which encroached that of
the defendant. Upon learning of such encroachment,
petitioner offered to buy the land but defendant refused.
After 2 years, through an agreement, petitioner agreed to
demolish the wall (but the case did not state what happened
to this agreement, my assumption is that it did not happen
due to conflicts that arose after)
Defendant dug a canal along the wall which caused a portion
of it to collapse. Petitioner filed a supplemental complaint re
the action and a separate criminal action of malicious
mischief (which the wife was convicted of)
RTC decided for the petitioners and the CA reversed. Note
that respondent wants to have the wall demolished.
ISSUES:
1. W/N petitioner is a builder in bad faith because it is
'presumed to know the metes and bounds of his
property.'
2. W/N amicable settlement was a proper remedy
3. W/N respondent can opt to demolish the structure
without exercising the option to sell the land to the
petitioner and the latter cannot do buy the same
RULING: Petition was granted.
Good faith or Bad Faith No such doctrinal statement that
supports that the knowledge of metes and bounds of a land
due to the Torrens system would amount to bad faith if there
was encroachment on the land of another.
1. When the petitioner purchased the lot, the wall was
already built. Even the respondent did not knew
about the encroachment until he has hired a
surveyor.
2. Where one derives title to the property from
another, the act, declaration, or omission of the
latter, while holding the title, in relation to the
property, is evidence against the former. And
possession in good faith does not lose this character
except when the possessor is aware of this
impropriety.
3. The encroachment was very narrow which can be
considered as a mere error.
Remedy the petitioner, despite being a purchaser of the
original builder, can compel the landowner to either buy the
property or sell the piece of land because:
1. He was really unaware of the encroachment basing
on the fact presented by both sides.
2. When the petitioner bought the land, he has stepped
into the rights of the original owner (hence, the
right to compel the LO to buy or sell is also
transferred)
Estoppel Petitioner is not considered in estoppel only
because it has previously agreed to demolish a part of the
wall. Rather, it was to be negotiated by the parties concern.
In the meantime, petitioner has to pay the rent for the
property occupied by its building only up to the date when
respondent serves notice of their option. Case remanded back
to the trial court for determination of the value of the land
and the number of days to allot for the respondent to choose
an option.
MANOTOK REALTY INC v. TECSON
If there is already a final and executory decision, the
judge has no recourse but to issue a writ of execution.
FACTS
In a complaint filed by the petitioner for recovery of
possession against defendants, CFI ruled declaring
respondent Nilo Madlangawa a builder in good faith. CA
affirmed and SC dismissed for lack of merit.
Petitioner filed with the trial court motion for the approval of
the petitioner's exercise of option and for satisfaction of
judgment(that is final and executory) which was dismissed.
Hence this petition for mandamus. However, since there is a
pending case (Manotok v. NHA) involving the expropriation of
the land in question it is better to suspend the current case
til after the outcome of the expropriation proceedings is
done. Moreover, a fire engulfed the Tambunting estate
covering the disputed area of the land.The expropriation case
was not granted and the law that provided for such was
declared unconstitutional.
Due to the fire, petitioner is contending that the execution of
the decision must now involve the delivery of possession.
ISSUE
W/N there should be a delivery of possession by the
respondent to the petitioner
RULING
When the decision of the trial court became final and
executory, it becomes incumbent upon the respondent judge
to issue the necessary writ for the execution of the same.
Since the improvements have been gutted by fire, and
therefore, the basis for private respondent's right to retain
the premises has already been extinguished without the fault
of the petitioner, there is no other recourse for the private
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respondent but to vacate the premises and deliver the same
to the petitioner.
SARMIENTO v AGANA
FACTS:
Before Ernesto Valentino and Rebecca Lorenzo wed,
Rebeccas mother offered a lot in Paranaque that they could
build their house on. In 1967, they finally built their home
which cost about PhP8,000-10,000, thinking that someday,
the lot would be transferred to them in their name.
It turns out, though, that the lot was owned by the Spouses
Santos who , in turn, sold the same to Leonila Sarmiento in
1974. A year later, Sarmiento ordered the Valentinos to
vacate their lot, then eventually filed and Ejection Suit
against them.
The lower court ruled in Sarmientos favor and ordered her to
pay 20,000 as the value of the house. But the case was then
elevated to the CFI of Pasay (w/ Agana as Judge), and
pursuant to Art.448 of the CC (March 1979), the Court
ordered Sarmiento to exercise the option in 60 days to pay
Ernesto 40,000 as the value of the house or to let them
purchase the land for 25,000. Sarmiento was not able to
exercise this option, and the CFI allowed Ernesto to deposit
the 25,000 purchase price with the Court.
ISSUE: Whether or not the land owner is compelled to
exercise either option: to buy the building or to sell the land?
HELD:
Ernesto and his wife (BPS) were clearly in good faith as they
believed that Rebeccas mother has the capacity to
eventually transfer the title of the land to them.
In line with this, Sarmiento (LO) was required to exercise only
2 options: To purchase the land or To sell the land to them,
in this case, based on the value decided by the courts. Since
Sarmiento failed to exercise the option within the allotted
period, and based on Art. 448, the LO is compelled by law to
exercise either option. Not choosing either is a violation of
the law.
DEPRA v DUMLAO
FACTS:
Dumlao is the owner of a parcel of land in Iloilo, while Depra
owns the lot adjoining his. Dumlao built his house on his own
land, but the kitchen encroached about 34 sq.m on Depras
property. Upon finding this, Depras mom ordered Dumlao to
