Lao Chit v Security Bank & Trust Co. and Consolidated Investment, Inc.
(17 ISSUES + RULING:
April 1959)
Concepcion, J.
FACTS:
 Consolidated Investments (lessor), leaser to Domingo Dikit part of the
lobby of the Consolidated Building at Plaza Goiti, Manila to be used as
offices for a proposed Bank of Manila to be organized by Dikit and Jose
Silva.
 The lessee undertook to construct walls, partitions, and other improvements;
such improvements “shall become the property” of the lessor “upon the
termination and/or rescission” of the lease contract.
 Dikit and Silva entered into a contract with plaintiff Lao Chit for the latter
to furnish the materials and the work for the improvements at a total cost of
P59,365 payable “as soon as the Bank of Manila opens for business, and is
given permit by the Central Bank.” The permit was never issued.
 The rentals for the lease of the space were also not paid. The lessor then
instituted an unlawful detainer action.
 Municipal Court of Manila: rendered judgment sentencing Dikit.
 Dikit appealed to the CFI and eventually the Supreme Court.
 The cases were soon dismissed upon agreement of the parties that Dikit will
relinquish whatever rights he might have to the possession of the leased
premises and disclaimed all rights to and over any and all improvements
introduced therein.
 Lao filed a separate civil action against Dikit and Silva for recovery of
whatever was due from them.
 CFI of Manila: ruled in favor of Lao and sentenced Dikit and Silva as
solidarily liable for the sum of P59,365.
 A writ of execution was issued but remained unsatisfied. Dikit nor Silva had
any properties registered in their respective names and Silva was nowhere to
be found.
 Lao Chit then brought the present action against Security Bank and (Bank)
to which lessor had leased the property, together with the improvements. He
demanded a payment of P1,000/month by way of rentals.
 In its answer, the Bank alleged that it used the improvements pursuant to its
contract of lease with the lessor.
 Soon after, Lao demanded the amount of the improvements plus
P1000/month from the lessor, which did not heed said demand.
 According to the lessor, it had no contractual or juridical relation with Lao
and that the improvements belonged to it and not to Lao.
 CFI of Manila: sentenced Consolidated Investments and Security Bank
solidarily to pay P59,365 and rentals at the rate of P1,000/mo.
 Defendants filed a motion for reconsideration and new trial, but were
denied. Hence, this appeal.
WoN the lower court erred in rendering judgment against the Bank. YES.
 It is clear that the Bank entered into the premises in question pursuant to a
lease contract with the lessor.
 The Bank paid the rentals and fulfilled its obligations under the contract.
 It cannot be denied that the improvements introduced became property of
the lessor pursuant to the provision in the contract between it and Dikit and
Silva that the former shall own said improvements upon expiration and/or
rescission of the contract.
 Although Lao Chit was not a party to said contract, this stipulation is
binding upon him, he having introduced said improvements pursuant to his
contract with Dikit, from whom he derived, therefore, his right to enter the
building and make the improvements.
o In short, insofar as the construction thereof, Lao Chit was, vis-a-vis
the lessor, a mere agent or representative of Dikit and, as such, was
privy to the undertakings of Dikit under his contract of lease with
the lessor.
WoN the lessor is liable to Lao Chit for the improvements. NO.
 The lower court held the lessor liable to Lao upon the ground that he was a
builder in good faith, and under the theory of unjust enrichment.
 Art. 361 (now 448) of the [Old] Civil Code provides:
o The owner of land on which anything has been built, sown, or
planted, in good faith, shall be entitled to appropriate the thing so
built, sown, or planted, upon paying the compensation mentioned
in Articles 453 and 454, or to compel the person who has built or
planted to pay him the value of the land, and the person who sowed
thereon to pay the proper rent therefor.
 However, this provision refers to one who builds upon a land which he
believes to be his property. Neither Lao nor Dikit claimed the building as
their own.
 Moreover, the provision is limited in its application to “buddings”
constructed on another’s land, and not to partitions, railing, counters,
shelves, and the like.
 Moreover, there was no bad faith on the part of the lessor since it was bound
to permit Dikit and Lao as his agent to construct improvements.
 The lower court also relied on Art. 356 (now 443) in ruling that there should
be no unjust enrichment:
o He who receives fruits is obliged to pay any expenses which may
have been incurred by another in the production, gathering, and
preservation thereof.
