IGNACIO v.

HILARIO
Petitioners: Damian, Francisco, and Luis Ignacio
Respondents: Elias and Dionisia Hilario

FACTS:
- Elias and Dionisia Hilario owned a parcel of land located in Pangasinan that is part riceland and
part residential. However, the Ignacios built houses and granaries within the residential part. The
Hilarios then filed a case against the Ignacios over the ownership of the said land.
- The CFI of Pangasinan rendered judgment in favor of the Hilarios, declaring that they do have
ownership over the land, but it also held that the Ignacios were builders in good faith. The
Hilarios were then given the option of either (1) appropriating the buildings of the Ignacios by
paying the actual market value of these buildings, or (2) selling the residential lot to the Ignacios.
If the latter option was chosen, the Ignacios should remove their buildings if they fail to pay the
asking price.
- The Hilarios however declined to choose any option, and moved for the CFI to order the
Ignacios to remove their buildings at their own expense. This motion was granted by the CFI.
- The Ignacios then elevated the case to the SC.

ISSUE: WoN the Hilarios can decline to exercise their options under Art. 361 (now Art. 448)

HELD: No, the Hilarios cannot decline to exercise their options and force the Ignacios to remove
their buildings. The Ignacios, as builders in good faith, are entitled by law (Art. 453 under the old
Civil Code, now Art. 546) to retain possession of the residential lot until the Hilarios have chosen to
exercise the options allowed them under Art. 361 (now 448). Either the Hilarios can appropriate the
buildings by paying an indemnity to the Ignacios, or they can sell the residential lot to the Ignacios.
The Hilarios can only force the removal of the Ignacios once they have chosen to sell the said land,
and the Ignacios are unable to pay for it. The decision of the lower court is therefore null and void.

PETITION IS GRANTED, CFI DECISION SET ASIDE, CASE IS REMANDED BACK TO THE CFI
FOR THE DETERMINATION OF THE VALUE OF THE PROPERTIES AND OF THE PERIOD
WITHIN WHICH THE HILARIOS MAY EXERCISE THEIR OPTION.