move back from his encroachment, then subsequently filed
an action 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
lease between the parties. Depra refused to accept the
rentals so Dumlao 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 of
Title. Dumlao contested this, stating that the suit is barred by
res judicata. But Depra averred that the lower court did not
have 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 to accept
rent payments by the court (with both LO and BPS being in
good faith)?
HELD:
In the first issue, res judicata would not apply should the first
case be one for ejectment and the other for quieting of title.
Article 448 of the Civil Code provides that the land owner has
2 options 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 the principle of accession, he also has a right to the
accessories.
The Court remanded the case to the RTC to determine the
fair price of the land, the expenses incurred by the BPS
(Dumlao), the increase in value of the land, and whether the
value of the land is considerably more than the value of the
kitchen built on it. The RTC shall then give Depra 15 days to
exercise such option.
BALLATAN v CA
-Land Owner in Good faith, Builder in Good faith scenario
-The right to choose between appropriating the improvement
or selling the land on which the improvement of the builder,
planter or sower stands, is given to the owner.
-If the option chooses is to sell the lot, the price must be
fixed at the prevailing market value at the time of payment.
FACTS:
Eden Ballatan, together with other petitioners, is living in and
registered owners of Lot No. 24. Respondent Winston Go is
living in and registered owners of Lot No. 25 and 26. And Li
Ching Yao is living in and the registered owner of Lot. 27. The
Lots are adjacent to each other.
When Ballatan constructed her house in her lot, she noticed
that the concrete fence and side pathway of the adjoining
house of respondent Winston Go encroached on the entire
length of the eastern side of her property. She was informed
by her contractor of this discrepancy, who then told
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respondent Go of the same. Respondent, however, claims
that his house was built within the parameters of his fathers
lot; and that this lot was surveyed by engineer Jose
Quedding, the authorized surveyor of Araneta Institute of
Agriculture (AIA). Petitioner called the attention of AIA on
the matter and so the latter authorized another survey of the
land by Engineer Quedding. The latter then did the survey
twice which led to the conclusion that Lots Nos 25, 26 (owned
by respondent Go) and 27 (owned by Li Ching Yao) moved
westward to the eastern boundary of Lot 24 (owned by
petitioner Ballatan.) (it was later on discovered by the
courts that Go encroached 42 square meters from the
property of Ballatan and Yao encroached 37 square meters on
Gos property, all of which were in GOOD FAITH)
Ballatan made written demands to the respondent to
dismantle and move their improvements and since the latter
wasnt answering the petitioner filed accion publiciana in
court. Gos filed their Answer with Third-Party Complaint
impleading as third party defendants respondents Li Ching
Yao, the AIA and Engineer Quedding.
RTC ruled in favor of the petitioner ordering respondent Go
to demolish their improvements and pay damages to
Petitioner but dismissing the third-party complaint. CA
affirmed the dismissal of the third party-complaint as to AIA
but reinstated the the complaint against Yao and the
Engineer. CA also affirmed the demolition and damages
awarded to petitioner and added that Yao should also pay
respondent for his encroachment of respondent Gos
property. Jose Quedding was also ordered to pay attorneys
fees for his negligence which caused all this fuzz.
ISSUE: What is the proper remedy in this situation (everyone
was in good faith)?
RULING:
Art 448 is the proper remedy (Lower Courts are wrong in
awarding the damages). It was established in the case that
the parties had no knowledge of the encroachment until
Ballatan noticed it there all of them were builders in Good
faith. In that scenario they have two options. 1st option is
that the land owner will buy the improvements and the 2nd
option is to oblige the builders to buy the land given that the
value of the land is not considerably more than the buildings
or tree; other wise the owner may remove the improvements
thereon.
The builder, planter or sower, however, is not obliged to
purchase the land if its value is considerably more than the
building, planting or sowing. In such case, the builder,
planter or sower must pay rent to the owner of the land. If
the parties cannot come to terms over the conditions of the
lease, the court must fix the terms thereof. The right to
choose between appropriating the improvement or selling
the land on which the improvement of the builder, planter
or sower stands, is given to the owner.
If the option chooses is to sell the lot, the price must be
fixed at the prevailing market value at the time of
payment.
Petitioner was given by SC 30 days to decide on what to do or
which right to exercise. Likewise, Go was also given time to
do the regarding Yaos encroachment. Engineer Quedding was
still asked to pay attorneys fees.
GEMINIANO v CA
Lessor in good faith and Builders in Good faith are not
synonymous. Article 1678 may apply to the formers case and
Art 448 may apply to the latters case. If a person knew that
his stay would likely end or that he knew somehow that he is
not the owner of the land then he is not a BPS in good faith.
FACTS:
The lot in question was originally owned by the mother of the
petitioner. Petitioner sold their unfinished bungalow to the
respondents for P6,000, with a promise to sell the lot to the
latter. The property was later leased to the respondents for 7
years starting November 1978 for P40 a month as evidenced
by their written lease contract. The respondents built their
house and introduced some improvements in the lot. In 1985
petitioners mother refused receiving monthly rentals.
It turned out that the lot in question was subject to litigation
which resulted to its acquisition by Maria Lee which was sold
to Salcedo, who further sold to Dionisio spouses. The property
eventually came back to the petitioner when the Dinisio
spouses executed a Deed of Quitclaim over the said property
in favor of the petitioners. As such, the lot was registered in