 The Supreme Court ruled, however, that the provision is not on point since
it refers to "expenses" of production, gathering and preservation" of fruits
received by the owner of a property, not to improvements, whereas the
 claim of Lao Chit is based upon "improvements" introduced, not "expenses"
incurred by him for the "production, gathering and preservation" of fruits.
 The provision on quasi-contracts (Art. 2142) of the Civil Code cannot
likewise be applied. It provides:
o Certain lawful, voluntary and unilateral acts give rise to the
juridical relation of quasi-contract to the end that no one shall be
unjustly enriched or benefited at the expense of another.
 The construction of the improvements in question was not a "purely
voluntary act" or "unilateral act" of Lao Chit.
 He introduced them in compliance with a bilateral "obligation" he
undertook under his contract with Dikit.
 For the principle of undue enrichment to apply, there must be "enrichment"
and the same must be "undue" or "unjust".
 In the case at bar, Dikit failed to pay the agreed monthly rental of P5,000
from October, 1949. Up to July 1, 1951, when the premises in question
were leased to the Bank, the rentals due from Dikit aggregated, therefore,
P105,000.
 Thus, despite the fact that the lessor had become the owner of the
improvements in question, worth P59,365.00, it still suffered a loss of over
P45,000.00. Such "loss" negates the idea of "enrichment".
 Had he been reasonably vigilant, Lao Chit could have demanded from Dikit
a mortgage, or a bond, or some other security, for the protection of his
rights, yet he did not do so.
 Should the lessor be required to pay Lao Chit what he is entitled to recover
from Dikit, but which he (Lao Chit) cannot—due to his oversight,
carelessness or negligence—collect from Dikit, the effect would be to
relieve Lao Chit of the consequences of his own inadvertence or negligence,
and hold the lessor responsible therefor.
DISPOSITION: Reversed. Costs against Lao Chit.
DEPRA V. DUMLAO 136 SCRA 475
Jul4
FACTS:
Francisco Depra, is the owner of a parcel of land registered, situated in the
municipality of Dumangas, Iloilo. Agustin Dumlao, defendant-appellant, owns an
adjoining lot. When DUMLAO constructed his house on his lot, the kitchen thereof
had encroached on an area of thirty four (34) square meters of DEPRA’s property,
After the encroachment was discovered in a relocation survey of DEPRA’s lot made
on November 2,1972, his mother, Beatriz Depra after writing a demand letter asking
DUMLAO to move back from his encroachment, filed an action for Unlawful
Detainer. Said complaint was later amended to include DEPRA as a party plaintiff.
After trial, the Municipal Court found that DUMLAO was a builder in good faith,
and applying Article 448 of the Civil Code. DEPRA did not accept payment of
rentals so that DUMLAO deposited such rentals with the Municipal Court. In this
case, the Municipal Court, acted without jurisdiction, its Decision was null and void
and cannot operate as res judicata to the subject complaint for Queting of Title. The
court conceded in the MCs decision that Dumlao is a builder in good faith.
Held: Owner of the land on which improvement was built by another in good faith is
entitled to removal of improvement only after landowner has opted to sell the land
and the builder refused to pay for the same. Res judicata doesn’t apply wherein the
first case was for ejectment and the other was for quieting of title.
ART. 448. 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 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.
Property
Topic art.448
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.
SARMIENTO v. AGANA
FACTS:
Before Ernesto Valentino and Rebecca Lorenzo wed, Rebecca’s 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 Sarmiento’s 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 Rebecca’s
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
house 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.
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 café)
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 plaintiff’s 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 defendant’s 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 coownership) 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 VS 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 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 didn’t 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
ISSUE:
1. Whether or not Petitioner has the right to choose whether to appropriate the house
encroaching his land or to sell his land.
2. Whether or not 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.
G.R. No. 117642 April 24, 1998
EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners,
vs. HONORABLE COURT OF APPEALS, FORENCIA BULING Vda de
TINAGAN, DEMOSTHENES TINAGAN, JESUS TINAGAN, ZENAIDA T.,
JOSEP and JOSEPHINE TINAGAN, respondents.