the latters names. (petitioners never lost possession of the
land because Lee and company never issued a writ of
possession against them)
In 1993, petitioners wrote a letter to respondents demanding
them to vacate the premises and when the latter refused,
petitioners filed in court. Respondents claim that they should
be entitled to buy the land because of the promise of the
petitioners to sell them the land and because they were
builders in Good faith. The courts now are deciding which one
to use: Art. 448 regarding builders and land owners in good
faith or Art. 1678 regarding lessee in good faith who can be
reimbursed half of the expenses of the improvements if the
LO chooses to appropriate them and that such lessee have the
right to retain in the premises until fully reimbursed.
ISSUE: 1) W/N the respondents were builders in Good faith?
2) W Art 448 or 1678 should be applied?
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RULING:
1) No, they were not builders in good faith. The respondents
knew that their stay would end after the lease contract
expires. They cant bank on the promise, which was not in
writing, of the petitioners that the latter will sell the land to
them. According to 1403, an agreement for the sale of real
property or an interest therein is unenforceable, unless some
note or memorandum thereof be produced. Other than the
alleged promise by petitioner, respondents had no other
evidence to prove their claim.
2) They are mere lessees in good faith; therefore Art 1678
may apply if the lessor chooses to appropriate the
improvements. But since the petitioners refused to exercise
that option, the private respondents cant compel them to
reimburse the one-half value of the house and improvements.
Neither can they retain the premises until reimbursement is
made. The private respondents sole right then is to remove
the improvements without causing any more impairment upon
the property leased than is necessary.
DEL CAMPO V ABESIA
When land is co-owned by two parties, but the co-ownership
is terminated, Article 448 governs in case real property (like
a house) encroaches the land of another. This is provided that
good faith exists.
FACTS:
The case involves two friendly parties who are co-owners of a
corner lot at Flores and Cavan Streets in Cebu City. Plaintiff
owns 2/3 of the lot and Defendant owns 1/3 of the same. The
total size of the lot is 45 square meters (which is about the
size of a typical Starbux caf)
Later on, the two parties decided to divide the co-owned
property into two lots. 30 square meters went to the
plaintiffs and 15 square meters went to the defendants.
From the sketch plan, both parties discovered that the house
of the defendants occupied a portion of the plaintiffs
adjacent lot, eating 5 sqm of it. The parties then requested
the trial court to adjudicate who should take possession of
the encroached 5 sqm.
The trial court ruled that Art 448 does not apply.
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.
Since art 448 does not apply, the Plaintiff cannot be obliged
to pay for the portion of defendants house that entered into
the 30 sqm lot, AND Defendant cannot be obliged to pay for
the price of the 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 ordered
Defendants to demolish the 5sqm part of their house
encroaching the 30sqm lot of the Plaintiffs.
Defendants where aghast at having to axe the family home,
hence they appealed.
CA affirmed the decision. So we have the SC coming to the
rescue.
ISSUE: w/n the rules of accession applies (and not co-
ownership) on property that used to be co-owned, but was
subdivided.
HELD:
The rule of accession applies because co-ownership was
terminated upon the partitioning of the lot. Art 448 therefore
governs. The house of Defendant overlapped that of Plaintiff,
but this was built on good faith. Hence, the plaintiffs have
the right to choose one of two options
Appropriate the 5sqm portion of the house of
Defendants after indemnifying the Defendants; or
Obliging the Defendants to pay a portion of the land
on which their home rested. ( or they can rent it)
IGNAO V IAC
When co-ownership is terminated by division of land, Art 448
applies to parties in good faith. The party whose land is
encroached upon has the sole right to choose whether to sell
his land encroached or to appropriate that which encroaches
his land.
FACTS:
The case involves Petitioner Florencio Ignao and his Uncles
Juan and Isidro Ignao as Respondents.
Both Petitioner and Respondents co-owned land with 534 sqm
(about the size of an Olympic swimming pool.) in Cavite. The
parties had a falling out (maybe the uncles had bad breath)
and so attempted to partition the land, with 133 going to the
uncles and 266 going to Petitioner. The attempt failed..
Later, Petitioner discovered that the two houses of
Respondent uncles encroached his land. Juan ate 42 sqm and
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Isidro ate 59 sqm for the grand total of 101 sqm. He
complained.
The RTC said that uncles built in good faith therefore that
exempts them from damages. Art 448 therefore applies
But things didnt go to well for the Petitioner. The RTC said
that if Petitioner opted to appropriate the sections of the
encroaching houses, the Uncles will be left with worthless
hovels. Hence, RTC ordered Petitioner to just sell his land
which was encroached.
No Good! cried Petitioner and he appealed to the IAC. He
lost again. Petitioner trooped to the SC for vindication
another, loses what is built, planted or sown without right to
indemnity." As a builder in bad faith, NAWASA lost whatever
useful improvements it had made without right to indemnity.
Moreover, under Article 546 of said code, only a possessor in
good faith shall be refunded for useful expenses with the
right of retention until reimbursed; and under Article 547
thereof, only a possessor in good faith may remove useful
improvements if this can be done without damage to the
principal thing and if the person who recovers the possession
does not exercise the option of reimbursing the useful
expenses. The right given a possessor in bad faith is to
remove improvements applies only to improvements for pure
luxury or mere pleasure, provided the thing suffers no injury
thereby and the lawful possessor does not prefer to retain
them by paying the value they have at the time he enters
into possession (Article 549).