Facts:
In this petition for review on certiorari, petitioners assail the decision 1 of the Court
of Appeals dated April 8, 1994 which affirmed the decision of the lower court
ordering petitioners to peacefully vacate and surrender the possession of the disputed
properties to the private respondents.
On April 1, 1950, Victoria Tinagan purchased from Mauro Tinagan 2 parcels of land.
One parcel of land contains an area of 5,704 square meters, more or less; while the
other contains 10,860 square meters. Thereafter, Victoria and her son Agustin, took
possession of said parcels of land.
Sometime in 1960, petitioners occupied portions thereof whereat they built a copra
dryer and put up a store wherein they engaged in the business of buying and selling
copra.
On June 23, 1975, Victoria died. On October 26, 1975, Agustin died, survived by
herein private respondents.
On December 24, 1976, petitioner Editha assisted by her husband filed a complaint
for partition and damages, claiming to be an acknowledged natural child of deceased
Agustin Tinagan and demanding the delivery of her shares in the properties left by
the deceased. This case was dismissed by the trial court on the ground that
recognition of natural children may be brought only during the lifetime of the
presumed parent and petitioner Editha did not fall in any of the exceptions
enumerated in Article 285 of the Civil Code.
On March 29, 1988, private respondents filed a complaint for recovery of possession
against Editha and her husband Porferio, praying, among others, that they be
declared absolute owners of the said parcels of land, and that petitioners be ordered
to vacate the same, to remove their copra dryer and store, to pay actual damages (in
the form of rentals), moral and punitive damages, litigation expenses and attorney's
fees.
In their answer, petitioners contend that they own the improvements in the disputed
properties which are still public land; that they are qualified to be beneficiaries of the
comprehensive agrarian reform program and that they are rightful possessors by
occupation of the said properties for more than twenty years.
After trial, the lower court rendered judgment in favor of the private respondents. CA
affirmed. Hence, this petition.
Issue: W/N the lands in question are public lands and W/N the petitioners are rightful
possessors by occupation for more than 20 year.
Held: No
Ratio:
Petitioners aver that respondent court erred in declaring private respondents the
owners of the disputed properties. They contend that ownership of a public land
cannot be declared by the courts but by the Executive Department; and that the
respondent court erred in not considering that private respondents' predecessor-in-
interest, Victoria Tinagan, during her lifetime, ceded her right to the disputed
properties in favor of petitioners.
Moreover, petitioners maintain that the respondent court erred in holding that they
were in bad faith in possessing the disputed properties and in ruling that the
improvements thereon are transferable. They claim that the copra dryer and the store
are permanent structures, the walls thereof being made of hollow-blocks and the
floors made of cement.
Private respondents counter that the question of whether or not the disputed
properties are public land has been resolved by overwhelming evidence showing
ownership and possession by the Tinagans and their predecessors-in-interest prior to
1949. They further aver that they merely tolerated petitioners' possession of the
disputed properties for a period which was less than that required for extraordinary
prescription.
The petition must fail.
The private respondents adduced overwhelming evidence to prove their ownership
and possession of the two (2) parcels of land. Private respondents' tax declarations
and receipts of payment of real estate taxes, as well as other related documents,
prove their ownership of the disputed properties. Moreover, the realty taxes on the
two lots have always been paid by the private respondents. There can be no doubt,
therefore, that the two parcels of land are owned by the private respondents.
The record further discloses that Victoria and her son, Agustin, took possession of
the said properties in 1950, introduced improvements thereon, and for more than 40
years, have been in open, continuous, exclusive and notorious occupation thereof in
the concept of owners.
Petitioners' own evidence recognized the ownership of the land in favor of Victoria
Tinagan. In their tax declarations, petitioners stated that the house and copra dryer
are located on the land of Victoria S. Tinagan/Agustin Tinagan. By acknowledging
that the disputed portions belong to Victoria/Agustin Tinagan in their tax
declarations, petitioners' claim as owners thereof must fail.
Petitioners contend that while the 2 parcels of land are owned by private respondents,
the portions wherein the copra dryers and store stand were ceded to them by Victoria
S. Tinagan in exchange for an alleged indebtedness of Agustin in the sum of
P7,602.04.