ISSUE:
1. w/n Petitioner has the right to choose whether to
appropriate the house encroaching his land or to sell his land.
2. w/n the courts and respondents can rob Petitioner of the
options provided for under Art 448

HELD:
Petitioner has the right whether to appropriate the houses or
to sell his land! The ruling of the RTC and IAC contravened
the explicit provisions of Art 448 which granted him the
explicit right to choose. The law is clear when it bestows
choice upon the aggrieved land owner and not upon the
builders or the courts.

MWSS V. CA|CITY OF DAGUPAN, 143 SCRA 623

He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without
right to indemnity (including useful improvements).

FACTS:
The City of Dagupan (CITY) filed a complaint against the
former National Waterworks and Sewerage Authority
(NAWASA), now the Metropolitan Waterworks and Sewerage
System (MWSS), for recovery of the ownership and possession
of the Dagupan Waterworks System. NAWASA interposed as
one of its special defenses R.A. 1383 which vested upon it the
ownership, possession and control of all waterworks systems
throughout the Philippines and as one of its counterclaims the
reimbursement of the expenses it had incurred for necessary
and useful improvements amounting to P255,000.00.
Judgment was rendered by the trial court in favor of the CITY
on the basis of a stipulation of facts. The trial court found
NAWASA to be a possessor in bad faith and hence not entitled
to the reimbursement claimed by it.

ISSUE: Whether or not MWSS has the right to remove all the
useful improvements introduced by NAWASA to the Dagupan
Waterworks System, notwithstanding the fact that NAWASA
was found to be a possessor in bad faith?

HELD: No.
Article 449 of the Civil Code of the Philippines provides that
"he who builds, plants or sows in bad faith on the land of
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