This claim of the petitioners was brushed aside by the respondent court as merely an
afterthought, thus —
Appellant testified that the areas on which their store and dryer were located were
exchanged for the amount of P7,602.04 owed to them by Agustin in 1967; that he did
not bother to execute a document reflecting such agreement "because they were our
parents and we had used the land for quite sometime already they had also sold their
copra to us for a long time." Yet, as earlier discussed, the tax declarations in
appellants' answer show that even after 1967, they expressly declared that the parcels
of land on which their store and dryer were constructed, belonged to Victoria and
Agustin. If appellants really believed that they were in possession of the said
particular areas in the concept of owners, they could have easily declared it in said
tax declarations.
Concededly, petitioners have been on the disputed portions since 1961. However,
their stay thereon was merely by tolerance on the part of the private respondents and
their predecessor-in-interest. The evidence shows that the petitioners were permitted
by Victoria to build a copra dryer on the land when they got married. Subsequently,
petitioner Editha Alviola, claiming to be the illegitimate daughter of Agustin, filed a
petition for partition demanding her share in the estate of the deceased Agustin.
However, the petition was dismissed since it was brought only after the death of
Agustin Tinagan. Considering that the petitioners' occupation of the properties in
dispute was merely tolerated by private respondents, their posture that they have
acquired the property by "occupation" for 20 years does not have any factual or legal
foundation.
As correctly ruled by the respondent court, there was bad faith on the part of the
petitioners when they constructed the copra dryer and store on the disputed portions
since they were fully aware that the parcels of land belonged to Victoria Tinagan.
And, there was likewise bad faith on the part of the private respondents, having
knowledge of the arrangement between petitioners and Victoria Tinagan relative to
the construction of the copra dryer and store. Thus, for purposes of indemnity,
Article 448 of the New Civil Code should be applied. However, the copra dryer and
the store, as determined by the trial court and respondent court, are transferable in
nature. Thus, it would not fall within the coverage of Article 448. To fall within the
provision of this Article, the construction must be of permanent character, attached to
the soil with an idea of perpetuity; but if it is of a transitory character or is
transferable, there is no accession, and the builder must remove the construction. The
proper remedy of the landowner is an action to eject the builder from the land.
The private respondents' action for recovery of possession was the suitable solution
to eject petitioners from the premises.
Alviola v. CA
FACTS:
Victoria Tinagan bought two parcels of land in 1950. She and her son Agustin took
possession of the said land thereafter.
Sometime in 1960, petitioners occupied portions of the land whereat they built a
copra dryer and put up a store wherein they engaged in the business of buying and
selling copra.
On 1975, Victoria and Agustin died, the latter survived by his wife and children who
are the private respondents in the instant case.
The private respondents filed a complaint for recovery of possession against the
petitioners asking the Regional Trial Court of Negros Oriental that they be declared
the absolute owners of the said parcels of land and that petitioners be ordered vacate
the same, to remove their copra dryer and store, to pay actual damages (in the form
of rentals), moral and punitive damages, litigation expenses and attorney's fees.
The trial court ruled in favour of the private respondents, hence this petition.
The petitioners put up the defense that the contested parcels of land are public lands,
making them qualify to become beneficiaries of the comprehensive agrarian reform
program and rightful possessors of the land in virtue of their occupation of the same
for 20 years.
The petitioners also contend that the copra dryer and the store are permanent
structures as they are made of hollow blocks and cement.
Private respondents on the other hand offer overwhelming evidence of their
ownership and possession of the land and contended that they merely tolerated the
petitioner’s occupation of the disputed property.
ISSUE:
WON the petitioners have ownership over the portions of land where the copra dryer
and store are located.
HELD:
No.
The petitioners’ defense that the said parcels of land are public lands is rebutted by
the Private respondents' tax declarations and receipts of payment of real estate taxes,
as well as other related documents which prove their ownership of the disputed
properties.
The record further discloses that Victoria S. Tinagan and her son, Agustin Tinagan,
took possession of the said properties in 1950, introduced improvements thereon, and
for more than 40 years, have been in open, continuous, exclusive and notorious
occupation thereof in the concept of owners.
The Court brushed as an afterthought the petitioners’ later defense that the portions
where the copra dryer and store are located were ceded to them by Victoria in
exchange for a prior debt since it was not supported by any document pointing to
Victoria transferring the ownership of the said portion and the lack of declaration on
the part of the petitioners.
The Court also ruled that though the petitioners were in occupation of the portions of
land in question for 20 years, they were able to do so out of the tolerance of the
private respondents and thus, their posture that they have acquired the property by
"occupation" for 20 years does not have any factual or legal foundation.
As correctly ruled by the respondent court, there was bad faith on the part of the
petitioners when they constructed the copra dryer and store on the disputed portions
since they were fully aware that the parcels of land belonged to Victoria Tinagan.
But there was likewise bad faith on the part of the private respondents, having
knowledge of the arrangement between petitioners and Victoria Tinagan relative to
the construction of the copra dryer and store.
Thus, for purposes of indemnity, Article 448 of the New Civil Code should be
applied. 32 However, the copra dryer and the store, as determined by the trial
court and respondent court, are transferable in nature. Thus, it would not fall
within the coverage of Article 448. As the noted civil law authority, Senator Arturo
Tolentino, aptly explains: "To fall within the provision of this Article, the
construction must be of permanent character, attached to the soil with an idea of
perpetuity; but if it is of a transitory character or is transferable, there is no accession,
and the builder must remove the construction. The proper remedy of the landowner is
an action to eject the builder from the land." 33
The private respondents' action for recovery of possession was the suitable solution
to eject petitioners from the premises.
Petition dismissed.
Facts of the Case:
The petitioner bought a lot owned by Mrs. Charvet which was then previously leased
by the latter to one Richard Stohner. The said lease contract provided that the lessee
may erect structures and improvements which shall remain as lessee's property and
he may remove them at any time. It further provided that should the lessee fail to
remove the same structures or improvements withing two months after the expiration
of the lease, the lessor may remove them or cause them to be removed at the expense
of the lessee. Stohner made fillings on the land and constructed a house. When he
failed to pay the rent, the petitioner, through counsel, sent Stohner a demand letter
ordering him to vacate the lot. The lessee contended that he is a 'builder in good
faith.'
Issue: Is the lessee a builder in good faith?
Ruling: No, the lessee cannot be considered a builder in good faith. The provision
under Art. 448 of the New Civil Code (Philippine) on a builder of good faith applies
only to the owner of the land who believes he is the rightful owner thereof, but not to
a lessee who's interest in the land is derived only from a rental contract. Neither can
Stohner be considered a 'possessor in good faith'. A possessor in good faith is a party
who possesses property believing that he is its rightful owner but discovers later on a
flaw in his title that could indicate that he might not be its legal owner. It cannot
apply to a lessee because he knows right from the start that he is merely a lessee and
not the owner of the premises.
As a mere lessee, he introduces improvements to the property at his own risk such
that he cannot recover from the owner the reimbursements nor he has any right to
retain the premises until reimbursements. What applies in this case is Art. 1678
(NCC) which provides that, " if the lessee, makes, in good faith, useful
improvements which are suitable to the use for which the lease is intended, without
altering the form or substance of the property leased, the lessor upon the termination
of the lease shall pay the lessee 1/2 of the value of the improvements at the time.
Should the lessor refuse to reimburse said amount, the lessee may remove the
improvements even though the principal thing may suffer damage thereby. He shall
not. however, cause any more impairment upon the property leased than is
necessary."
Kilario v. CA
G.R. No. 134329. January 19, 2000
Respondent Silverio Pada filed an ejectment case against sps. Kilario. The latter
occupies a portion of the intestate estate of Jacinto Pada, Grandfather of Silverio.
The
Kilario’s have been living therein since 1960 by sheer tolerance. When Jacinto Pada
dies, his heirs entered into extrajudicial partition of his estate in 1951. As a result
thereof, lot 5581 was allocated to Ananias and Marciano who became co-owners of
said
lot.
Ananias died and his daughter succeeded in his right as co-owner. Eventually,
Juanita sold her right in the co-ownership to Engr. Paderes. Mariaon the other hand,
heir of Marciano, sold her share to her cousin respondent Silverio Pada. The latter
demanded sps. Kilario to vacate but the sps. refused.On June 1995, a complaint for
ejectment was filed against sps. Kilario. On July1995 a deed of donation in their
favor
was executed by heirs of Amador Pada.
ISSUE: Whether or not the partition was valid
The extrajudicial partition of the estate of Jacinto Pada among his heirs made in
1951 is valid, albeit executed in an unregistered private document. No law requires
partition among heirs to be in writing and be registered in order to be valid. The
object of registration is to serve as constructive notice to others. It follows then that
the intrinsic validity of partition not executed with the prescribed formalities is not
undermined when no creditors are involved. Without creditors to take into
consideration, it is competent for the heirs of an estate to enter into an agreement
for distribution thereof in a manner and upon a plan different from those provided by
the rules from which, in the first place, nothing can be inferred that a writing or other
formality is essential for the partition to be valid. The partition of inherited property
need not be embodied in a public document so as to be effective as regards the heirs
that participated therein. The extrajudicial partition which the heirs of Jacinto Pada
executed voluntarily and spontaneously in 1951 has produced a legal status. When
they discussed and agreed on the division of the estate of Jacinto Pada, it is presumed
that they did so in furtherance of their mutual interests. As such, their division is
conclusive, unless and until it is shown that there were debts existing against the
estate which had not been paid. No showing, however, has been made of any
unpaid charges against the estate of Jacinto Pada. Thus, there is no reason why the
heirs should not be bound by their voluntary acts.
The belated act of Concordia, Esperanza and Angelito, who are the heirs of
Amador Pada, of donating the subject property to petitioners after forty four (44)
years
of never having disputed the validity of the 1951 extrajudicial partition that allocated
the subject property to Marciano and Ananias, produced no legal effect. The
donation made by his heirs to petitioners of the subject property, thus, is void for
they were not the owners thereof. At any rate it is too late in the day for the heirs
of Amador Pada to
repudiate the legal effects of the 1951 extrajudicial partition as prescription and
laches have equally set in.Petitioners are estopped from impugning the extrajudicial
partition executed by the heirs of Jacinto Pada after explicitly admitting in their
Answer that they had been occupying the subject property since 1960 without ever
paying any rental as they only relied on the liberality and tolerance of the Pada
family. Their admissions are evidence of a high order and bind them insofar as the
character of their possession of the subject property is concerned.
LUMUNGO V. USMAN
25 SCRA 255
FACTS:
Dominga Usman sold and transfers her rights in and to the 3 lots in question
to Jose Angeles. The latter made the purchase with the knowledge that the property
was already in dispute by Atty. Usman, husband of Dominga, and by the plaintiffs.
Angeles, upon taking possession of the land, planted the same with coconuts, which,
together with those already planted by Dominga Usman, numbered about 3,000,
most of which are now fruit-bearing. In short, Angeles was a purchaser and a builder
in bad faith.
ISSUE:
Whether or not Angeles is entitled to reimbursement for the coconuts tree he planted
on the property in litigation.
HELD:
No. It should be noted that said trees are improvements, not "necessary
expenses of preservation," which a builder, planter or sower in bad faith may recover
under Arts. 452 and 546, first paragraph, of the Civil Code. The facts and findings of
both the trial court and the Court of Appeals leave no room for doubt that Jose
Angeles was a purchaser and a builder in bad faith. The provision applicable to this
case is, accordingly, Article 449 of the Civil Code, which provides that, "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."
MUNICIPALITY OF OAS V. ROA
7 PHIL. 20
FACTS:
The Municipality brought the action for the recovery of a tract of land in the
pueblo of Oas, claiming that it was a part of the public square of said town, while
Roa alleged that he was the owner of the property. The defendant admitted in writing
that he knew that the land is owned by the Municipality and that Jose Castillo, whom
he bought the property did not own the land. When Roa constructed a substantial
building on the property in question after he “acquired” the property from Castillo,
the Municipality did not oppose the construction.
ISSUE:
Whether or not the municipality owns the land.
HELD:
Yes. The defendant was not a purchaser in good faith. The plaintiff, having
permitted the erection by the defendant of a building on the land without objection,
acted in bad faith. The rights of the parties must, therefore, be determined as if they
both had acted in good faith. To the case are applicable those provisions of the Civil
Code which relate to the construction by one person of a building upon land
belonging to another. Article 364 (now Art.453) of the Civil Code is as follows:
"When there has been bad faith, not only on the part of the person who built, sowed,
or planted on another's land, but also on the part of the owner of the latter, the rights
of both shall be the same as if they had acted in good faith.” The Supreme declared
that the Municipality is the owner of the land and that it has the option of buying the
building thereon, which is the property of the defendant, or of selling to him the land
on which it stands.
MWSS V. CA
143 SCRA 20
FACTS:
MWSS had an account from PNB. Its treasurer, auditor, and General
Manager are the ones authorized to sign checks. During a period of time,
23 checks were drawn and debited against the account of petitioner. Bearing
the same check numbers, the amounts stated therein were again
debited from the account of petitioner. The amounts drawn were deposited in the
accounts of the payees in PCIB. It was found out though that the names stated in the
drawn checks were all fictitious. Petitioner demanded the return of the amounts
debited but the bank refused to do so. Thus, it filed a complaint.
HELD:
There was no categorical finding that the 23 checks were signed by
persons other than those authorized to sign. On the contrary, the NBI reports
shows that the fraud was an “inside job” and that the delay in the
reconciliation of the bank statements and the laxity and loss of records
control in the printing of the personalized checks facilitated the fraud. It further
doesn’t provide that the signatures were forgeries.
Forgery cannot be presumed. It should be proven by clear, convincing and positive
evidence. This wasn’t done in the present case.
The petitioner cannot invoke Section 23 because it was guilty of negligence not only
before the questioned checks but even after the same had already been negotiated.
FILIPINAS COLLEGES, INC. VS MARIA GARCIA TIMBANG
No. L-12813. Spetember 29, 1959
SUCCESSFUL BIDDERS – MARIA GARCIA TIMBANG AND MARCELINO
TIMBANG
DEFENDANT APPELLANTS
PLAINTIFF APPELLEE – MARIA GERVACIO BLAS
FACTS:
Whether or not the respondent Blas is a builder in good faith?
Maria Gervacio Blas was declared to be a builder in good faith of the school building
constructed on the lot in question. HELD:

Spouses Timbang were the successful bidders of the school building sold at a public
auction and shall pay Maria Gervacio Blas directly or through Sheriff of Manila
P5,750.00.
Filipinas Colleges, Inc. was declared to have acquired the rights of the spouses
Timbang in and to Lot No. 2 thereof, Filipinas Colleges Inc was ordered to pay the
spouses Timbang the amount of P15,807.90 plus other amounts which said spouses
might have paid to the original vendor of Filipinas Colleges.
Filipinas College Inc, purchaser of the said building was ordered to deliver to Blas
stock certificate for 108 shares of the said school with par value of P10,800.0 and to
pay Blass the sum of P8,200.00 representing the unpaid balance of the purchase price
of the house.
Yes. The Supreme Court affirms the decision of the Court of Appeals.
The court ordert he appellants to pay appellee Blas the amount of their bid made at
public auction.
ANALYSIS:
In the instant case, the Court of Appeals has already adjudged that appellee Blas is
entitled to the payment of the unpaid balance of the purchase price of the school
building. Blas’ claim is therefore not a mere preferred credit, but is actually a lien on
the school building.
CONCLUSION:

In case Filipinas Colleges failed to comply in the 90 day period, the latter would lose It is true that the owner of the land has the right to choose between appropriating the
all its rights to the land and spouses Timbang would become the owners thereof. building by reimbursing the builder of the value thereof or compelling the builder in
good faith to pay for his land.
Upon failure to settle the payments, spouses Timbang had chosen not to appropriate
the building but to compel Filipinas Colleges Inc to acquire the land and pay them
the value thereof.

Blas through a cpunsel, sent a letter to the Sherff of Manila advising him of her
preferential claim or lien on the house to satisfy the unpaid balance of the purchase
price thereof and to withhold from the process of the auction sale the sum of P8,200.

Blas in turn filed a motion for execution of her judgment of P8,200.00 representing
the unpaid portion of the price of the house sold to Filipinas Colleges Inc.

Blas’ claim for preference on account of the unpaid balance of the purchase price of
the house does not apply because preference applies only with respect to the property
or the debtor, and the Timbangs, owners of the house are not the debtors of Blas.

The owners of the land, instead of electing any of the alternatives, chose to seek
recovery of the value of their land by asking for a writ of execution; levying on the
house of the builder and selling the same in public auction. And because they are the
highest bidder in their own auction sale, they now claim they acquired title to the
building without necessity of paying in cash on account of their bid. In other words,
they in effect pretend to retain their land and acquire the house without paying a cent
therefor.

ISSUE: